US bankruptcy lawyers will have to declare how they bill clients under new rules overhauling bankruptcy law from the US Department of Justice in a move to control bankruptcy costs, reports Reuters. The lawyers will have to explain any changes to their hourly rates and will be asked to provide rough budgets, according to guidelines released by the US Trustee Program.
Legal fees must be explained
The guidelines are applicable for companies with more than $50 million in assets and £50 million in liabilities. With legal fees the first to be paid out of a corporate estate, the new rules will force lawyers to explain how they are billing and make them disclose budgets which must be adhered to or a suitable explanation offered. Currently the guidelines, which courts are not legally obliged to follow, only apply to law firms and not yet financial advisors or others.
According to Reuters, the controversial move has angered law firms with one, Foley & Lardner quoted as calling it ‘excessive micro-management.’
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