Glenn W. Penn and Kara L. Penn

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Greenbelt
In Re: 	Case No. 07-20772PM
Chapter 13
Glenn W. Penn and Kara L. Penn,
Debtors.
MEMORANDUM OF DECISION
Laura J. Margulies, Esq. filed an application for compensation for services rendered the
Debtors in this bankruptcy case that was filed under Chapter 13 on October 31, 2007. She seeks
an allowance of $4,500.00 for services rendered in the period from July 22, 2007, through
January 14, 2008, and for preparing fee applications afterwards. On February 14, 2008, this
court entered an Order confirming the Debtors’ 60-month Amended Plan that provides for
payments of $321.00 monthly for the first year and $986.00 monthly for the remaining months.
The Disclosure of Compensation filed by counsel showed a fee charged of $4,500.00,
with a $1,500.00 retainer paid to her. In fact, the Disclosure also shows, somewhat ambiguously,
that the real charge is $300.00 an hour. She agrees to represent the Debtors for the life of the
case, but only upon payment of her hourly fee for matters not related to confirmation. The
prolonged representation statement is illusory at best.
In deciding this matter, the court is guided by Appendix F of the Local Bankruptcy
Rules. This document was the product of a long cooperative and deliberative process involving
Judges of this court led by Judge Nancy Alquist, the Chapter 13 Trustees, representatives of the
Bankruptcy Bar Association of Maryland, the Consumer Bankruptcy Section of the Maryland
Date signed March 24, 2008
Entered: March 26, 2008 Case 07-20772 Doc 25 Filed 03/26/08 Page 1 of 3

1This history of this effort is described in the opinion of Chief Judge Keir in the case of In
re Bellamy, 379 B.R. 86 (BC Md. 2007).
-2-
State Bar Association and other lawyers.1 This project was conceived in an effort to work out an
agreement as to what would be appropriate compensation for handling cases under Chapter 13 in
light of amendments to the Bankruptcy Code made by the Act of 2005. One special concern of
the court and the Chapter 13 Trustees was the need to keep attorneys involved throughout the
length of the case because of the experience that clients were often abandoned soon after
confirmation so that they lost nearly all the benefit of representation. Another concern was to
create guidelines for the Bar as to what fees would be considered fair and reasonable. In so
doing, the parties agreed on “no look” figures. That is that certain fees would be presumed
reasonable under 11 U.S.C. § 329 and allowed under 11 U.S.C. § 330 without the need for
formal fee applications. A consensus was reached that, in the rare and exceptional case, rather
than be limited by the presumptive fees, attorneys could file applications for compensation
where they felt that the scheduled compensation was inadequate. The presumptive fees are as
follows:
A. $ 3,500.00 for representation of a debtor for all matters in the main case. Counsel
retains the right to apply for additional fees for services rendered more than six months after the
entry of the order confirming the plan.
B. $ 4,500.00 for representation for all matters for the life of the case other than
adversary proceedings and trustee audits.
C. $ 2,000.00 for representation limited to all matters related to plan confirmation.
Counsel retains the right to file an application for additional compensation for services rendered
in adversary proceedings and in contested matters such as motions for relief from the automatic
stay, claims objections and motions to avoid liens.
After reviewing the record and counsel’s boiler-plate fee application as amended, the
court finds nothing extraordinary about this case, other than the fee application before it. The
case appears to have been filed to deal with unsecured claims without priority. There was no
pending foreclosure. The Debtors appear to have refinanced their home in October 2005,
purchased a new automobile in August 2006, and have another auto loan payment of $665.51
that is scheduled to be paid off by the end of this year. They also have a time share interest in
Case 07-20772 Doc 25 Filed 03/26/08 Page 2 of 3

-3-
Florida property. None of the four proofs of claims filed by the secured creditors showed any
arrears at the time of filing of this case. The original Plan filed by counsel providing for 60
payments of $321.00 was patently underfunded as noted in the Trustee’s objection. The
Debtors’ Schedules I and J reflect overwithheld income taxes of more than $300.00 a month and
paint a picture of disposable income as if the $665.61 payment would continue for the life of the
Plan. It is beyond dispute that the original Plan prepared by counsel was subject to objection by
virtue of 11 U.S.C. § 1325(b)(1)(B) and could not be confirmed.
The court finds that there is nothing about this case that justifies the fee sought. The time
said to be spent on preparation of the Plan, Schedules and Statement of Financial Affairs and
initial study of the clients’ affairs that is said to be over 14 hours is clearly excessive. Similarly,
the court finds it unreasonable that it took more than an hour to make two amendments to the
Plan, namely changing paragraph 1. to provide for the increased payment and removing the
provision that provided for surrender of the time share to Starwood.
In summary, the court will, in the exercise of its discretion, deal with the Amended
Application as if counsel agrees to the flat fee of $3,500.00 for all matters in the main case
through August 14, 2008, although a finding could be made on the facts of this case that the
$2,000.00 fee arrangement for services relating only to plan confirmation is more appropriate.
An appropriate order will be entered.
cc: 	Debtors
Debtors’ Counsel
Chapter 13 Trustee
United States Trustee
End of Memorandum of Decision
Case 07-20772 Doc 25 Filed 03/26/08 Page 3 of 3