The Justice Department is concerned with the costly attorney's fees that are circulating throughout America. They say that some firms are charging over $1,000/hr. for their services. The irony is that these high costs are being paid by companies that are currently in financial disorder and are trying to finalize a bankruptcy. Last Monday, attorneys were able to press their own case for the high fees at a meeting in Washington. They tried challenging the U.S. Justice Department's U.S. Trustee Program, which is set up to monitor bankruptcies. Currently, the program is concerned with the high attorney's fees and wants to understand why firms are allowing their prices to skyrocket.
A lot of times, when a company wants to file for bankruptcy protection, they need to secure court permission first. During this time, they often have to submit fees and show the costs that an attorney will charge for the filing. The court can approve or deny the expenses that the attorney has submitted. When legal fees are through the roof, it can cause companies to reel backwards. They don't want to pay out exorbitant amounts of money to a lawyer because they don't have a lot of funds to begin with.
The U.S. Trustee Program hopes that law firms can make additional disclosures when they are trying to convince clients to hire them. They suggest that attorneys show rate comparisons that explain what they charge in a specific bankruptcy case and what they would charge in other cases. Then the customer's and potential clients can compare these rates and get a better understanding of whether or not they are getting a good deal. The Program also hopes that attorneys can start their cases by showing client's a budget that outlines exactly how much everyone needs to pay. Be being transparent and honest, they believe that companies will be better satisfied when they have to file for bankruptcy, and not start their debt-free life by accumulating more costs from their legal representation.