Leslie Wayne Lish and Christine Emma Lish

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U.S. Bankruptcy Court
District of Idaho

Filed: 3/10/2004

At: 4:00 p.m.

By: dh

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF IDAHO

In Re:
Bankruptcy Case
LESLIE LISH and EMMA No. 03-04400
LISH,
Debtors.
MEMORANDUM OF DECISION
Appearances:

Gary L. McClendon, Esq., Attorney for the U.S. Trustee,
Boise, Idaho.

Introduction
Apparently, some lessons arc truly hard learned.
Debtors Leslie and Emma Lish, residents of Bliss, Idaho, filed a
Chapter 7 bankruptcy case on December 4, 2003. Docket No. 1. Their attorney is

Hyong Pak (“Counsel”). As revealed by his Fed. R. Bankr. P. 2016(b) disclosure,

MAD TIA
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Docket No. 2, Counsel charged Debtors $500.00 for his services, which he
received before filing the bankruptcy petition.

On March 2, 2004, the Court conducted a hearing concerning the
U.8. Trustce’s Motion for Review of Professional Compensation (the “Motion”),
filed on February 2, 2004. Docket No. 11. The Motion challenges Counsel’s
attorney fees in this case. The attorney for the U.S. Trustee appeared and
participated at the hearmg, but to the Court’s surprise, given the subject matter of
the Motion, Counsel did not appear. Presumably, Counsel intended that the
Affidavit he and his clicnts executed and filed would serve as his response to the
Motion. Docket No. 16. At the conclusion of the hearing, the Court took the
issues raised by the Motion under advisement on the basis of the written record.

The Motion compels the Court to revisit an unfortunate, but all-too-
familiar topic of late: whether Counsel has satisfied his duty to adequately
represent his clients and, in doing so, whether Counsel has complied with the
applicable bankruptcy rules and laws. What follows are the Court’s findings of
fact and conclusions of law, and its disposition of the Motion. Fed. R. Bankr. P.

7052; 9014,

MEMORANDUM OF DECISION - 2

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Facts

The material facts are simple enough, Counsel originally agreed
with Debtors, and then represented to the Court in his Rule 2016(b) disclosure, that
he would provide, among other services, “[r]cpresentation of the debtor[s] at the
meeting of creditors ....” Docket No. 2. As it turned out, Debtors appeared at the
creditors’ meeting, as required by 11 U.S.C.§ 341(a), in Boise on January 15,
2004, alone and without representation. Why? The words of the Affidavit
explain:

. ..[C]ounsel instructed the debtors that the counsel has
a previously scheduled administrative hearing
regarding worker’s compensation in Twin Falls, Idaho,
beginning at 10:00 o'clock am. [sic] As such,
[Counsel| informed the debtors that he will try to make
it to the mecting [of creditors] if the hearing gets out in
time. If not, debtors were informed of their decision to
cither continued [sic] the creditors meeting to a later
date with counsel present or to have the creditors
meeting without counsel so debtors don’t have to make
the trip to Bosc from Bliss, Idaho;

...[C]ounsel for the debtors did not gct out of the
administrative hearing . . . until approximately 12:15
pm [sic], which made it impossible for counsel to make
it to the creditors mecting scheduled for 1:00 pm [sic];

... [T]he debtors after discussing the proceeding and
the bankruptcy matter in [sic] length with counsel prior

MEMORANDUM OF DECISION - 3

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to the scheduled creditors meeting decided to follow

through with the creditors meeting since debtors were

well informed of their choices and the procecding.

Affidavit, [J 7-9, Docket No. 16. Restated simply, while Counsel had agreed to
appear at the § 341(a) meeting, and told the Court he would do so, Counsel alleges
it was “impossible” for him to attend the meeting because of his scheduling
conflict. After discussing his dilemma with Debtors, they collectively decided that
if Counsel could not appear, Debtors would attend anyway and “go it alone” at the
creditors’ meeting. And that’s what they did.

