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L.B.R. 2014-1. Employment of Professional Persons

(a)  Applications Requiring Notice.  Notice of an application to employ a professional person under 11 U.S.C. § 327 must be given if any of the following circumstances or conditions are present:

(1)  The professional files an application for retention that identifies a potential conflict may exist.  In such cases, the application and notice must state sufficient facts for parties in interest to determine whether a conflict of interest exists, including whether the professional represented the debtor prepetition;

(2)  The professional’s retainer or other fees have been, or will be, paid by a third party payor.  In such cases, the application must include a verified statement of the debtor disclosing all transfers by the debtor to the entity providing the retainer and any other circumstances that may create a conflict of interest between the debtor and the payor.  The payor must retain independent counsel or provide a written acknowledgement that the debtor’s attorney’s duty of loyalty is owed solely to the debtor, and not to the payor;

(3)  The professional represents multiple debtors in related or jointly administered cases;

(4)  A trustee seeks to employ his or her own firm;

(5)  The professional proposes to be paid under non-traditional compensation arrangements (e.g., flat fee agreement or contingency fee agreement);

(6)  The professional asserts a lien on the debtor’s property;

(7)  The debtor owes the professional payment for services rendered pre-petition, in which case the notice must state the amount of fees owed and whether the professional has received any preferential payments under 11 U.S.C. § 547(b); or

(8)  The Court orders notice for any other reason.

(b)  Applications When Notice is Not Required.  If notice of an application to employ a professional person is not required, the Court may enter an order approving the employment on an ex parte basis.  If the professional requests entry of an order approving the application prior to the time specified in Fed. R. Bankr. P. 6003(a), then the application must set forth a sufficient factual basis to establish immediate and irreparable harm will occur if not granted earlier approval. 

(c)   No Retroactive Approval of Applications.  Unless otherwise stated, an Order granting an application to employ a professional will be effective as of the date of filing of the application.  Requests for nunc pro tunc or retroactive approval to a date prior to the filing date of the application will not be granted absent a showing of extraordinary circumstances.

(d)  Retainers.  Professionals who receive or propose to receive a retainer in connection with a bankruptcy case must seek approval of the retainer by separate motion and notice.  The motion and notice must include:

(1)  the amount of any retainer received or proposed;

(2)  the source of the payment or retainer; and

(3)  whether the professional’s fees are paid by a principal, insider, or affiliate of the debtor.