Joint Administration Case Nos. 02-43428-11.United States Bankruptcy Court, D. Kansas.
July 16, 2004
ORDER PARTLY APPROVING AND PARTLY DENYING FOURTH INTERIM APPLICATION BY SPENCER FANE BRITT AND BROWNE, LLP FOR ALLOWANCE OF COMPENSATION FOR SERVICES RENDERED AND REIMBURSEMENT OF ACTUAL AND NECESSARY EXPENSES INCURRED FOR THE PERIOD JANUARY 11, 2004 THROUGH APRIL 30, 2004
JANICE M. KARLIN, Bankruptcy Judge
This matter comes before the Court upon the Fourth Interim Application by Spencer Fane Britt and Browne, LLP (“SFBB”), Counsel for Unsecured Creditors’ Committee, for Allowance of Compensation for Services Rendered and Reimbursement of Actual and Necessary Expenses Incurred for the Period January 1, 2004 through April 30, 2004 (the “Application”). The Court, after being duly advised in the premises, and after noting that no objections have been filed, finds that the Application should be approved, except in the amounts, and for the reasons, noted below.
Paraprofessional time and hourly rate
Use of paralegals can be especially value when they can render certain legal services, such as the research of legal issues or drafting legal pleadings, at less cost than if those same services were performed by an attorney. The Tenth Circuit Court of Appeals has acknowledged the “widespread
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custom of separately billing for the services of paralegals. . . .,”[1] and requires courts to scrutinize the reported hours and the suggested rates in the same manner it does for lawyer time and rates.[2] The Supreme Court has also noted that “[p]urely clerical or secretarial tasks should not be billed at a paralegal rate, regardless of who performs them.”[3] This is obviously especially important in bankruptcy cases, because every dollar spent on legal services is a dollar less for the creditors.[4]
If the services performed by a paraprofessional consist of typing, data entry, checking court dockets or court dates, manually assembling, collating, marking, processing, photocopying or mailing documents, organizing files, making copies, delivering or mailing papers, or making or receiving routine telephone calls, the task is clerical in nature and not compensable. Such tasks are traditionally charged to overhead and included in the professionals’ hourly rate, as they can and should be performed by competent legal secretaries without additional charge to the client.
In this fee application, SFBB is seeking reimbursement for work done by paraprofessional D.C. Katsulis at rates between $105 and $120.56 per hour. Below is a list of the work billed by SFBB for Katsulis’ time which, without more complete information, appears to be secretarial in nature:
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The Court is well aware that some work that may appear to be clerical may not necessarily be so. Without an explanation of why the services were delegated to a highly paid paralegal, instead of being absorbed in the firm’s overhead by a competent legal secretary, however, the Court must require the applicant to carry its burden of proof regarding the reasonableness and necessity of the services, at the rate requested, as it must in every other area of its fee application.[11]
The hourly rate being requested for this paralegal is equal to the rate charged by some licensed lawyers in this Court, and thus this Court has some concern whether $120/hour is truly a reasonable rate
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for a paraprofessional.[12] Because neither the U.S. Trustee nor any other party has objected to this rate, however, this Court will not at this time find the rate to be unreasonable.[13]
Instead, this Court will require that SFBB, and all other counsel, fully and completely justify the time spent at such a rate. Where a fee application requests compensation for a paraprofessional’s work, that individual’s experience and qualifications should be noted on the first fee application in which the request appears. This Court has been unable to find that information for this paralegal.
Accordingly, the Court will at this time disallow $2,913.21 of the SFBB fee application, which is the amount attributable to tasks which appear, without more information, to be properly handled by a legal secretary, and attributable to overhead. Because this is the Court’s first opinion on the issue of paralegal time, however, and because no party objected to the fee request, the Court will deny this $2,913.21, without prejudice. If fees for services herein disallowed were in fact services that required special training or education and experience, or the exercise of professional judgment not expected of a competent legal secretary, SFBB may submit to this Court an affidavit, with a Supplemental Fourth Application, of those tasks which it contends should be compensated at the paraprofessional rate, with a thorough explanation of what tasks were performed, and why they should be compensated at a
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paralegal rate instead of being absorbed as part of overhead. If such a supplement is to be filed, it shall be filed by August 5,2004, at which time the Court will determine if any of the $2,913.21 should, in fact, have been allowed, had an adequate description of the services, and the skill and training of the paralegal, been earlier provided.
IT IS, THEREFORE, ORDERED that the Application is hereby approved in the amount of $13,112.54 for services. The sum of $2,913.21 is disallowed, without prejudice, as noted above. Because no party entered an objection to this fee application, and thus SFBB was deprived of presenting evidence that it is entitled to reimbursement of these amounts for these services, the denial of these amounts is without prejudice to SFBB submitting a renewed request for these amounts, accompanied by an appropriate affidavit(s) explaining why it should, in fact, be awarded these sums as reasonable and necessary fees. Any such supplemental fee application shall be filed by August 5, 2004.
IT IS, FURTHER, ORDERED that the captioned Debtors are hereby authorized to release and direct payment to SFBB the sum of $13,112.54 for services rendered by SFBB on behalf of the Committee for the period January 1, 2004 through April 30, 2004, for which SFBB has not been paid; and
IT IS, FURTHER, ORDERED that the captioned Debtors are hereby authorized to release and direct payment to SFBB the sum of $245.33 for expenses incurred by SFBB on behalf of the Committee for the same period, for which SFBB has not been paid.
IT IS SO ORDERED.
(Bankr. N.D.N.Y. 1997).
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