No. 02-84536.United States Bankruptcy Court, C.D. Illinois.
July 14, 2006
OPINION
THOMAS PERKINS, Bankruptcy Judge
This matter is before the Court on the Motion of Bank Austria, (BANK AUSTRIA), for Attorney’s Fees and Costs and the objection thereto of the Debtor, 4 C Solutions, Inc. (DEBTOR). The Motion, which seeks fees of $56,386.50 and costs of $1,148.36, is supported by detailed time records of Freeborn Peters, LLP, BANK AUSTRIA’S attorneys.
In its objection, the DEBTOR contends that the hourly rates are excessive to the extent they exceed the customary rate for the most senior bankruptcy counsel practicing in the Central District of Illinois. The DEBTOR, without focusing on any specific time entry or entries, also contends that the number of hours expended is excessive and that a “considerable reduction in the amount claimed is warranted.”
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With regard to the hourly rate question, a reasonable hourly rate is usually considered to be the prevailing market rate in the relevant legal community for similar services by lawyers of reasonably comparable skills, experience and reputation. In re East Peoria Hotel Corp., 145 B.R. 956, 963 (Bankr.C.D.Ill. 1991). BANK AUSTRIA’S lawyers are located in Chicago in the Northern District of Illinois, while this case is venued in the Central District of Illinois. It is common knowledge that lawyers who office in large cities, such as Chicago, charge higher hourly rates than those whose practices are located in smaller locales. The question presented here may be stated as whether the “relevant legal community” for purposes of establishing the “prevailing market rate” includes Chicago.
For ordinary consumer cases and smaller business cases filed in the Central District of Illinois, the relevant legal community is the population of lawyers with offices in this District. This case, however, was a Chapter 11 Reorganization where BANK AUSTRIA held a claim for several million dollars, as well as an equity interest in the DEBTOR. BANK AUSTRIA was substantially undersecured with a significant piece of its collateral, a partially developed software program, being of speculative value. Freeborn Peters represented BANK AUSTRIA for a lengthy period of time prepetition and were very familiar with the DEBTOR and the complex relationship between the parties. Moreover, the DEBTOR never objected to BANK AUSTRIA’S use of Freeborn Peters until after the case had been fully litigated. Under these circumstances, the Court finds that the relevant legal community includes Chicago, and that Freeborn Peters will be allowed to charge its customary rates.
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With respect to the reasonableness of the fees, the Court has reviewed the detailed fee statement in light of the “Johnson factors” set forth in Johnson v. Georgia Highway Exp., Inc., 488 F.2d 714 (5th Cir. 1974). The problematic factors are (1) the time and labor required, and (2) the novelty and difficulty of the questions. What jumps off the page are the hours billed by Kathleen L. Hobbins, who bills at an average rate of $300 per hour, a partner level rate, although she is shown as “of counsel,” having been admitted to the Illinois bar in 1995. It appears that Neal H. Levin, lead counsel for BANK AUSTRIA, used Hobbins as a contract drafting specialist. Hobbins billed 71.4 hours for a total of $21,420.
Many of Hobbins’ time entries are nonspecific. For example, the entry on March 11, 2004, states she spent 9.6 hours to “work on loan agreement.” Between March 10, 2004 and March 29, 2004, she spent 28.5 hours working on the loan agreement, the notes and the pledge agreement. These documents were a redocumentation of the loan documents in existence when the DEBTOR filed for bankruptcy relief.
Hobbins’ time is excessive for a partner level attorney performing the work she was doing. In the Court’s opinion, Hobbins’ time entries reflect a lack of the efficiency to be expected (even demanded) from a partner level attorney or at least one charging a partner level hourly rate. In this Court’s view, the proper remedy is to allow her time as billed, but at a reduced hourly rate. Sheila C. Zeller, an associate with the firm, who was admitted to the bar in 1997, bills at $225.00 per hour. This rate should be used for Hobbins’ time. Hobbins will be allowed 71.4 hours at $225.00 per hour for a total of $16,065.00, a reduction of $5,355 from the compensation requested.
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In addition, certain time entries reflect billing for what can only be termed “secretarial work.” Secretarial work, including overtime work, is not compensable as part of a professional fee application. In re ThermoView Industries, Inc., 341 B.R. 845
(Bankr. W.D.Ky. 2006). These time entries are excerpted as follows:
These entries have a time value of $669.00 and must be disallowed.
For the foregoing reasons, BANK AUSTRIA’S attorney fees will be approved in the amount of $50,362.50 and expenses in the amount of $1,148.36. This Opinion constitutes this Court’s findings of fact and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052. A separate Order will be entered.
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IT IS SO ORDERED.
ORDER
For the reasons stated in an Opinion entered this day, IT IS HEREBY ORDERED that the Motion of Bank Austria for Attorney’s Fees and Costs is allowed in part and denied in part; Attorney Fees are allowed in the amount of $50,362.50; Expenses are allowed in the amount of $1,148.36.
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