What is the cost for bankruptcy today? Is there cheap bankruptcy for American debtors? Any low cost bankruptcy in affordable range? Today, as Americans are rightly outraged over the AIG Bonus and Excessive Corporate Compensation issue, the American Bankruptcy Lawyers’ show no hint of showing responsibility or sacrifice as they reportedly continue to demand and collect $1,000-per-hour fees for corporate bankruptcy work!
With the hard economic times and high unemployment in the nation, and many Americans, individuals as well as businesses, increasingly hurting, the central economic issue for many Americans is cost for bankruptcy, a sacred right conferred by the Constitution. Do we all, perhaps, have to “Go to Law School” in order to make out well as debtors and consumers in the current Economy?
Reacting to the bankruptcy lawyers’ charge of $1,110-per-hour fee in a Chicago case liquidating the then giant United Airlines, one outraged Chicago reporter, Knight Ridder, dished out this advice to the workers who lost their jobs in the bankrupt airline: “in your next lives, go to law school.” (“UAL’s Bankruptcy Lawyers Document a Feast of Fees,” Tribune News, March 5, 2003).
Bankruptcy has recently been called “America’s [current] growth industry” by the British Times newspaper. At a time in which almost every other industry in the United States, in deed in the whole industrialized world, is experiencing massive economic burst and employment lay offs, the British paper noted, American “Lawyers who specialize in representing failed businesses are a hot commodity.” (See Citation 1 below at the end of this article). That may be great for the bankruptcy lawyers’ pocket book. But what about the rest of America, particularly if you’re so hard pressed that you have to file for bankruptcy? How much will it cost for bankruptcy? low-cost bankruptcy
One American bankruptcy lawyer, Jason Kilborn, wrote in a CreditSlips.com piece characterizing the English newspaper report as “U.S.-bankruptcy-lawyer envy” by the British lawyers which, he said, “is doubly powerful, as even bankruptcy lawyers there are not as high-profile as in the U.S.” He noted, however, that even “here in the U.S. lawyers in other areas [of legal practice] must be eyeeing their bankruptcy counterparts with envy, as our sector enjoys (if we can use that word without multi-directional guilt!) rapid growth while other areas are contracting,” concluding by appealing to his fellow American bankruptcy lawyers to “let us U.S. bankruptcy lawyers try not to be too smug (for the humor impaired, yes, this is a little joke!)” about their unique standing as a virtual lone professional ‘growth industry’ in the midst of economic wreckage and devastation in the nation and the world.
In point of fact, Mr. Kilborn and his fellow American bankruptcy lawyers actually have pretty plenty to be apologetic for to the American people, and a lot of explaining yet to do. “Corporate greed” for the AIG and Wall Street executives, right? What about “bankruptcy lawyers greed”? Or the bankruptcy lawyers’ excessive selfishness, opportunism and lack of sacrifice, for such remarkable conduct that this legal specialty has so amazingly displayed as major professional players in the current American economic crises! Not the least of these being that, to date, the legal profession are yet to provide legitimate low-cost alternative bankruptcy filing system to the lawyers’ high cost bankruptcy system, and a system that brings bankruptcy on the cheap to debtors and readily within their reach.
Somewhat remarkably, it’s something that has somehow managed to escape the general public or media scrutiny, or even attention, that it clearly ought to attract. One of the most recent cases frequently cited by experts in such discussions, relates to the lawyers’ liquidation work on the now bankrupt airline giant, the United Air Lines. This is the case involving the UAL’s Chicago-based outside law firm, Kirkland & Ellis, that is reportedly the first case that “broke through the $1,000-an-hour barrier” in legal fees, as its charge in that case was an hourly fee of $1,110 to liquidate the UAL in bankruptcy.
