What a scam! I'm sorry to hear that someone in our profession acts like this.
While a limited scope of engagement for an attorney is possible in a Chapter 7, that kind of limit is just redicilous and I too would complain both to the state bar and the united states trustee!
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The 341 hearing is VERY important. I suggest you have an attorney there with you. I find this a little strange because here, in the District of Oregon, when an attorney prepares & files the petition he/she is required to also attend the hearing with the debtor, and the attorney fee includes all this work.
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This is shocking to me. In Massachusetts, where I practice, an attorney is required to attend the 341 meeting with his client -- it's all part of the fee we charge. I suggest complaining to the United States Trustee about this, because you should have the assistance of your attorney at the meeting.
At the risk of receiving more outrage and further shocking other attorneys here, I would like to offer another perspective: I charge a flat fee for all of the bankruptcies that I handle. The flat fee varies depending on if it is a Chapter 7 or 13, individual or joint, involving ownership in a corporation or other business, etc. All of the flat fee amounts I charge already have built into them the cost for me to personally appear with the client at the 341(a) meeting as part of the service, and the total flat fee is paid in full prior to filing the BK. However, occasionally I will have a client who is having a very difficult time coming up with the full flat fee retainer amount. Those clients will often ask if there is any way I can reduce the fee for them. If I have already quoted the lowest flat fee I can, and if the case is a very straight-forward Chapter 7, with no complicated issues, I will often suggest that I can reduce the fee for them by deducting the built-in cost of my attending the 341(a) if they would be interested in attending on their own. We will then discuss exactly how the 341(a) is conducted, what to expect, what the typical questions will be, etc. The client then can decide if they would be comfortable attending alone or not and if it is worth it to them to attend on their own in exchange for the reduced fee. If so, then I will reduce the fee for them and will uncheck the "Represent the Debtor at the 341(a) Meeting" box on the Limited Scope form.
Even if they are attending on their own, I will still discuss with them a day or two before the meeting, as a reminder, all of the points mentioned above as far what to expect, etc., and tell them that if the trustee asks for any corrections or additional documents or whatever, to let me know and I will take care of it. Whenever I have had a client choose to attend the 341(a) on their own, they have been thankful for the reduced fee and have stated afterward that they did not have any problems and that it was a pretty easy experience and exactly as we had discussed.
So, if the question-asker is referring to a situation where an attorney charges a fixed price and then after-the-fact states that the fee doesn't include the attorney appearing with them at the 341(a) and if they want that then it will cost extra, I agree that would be outrageous reportable conduct. I think the key words in the question are "need to pay extra." But if it is a choice being given to the client as a way to help them out with a reduced fee from regular rates, at their option, and they are comfortable with it, I don't see the problem. And, as described above, I personally have never had any problems with the few times I have given a client that option, and every time the client has been appreciative of the reduced fee.
So in the given fact situation of this question, I don't see how an answer can be given without knowing how the fee that is being charged compares with the fee being charged by other attorneys in the area. If the base fee is well below the competition, and adding an additional amount for the attorney to attend the 341(a) only brings the total fee up to an amount that is the same as what other attorneys in the area are charging, then what is the problem? However, if the base fee already is a competitive amount, and the "extra" to have the attorney attend would put it much higher than others in the area, then I can see where there would be a problem. So I wouldn't be so quick to judge and condemn the attorney referred to in the question without knowing the relative dollar amounts involved and the general rates being charged in the area.
Anyone else bothered by the fact that a paralegal was offering an opinion on whether to "get the attorney" for the 341 hearing? Without knowing more, this sounds suspiciously more like a petition preparing mill than a real law firm.