On October 25, the Tenth Circuit Court of Appeals upheld lower court decisions that drastically reduced the fees awarded to a financial consulting firm retained to represent a group of unsecured creditors in a bankruptcy proceeding. Houlihan, Lokey, Howard & Zukin Capital ("Houlihan") had requested fees totaling $1,920,967.74; the Bankruptcy Court ultimately awarded $904,000. As part of its retention agreement, Houlihan and the unsecured creditors had agreed to a monthly fee. However, when it approved Houlihan's employment, the bankruptcy court had imposed a requirement that Houlihan's actual fees would be subject to final court approval and that Houlihan would be required to produce time records to justify its fees. Houlihan had acknowledged that it was bound by the court's prior orders requiring professionals to keep time records. When the time came to file fee applications, Houlihan sought payment based on the monthly fee amounts and did not initially provide hourly time records. Ultimately, the bankruptcy court established its own hourly rates for Houlihan's professionals and awarded fees it considered reasonable. It did so in part by looking at fees charged by other professionals in the case. On appeal, Houlihan argued that the superior skill of its professionals and the value of the services they provided could not be compared to those of other professionals involved in the case; that flat monthly fees were standard in the marketplace and that the bankruptcy court had impermissibly altered its fee arrangement. The Bankruptcy Appellate Panel for the Tenth Circuit, and ultimately the Tenth Circuit Court of Appeals itself, rejected these arguments. The Tenth Circuit held that the Bankruptcy Court was within its power to require Houlihan to track hourly billing and submit fee applications that could be compared with those of other professional involved in the case and, absent those records, to perform its own calculation of reasonable hourly rates. http://pacer.ca10.uscourts.gov/pdf/03-5161.pdf Mac