It was a fee whose magnitude prompted another reporter in a more recent bankruptcy case, to call the fee of $950 per hour charged by the New York law firm of Weil, Gotshal & Manges in the largest American bankruptcy case in history, the Lehman Brothers Holdings Inc case, to “look cut-rate and a mere” paltry sum. Recent reports about exorbitant bonuses taken or planned by the executives of wealthy but troubled institutions like the Lehman Brothers, the AIG, the automobile companies and others, has sparked a gradual groundswell of political and public outrage and condemnation across America about excessive lifestyle by corporations, and exorbitant compensation and “corporate greed” by business executives. (See Citation 2 below).
But where has similar outrage been by the Washington and local politicians and the public – or the reportage about it by the media – against the outrageous $1,000-plus-an-hour fees charged by bankruptcy lawyers in corporate bankruptcy work? Or, a similar outrage against the equally outrageous average fee of $2,000 to $2,500 that lawyers charge struggling debtors in the simplest types of Chapter 7 personal bankruptcy cases?
President Barack Obama has publicly called such conduct ‘shameful.’ And, since the latest story broke public condemnation, with well-publicized public demonstrations and protests at AIG offices and the homes of most recently about the attempt of the AIG executives to parcel out fat bonuses of some $160 million or so to their workers, prominent American politicians, from President Barack Obama to members of Congress, Democrats as well as Republicans, have taken turns to rush before the camera and to the airwaves to denounce and condemn the “corporate greed and thievery” of America’s business executives and institutions in high places. And even the general public have joined the parade of its executives in Connecticut. A common refrain by the protesters and persons who condemn such predatory conduct as to what particularly enrages, is that it is simply outrageous and intolerable for persons or institutions in positions of privilege or advantage to “exploit the misery” of Americans in vulnerable situations who are unable to meet their routine financial obligations in the current depressed economic conditions (e.g., landlords against tenants, mortgage lenders against home buyers, and the like), and live lives of opulence or extravagance even as the poorer and less fortunate Americans are mired in suffering and hardship.
That’s all fine and proper, and very much welcome. But, a central question: IN THE INTEREST OF AMERICAN FAIRNESS, EQUAL OPPORTUNITY AND EQUAL TIME, WHERE IS THE OUTRAGE AND PROTEST FOR A SIMILAR CONDUCT BY THE BANKRUPTCY LAWYERS IN AMERICA? Where is some bankruptcy on the cheap for cash strapped American debtors?
For most Americas seeking bankruptcy, the crucial impediment is cost for bankruptcy. How much will it cost for bankruptcy. Yet, in terms of personal bankruptcy of the Chapter 7 and Chapter 13 types, for example, which are the bankruptcy domain in which primarily you find the poorer and the less privileged and more voiceless classes of the society, it has been estimated by experts that at least the same 1.1 million or so debtors in number who filed bankruptcy in 2008, additionally wish to file for bankruptcy, but fail to do so merely because they’re not able for afford the legal fees required for filing one. Putting it very simply, these are, in effect, Americans who are deprived, each year, of filing for bankruptcy – to legitimately exercise a special constitutional right of citizenship – to relieve themselves of their debt burden. And why? Primarily because of, and out of, the financial greed and selfishness of the personal bankruptcy lawyers. No less than the AIG executives and corporate executives who are, and quite understandably so, the recipients of the outrage and condemnation of the politicians and the public today.
We may, perhaps, have come to the time when the American people will have to demand and insist, under the threat, perhaps, of public protests and demonstrations, that, particularly in the current economic crisis, the legal fees charged by the nation’s bankruptcy lawyers for personal as well as corporate bankruptcy, be drastically brought down and capped – just like the famous Wall Street executives and others for whom such a policy has been advocated by President Obama and several members of Congress. Or, at the very least, the President, the members of Congress and the American public – as well as the media – should begin publicly to call attention to, and point a finger of shame and condemnation at, the bankruptcy lawyers. In either case, it will require a visibly enraged class of debtors, the American general public, and even creditors, and a sensitive but courageous class of politicians truly sensitive about the role of such exorbitant legal fees by bankruptcy lawyers in further compounding and worsening the already deep economic hurt of the debt-burdened Americans and American companies already swimming in deep, deep debt burdens in the current economic recession.