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‘Judicial notice’ OK for attorney fee award

A bankruptcy court can be its own authority on the prevailing pay rate for a winning lawyer, according to a new opinion from the 4th U.S. Circuit Court of Appeals.

In awarding $279,090 in fees after upholding the lien priority of Tysons Financial LLC in an adversary proceeding, the bankruptcy court said it could “almost take judicial notice of what are prevailing fees in the Virginia area for bankruptcy-related litigation.”

In scrutinizing fee awards, the 4th Circuit has been known to reverse awards where the only evidence from the winning party was her own lawyer’s affidavits, according to Judge Allyson K. Duncan, who write the panel’s June 8 unpublished opinion in Bank of NY Mellon Trust Co. NA v. Tysons Financial LLC. But this is the appellate court’s first look at whether a bankruptcy court may consider its own expertise to determine the reasonableness of a lawyer’s fee request.

Citing cases from the 2nd, 10th and 11th Circuits, Duncan said bankruptcy courts, in certain circumstances, are “particularly qualified to determine the reasonableness of fess based on their own expertise.” Here, the bankruptcy judge had specific comparators in recent, similar cases, and did its own analysis of whether Tysons had claimed certain overhead expenses as costs and whether some issues were “overlawyered.”

Duncan also had no problem with the fact that Tysons’ lawyer, Gabrielle Duvall, was not admitted to the Virginia bar. The court did not abuse its discretion in making the fee award, the panel held.

By Deborah Elkins

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