Tishgart v. Hoffman (In re Tishgart), BAP No. 12-1160-PaMkH, — B.R. — (9th Cir. Nov. 13, 2012)
After filing for chapter 7 bankruptcy, Tishgart, an attorney-debtor, received over $130,000 in contingent legal fees in fifteen cases. The trustee brought an adversary proceeding to determine the estate’s interest in the post-petition fees, wherein the bankruptcy court deemed Tishgart to have admitted that he provided little or no legal services in those cases after entering bankruptcy. The bankruptcy court analogized the facts of the case to a situation where Tishgart’s clients had terminated his legal services as of the petition date. On that basis, the court surmised it would be justified to award nearly everything to the trustee, but ultimately allowed the debtor to retain half, "in the spirit of fairness."
On appeal, Tishgart argued that the trustee was entitled only to the number of pre-petition hours actually worked on those cases, at his billable rate. The BAP addressed California jurisprudence on property interests, and rejected the notion that the value attributed to pre-petition and post-petition services is quantifiable by the billable hour. Rather, the BAP maintained that courts must look beyond the number of hours worked and consider factors like results achieved. The BAP affirmed the bankruptcy court’s ruling, finding that Tishgart was not prejudiced by keeping only 50% of his post-petition fees.
Author’s Comment: The Tishgart opinion provides a nice theoretical discourse of property rights as it relates to the value of services, and provides greater room for chapter 7 trustees to link post-petition payments to pre-petition services and increase their ability to recover for the estate.