Disposition

As pointed out by the U.S. Trustee’s Motion and arguments at the
hearing, there are serious flaws with Counsel’s position. His conduct in this case,
not to mention his approach to the U.S. Trustee’s Motion, justify a close review of
his fees in this case for scveral reasons,

First, a debtor’s attomey always bears the burden of proving that his
or her fees are reasonable in light of the services provided. 11 U.S.C. § 329(b): In
re Jordan, 00,1 LB.C.R. 46, 47-48 (Bankr. D. Idaho 2000) (citing In re Dale's
Crane, Inc., 99.1 1.B.C.R. 8, 8 (Bankr. D. Idaho 1999) and Jn re Ferreira, 95

1.B.C.R. 282, 283 (Bankr. D. Idaho 1995)). The Bankruptcy Court is granted

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broad discretion by the Code in determining reasonable compensation. Law
Offices of Nicholas A. Franke v. Tiffany (In re Lewis), 113 F.3d 1040, 1045 (9
Cir. 1997); Neben & Starrett, Inc. v. Chartwell Fin, Corp. (in re Park-Helena
Corp.), 63 F.3d 877, 882 (9" Cir. 1995); see alsa In re Larson, 1.B.C.R. _,
Case No. 03-02488, Docket No. 63, Mem. of Decision (Bankr. D. Idaho Feb. 4,
2004).

Based upon the written record (which is all there is to consider here),
what services did Counsel provide for Debtors? The Court is comfortable in
assuming that Counsel completed Debtors’ bankruptcy schedules and statements
found in the Court’s file. Presumably, he also counseled them, to some unknown
extent, about the bankruptcy law and their rights and duties. However, no further
specifics detailing Counsel’s services can be gleaned from the papers in the
Court's file. Because of this, the Court cannot reliably conclude that $500.00
constitutes a reasonable fee for Counscl’s services in this case. Given the law

summarized above, Counsel’s apparent decision not to provide more information

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to the Court about his services, cither in writing or by appearing at the hearing on
the Motion,' surely seems unwise.

Second, while Counsel had several potential solutions to resolve his
scheduling conflict,” Counsel’s options did not include sending his clients
unrepresented to the § 341(a) mecting. As Judge Myers thoughtfully and
comprehensively explained several years ago in Jn re Castorena, 270 B.R, 504

(Bankr. D. Idaho 2001), a decision that has been widely cited and surely must be

' Counsel failed to contact either the Court or U.S. Trustee regarding his absence
from the hearing on the Motion. Perhaps Counsel had a conflict in his schedule which
made it “impossible” for him to attend. Under the circumstances, the Court can only
speculate about the reason for his absence.

* These alternatives scem almost too obvious to mention but, for example,
Counsel could have, in advance, requestcd that the U.S. Trustee continue the creditors’
mecting to a different date so that he could attend with his clients. Counsel apparently
made no such request. Counsel could have helped his clients retain substitute counsel to
appear for them at the mecting, perhaps off ering a partial refund of his fee to pay another
attorney. While there are obvious disadvantages to this approach, Debtors would likely
have been better off than appearing with no atlorey al all. This course is not mentioned
in the Affidavit, which suggests to the Court that Debtors and Counsel did not consider it.
Finally, the Affidavit also does not discuss whether Counsel considered asking that his
worker’s compensation hearing be rescheduled. Tn not addressing this possibility,
Counsel perhaps implicitly asks the Court to assume that it was more important for him to
attend the state administrative hearing than to participate in the bankruptcy procecdings.
That's asking too much. Counsel’s client in the worker’s compeusation case and his
clients in this bankruptcy case all deserve representation, and it Counsel’s professional
obligation to resolve scheduling conflicts and ensure his clients are adequately
represented,

MEMORANDUM OF DECISION - 6

Cc

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familiar to an experienced Idaho bankruptcy attorney such as Counsel, when an
attorney accepts an engagement to represent debtors in a bankruptcy case, the
attomey tmplicitly assumes certain fundamental, “core” professional obligations.
270 B.R. at 530. Among the core obligations is the attorney’s attendance and
representation of the debtors at the creditors’ meeting, Id. As the Court observed
in Castorena, and as the Court ratifies again herc, attempts by debtors’ attorneys to
send clients into bankruptcy court unrepresented are “unacceptable and rejected.”
/d. Without the offer of a better explanation by Counsel, his decision to send his
clients to the § 341(a) mecting alone because it was inconvenient for him to attend
was misguided and irresponsible.

