IN RE BURNS

WESLEY W. STEEN, United States Bankruptcy Judge

Counsel for Ben Floyd, Trustee, filed a second application for compensation in this case (docket #66). The application was served on the U.S. Trustee, but not on the other parties on whom service is required under BLR 2016(e). I denied the application, without prejudice, for want of proper service.

Counsel has now filed a Motion for Reconsideration (docket #71). In that motion, Counsel suggests that the I should reconsider and should approve the fees requested. Counsel does not contend that she served the application as specified in BLR 2016(e). Counsel argues that she intended an alternative method of compliance:

Other courts in the Houston Division, including this Court in the past, have deemed this requirement satisfied if the applicant serves a notice after the hearing date has been set by the Court.

Counsel also states

If, like the court in the Corpus, McAllen and Brownsville divisions, this Court now directs that all fee applications be noticed when filed, so that an Order may be entered without hearing after the `negative notice' period under BLR 9013, the Firm respectfully requests instructions to this effect.

General Explanation of Procedures and Rules

There appears to be no provision in the local rules that establishes the procedure suggested by Counsel, that is, for Counsel to delay notice of her fee application so that she can send a single notice which includes both notice of the fee application and notice of the hearing. I would read BLR 2016(e) to require that the application be noticed immediately when the application is filed. First, there is no suggestion that notice can or should be delayed. Second, the rule incorporates BLR 9013(b) language that sets deadlines for objections and suggests that an order may be entered without a hearing if there is no objection. Third, subparagraph (f) appears to contemplate a hearing only if objection is filed, since it refers to "hearing on such objection." Fourth, the provision for notice of the application (BLR 2016(e)) is separate from the provision for notice of the hearing (BLR 2016(f)). The rule does not say that counsel may delay notice of the fee application until the court issues an order for a hearing.

I do not know whether delaying notice of fee applications is the general practice in the district. But those who follow "general practice," in lieu of written rules, do so at their peril. The Court has demonstrated its willingness to change procedures for the benefit of the bar and the public. Counsel suggests good reasons why the procedures might be changed. Counsel might want to ask the Court to change the rule to adopt the procedure she favors. Until and unless the rules are changed, however, the written rules prescribe how things must be done. The fact that an alternative procedure may be successful in some situations does not mean that it will suffice in other situations.

More specifically, the informal procedure of sending a single notice, including the notice of hearing, will not suffice in this case because no hearing was ever set in this case. I was waiting to see whether a hearing was necessary. Although a judge may set a hearing in any contested matter, Bankruptcy Code § 102(1), implemented by BLR 2016 and 9013, suggests that there need not be a hearing unless there is an objection.

Upon my appointment, I adopted my predecessor's practice to set all fee applications for hearing. But I soon became concerned that this procedure was unnecessarily expensive and drawn out. First, there were substantial delays. The application was filed and perhaps a month ran before the Court issued an order for hearing. Then, an additional month or so probably elapsed while the applicant was notified of the hearing date and gave notice of the hearing date to appropriate parties. Adequate time had to be allowed for those parties to receive the notice and to respond before the hearing. It was not unusual for 60 or more days to elapse between the time that the application was filed and the date that a hearing was held and a ruling was issued. Second, there was substantial docketing and work for the Court. The clerk had to docket the application, had to docket notice of the application, had to issue an order for hearing, had to docket that, had to calendar the hearing, had to docket notice of the hearing, had to pull the file for hearing, had to enter a minute entry from the hearing, and had to issue and enter an order from the hearing. That is ten events when, generally, only two or three are usually required. Third, the applicant was required to prepare for the hearing and to attend the hearing. Even assuming minimal preparation and travel time from the office to the court, at least several hours were involved, at a cost of many, many dollars to the estates.

Two changes substantially reduce these burdens and expense. First, benchmarks for expense reimbursement requests, although not perfect, substantially reduce the variation in fee applications. The Court need only hear applications when the applicant suggests that the benchmarks are not appropriate to that case. Second, once the expense reimbursement issues became generally understood, hearings were not required at least in division H2, in the vast majority of cases. Almost never is there an objection to the fee application and most applications are well-prepared and documented. The Court can rule from the pleadings. In such situations, requiring counsel to prepare, to travel to the courthouse, and to charge the estate for a hearing on a fee application was wasteful since there was no controversy to be heard.

Consequently, I adopted a policy in division H2 of not conducting hearings on fee applications unless (i) an objection is filed, or (ii) after review of the application I conclude that I cannot rule from the pleading. Therefore in most situations, I can rule on the application in less than half the time (which benefits counsel), with less administrative expense for the estate, and with at least 75% less burden on the clerk's office. Occasionally (because of vacations or a heavy docket) it takes longer. But the goal is to rule in 30 days or to set a hearing within that time with notice to counsel concerning the issues to be addressed.

I believe that the local rules, as written, accommodate this procedure. But the procedure requires that counsel conform with the written rule, not with what may be acceptable under other circumstances.

It should be clear that this does not mean that fee applications will be approved as requested if there is no objection. Each fee application is reviewed in chambers. If there is no objection and if the Court's review indicates that it should be approved based on the pleadings, then it is approved. Sometimes there are minor changes; in those situations the Court issues an order and Counsel has the right to seek reconsideration if Counsel disagrees with the Court's ruling. If the Court has major concerns, the Court will schedule a hearing.

This process results in much faster rulings, requires less work by Counsel and by the clerk's office, and saves substantial fees to the estates.

Specific Explanation Regarding Counsel's Second Application

Specifically, the Counsel's pleading is entitled Motion for Reconsideration. However, it asks the Court either (i) to set a hearing on its fee application, or (ii) to instruct her to notice all fee applications when filed. The Court declines to set a hearing at this time, because the Court sees no need, yet, for a hearing. With respect to the alternative request for relief, the Court sees no need to instruct Counsel to comply with the local rules, as written. Therefore, the motion is denied.

The Court notes that the second fee application was denied without prejudice.

Motion to Uphold the Court's Order is Granted

Debtor filed a Motion to Uphold the Court's Order (docket #72). That motion is granted, for the reasons set forth above. However, as noted above, the second fee application was denied without prejudice.