Turnaround guru calls for cap on legal fees in Chapter 11 cases
Posted Apr 22, 2013 07:50 pm CDT
Fees should be capped for the lawyers who represent companies in Chapter 11 bankruptcies, and they should not be paid at all for pursuing “outlandish” theories, a turnaround guru told attendees at a Friday program.
Speaking at a Maryland meeting of an American Bankruptcy Institute commission that is studying Chapter 11 reform and could potentially rewrite bankruptcy law, billionaire Wilbur Ross said the current system overpays attorneys for “hyperactivity,” Reuters reports.
Instead of encouraging lawyers to litigate over far-fetched theories and engage in “terrorist tactics” to try to obtain money for their clients, bankruptcy law should provide a modest schedule of legal fees which attorneys could exceed if they could prove they added value, Ross suggested.
“Bankruptcy professionals undoubtedly will be unhappy with this proposal,” he said.