There is another problem with Counsel’s conduct in this case.
Recall, he filed a Rule 2016(b) disclosure which detailed both the amount of his
fees and the services he had agrecd to provide to Debtors. Docket No. 2.
According to the Affidavit, Counsel and his clients later decided to modify that
agreement by “excusing” his appearance at the creditors meeting, albeit without
any reduction in his fee. Under the Rule, a “supplemental statement shall be filed
and transmitted to the United States trustee within 15 days after any payment or

any agreement not previously disclosed.” Fed. R. Bankr. P. 201 6(b) (emphasis

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added). No supplemental disclosure to reflect Counsel’s change in the terms of his
representation agreement has been filed in this case, not even after the U.S.
Trustee’s Motion called into question the propriety of Counsel’s fees. The failure
to comply with this Rule by itself, even where inadvertent, is an adequate basis for
this Court to reduce or deny Counsel’s fees. See In re Park-Helena Corp., 63 F.3d
at 882 (“Even a negligent or inadvertent failure to disclose fully relevant
information may result in a denial of all requested fees.”), This is yet another
example of Counsel’s lack of diligence in doing his job.

Representing clients in a bankruptcy case requires an attorney to be
knowledgeable and conscientious, Counsel is presumed to know the law and the
duties it imposes upon him, duties which must be fulfilled if he intends to
represent debtors in Bankruptey Court. If he takes the high road, Counsel can
comunand a fee for his services commensurate with these obligations. If his
conduct leaves his clients’ interests unrepresented, Counsel should expect no such

feo,"

7 As this Court has observed, if a lawyer fails to assume and satisfy the
professional obligations of representing debtors in a bankruptcy case, the attormney’s
services should be valucd at a level comparable to that allowed to nonlawyer bankruptcy
petition preparers. See, generally, Castorena, 270 B.R. al $23-531 (discussing the
perhaps insoluble challenges associated with attempts by some attomeys to significantly

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Counsel may feel the Court is over-reacting to his conduct in this
casc. Lo be clear, the Court does not assume that Counsel routinely sends his
bankruptcy clients to court “bare,” nor regularly disregards his duty to personally
appear at creditor’s meetings and represent their interests, as was the case in
Castorena. Even so, the Court is unwilling to reward Counsel’s poor judgment in
skipping Debtors’ § 341(a) meeting, or to condone his cavalier defense to the U.S.
Trustee’s Motion in this case. It is Counsel’s burden to show the Court that he has
satisfied the standards set by the Rules and the Code, and to justify the amount of
his fees. The abbreviated showing made in the Affidavit, coupled with Counsel’s
failure to appear and participate at the hearing concerning the U.S. Trustee’s
Motion, constitute ample reason for the Court’s decision in this case to ordct that
Counsel promptly refund all but $100.00 of the fees he collected from Debtors.

The U.S. Trustee’s Motion will be granted to the extent discussed
above by separate order. While thc Court has attempted to make its attitudes

toward these issucs evident in past published decisions, hopefully the hard-learned

limit services to bankruptcy debtors, yet still chargc substantial fees.); dn re Doser, 02.3
L.B.C.R. 123, 132 (Bankr, D, Idaho 2002) and In re Bush, 02.1 LB.CR. 63, 70-71
(Bankr. D, Idaho 2002) (both suggesting a range of $20 to $25 per hour as an appropriate
charge for the clerical-type scrvices performed by bankruptcy petition preparers).

MEMORANDUM OF DECISION - 9

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lesson in this case wil] serve as additional food for the thought of all those who

undertake the serious obligations of representing ors in bankruptcy cases.

DATED This 10" day of Mar

JIMD.PAPPAS \_/ A

CHIEF U.S. BANKRUPTCY JUDGE

MEMORANDUM OF DECISION - 10

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CERTIFICATE OF SERVICE

I, the undersigned, hereby certify that I served by the method
indicated below, a true copy of the document to which this certificate is attached,
to the following named person(s) at the following address(es), on the date shown
below:

Gary L. McClendon, Esq.
gary meclendon@usdo].gov

Via Email

Hyong K. Pak, Esq.
P. O. Box 2397
Twin Falis, Idaho 83303

Via U.S. Mail

Note re E-mail service: A "pdf" version of the above decision/order was electronically transmitted to the
parties indicated above, Email service is provided as a courtesy only upon request of a party, To review an
electronic image of the original of this document, or to subscribe for email service of future decisions/orders
from the Bankruptey Judges, please access the Court's Intemct web site, www.id uscourts gov

CASE NO.; 03-04400 CAMERON 8, BURKE, CLERK
U.S. BANKRUPTCY COURT

I. Ch Lehre

DATED; March 10, 2004 By Diane Hutchinson, Deputy Clerk

MEMORANDUM OF DECISION - 11