3 ABR 49 UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ALASKA

In re:	)
CHUGACH ALASKA CORPORATION,	)	A91-00207-DMD
CHUGACH FISHERIES, INC.,	)	A91-00209-DMD
CHUGACH FOREST PRODUCTS, INC.,	)	A91-00210-DMD
CHUGACH TIMBER CORPORATION,	)	A91-00211-DMD
	)	Chapter 11
Debtors.	)
	)	(Jointly Administered)
----------------------------------------------	)

ORDER ALLOWING PROFESSIONAL FEES AND COSTS

     The final applications of Giannini & Associates (Giannini) and Birch, Horton, Bittner and Cherot, Inc. (Birch Horton), for compensation and the unsecured creditors' committee's (UCC) objections thereto duly came before the court for hearing on September 17, 1992. Peter Giannini and Diane Vallentine appeared for Giannini. Phil Blumstein appeared for Birch Horton. David Bundy appeared for the UCC.

     The Giannini and Birch Horton fee and cost applications total nearly $1.7 million for a 16-month period. Giannini seeks a total of approximately $1.1 million, and Birch Horton seeks $600,000. After deducting interim awards, Giannini requests about $371,000 and Birch Horton requests $244,270.

     Parties in interest may object to fee applications. Additionally, a bankruptcy judge has an independent duty to review such fee applications. Rule 2017(b), F.R.B.P.; In re Cuisine Magazine, Inc., 61 B.R. 210, 219 (Bankr. S.D.N.Y. 1986); In re S.T.N. Enterprises, Inc., 70 B.R. 823, 831 (Bankr. D. Vt. 1987); In re Hogg, 103 B.R. 207, 208 (Bankr. D.S.D. 1988); In re Holub, 129

   3 ABR 50 B.R. 293, 295 (Bankr. N.D. Fla. 1991). A bankruptcy judge may utilize his own experience and expertise in determining the reasonableness of a fee request without the need for independent evidence or expert testimony. In re G.W.C. Financial & Ins. Services., Inc., 8 B.R. 122; 126 (Bankr. C.D. Cal. 1981); Matter of R.C. Sanders Technology Systems, Inc., 21 B.R. 40, 43 (Bankr. D.N.H. 1982); Matter of Pothoven, 84 B.R. 579, 583 (Bankr. S.D. Iowa 1988); In re Richardson, 89 B.R. 716, 717 (Bankr. N.D. Ill. 1988); In re Gulf Consol. Services., Inc., 91 B.R. 414, 415 (Bankr. S.D. Tex. 1988); In re McClanahan, 137 B.R. 73, 74, (Bankr. M.D. Fla. 1992).

     The Chugach Alaska bankruptcy was a complex bankruptcy involving tens of millions of dollars in assets and liabilities. Giannini and Birch Horton, in the course of 16 months, successfully took Chugach from the brink of extinction through the successful confirmation of a consensual Chapter 11 plan of reorganization. Unsecured creditors in the Chugach Alaska Corporate case have received a $3.1 million dividend on $21.2 million in unsecured claims. Unsecured creditors in the three subsidiary cases, with claims totaling $6.7 million, have received approximately $350,000, or a 5 percent dividend. These dividends may be increased substantially, depending upon the results of Chugach's Exxon Valdez litigation and pending NOL litigation. Overall, debtor's counsel performed admirably under stressful and difficult circumstances. They achieved a good result.

   3 ABR 51 Birch Horton Duplication

     The first objections of the UCC allege duplication of services. The UCC has taken various fee categories from Giannini and Birch Horton bills and shown an overlap in function. Birch Horton was to function as corporate counsel; Giannini was to function as bankruptcy counsel. Because of the overlap in some categories, the UCC feels there were duplicated and unnecessary services performed. They seek reduction of $52,287 in Birch Horton fees for such duplicated services.

     My perception, based on reading the itemized statements, as well as my experience in the courtroom, is that Birch Horton was often overly and duplicatively involved in the chapter 11 process. The reductions proposed in CAC matter 208 and 210 are well taken and Birch Horton fees for categories described as "Chapter 11" and "Plan Development" will be reduced by 50 percent, or $18,500. I reject the UCC's argument for reduction on the other matters. The itemized statements simply do not bear out the remainder of the UCC's objections. Rather than being duplicative, the functions performed in the other categories were complementary and part of the team effort involved in achieving a successful plan of reorganization. They were not duplicative.

Benefit to the Estate

     The UCC seeks another $63,623 in reduced fees for Birch Horton and $78,998 for Giannini based on a perceived "lack of benefit" to the estate for certain billing categories. A large

3 ABR 52 part of the fee categories subject to objection centers around Chugach's internal management. Chugach had a change of management in the course of this Chapter 11. There were prolonged board meetings throughout the Chapter 11 case, however, with two and even three attorneys often billing full 8 and 10 hour days for attending the meetings. To the extent that the UCC objects to the fees for attending such meetings, I believe their objections are well taken. While there was some benefit to the estate through the attorney's attendance at these meetings, it was not reasonable or necessary to bill the estate for two or three attorneys' attendance for full days. The board meetings and related shareholders' meetings could have been handled much more efficiently. I am reducing all fees for attending board and shareholder meetings by 50 percent.

Other than those reductions, the UCC "benefit to the estate" argument rings hollow. This case is far removed from the situation found in In re Pickworth, 1 A.B.R. 71 (Bankr. D. Alaska 1990). Pickworth and its companion, Northern Marine Services. Inc., 1 A.B.R. 61 (D. Alaska 1990), were failed chapter 11 cases that were converted to chapter 7. Copeland, Landye, Bennett & Wolf, attorneys for the debtors, sought $64,000 in preconversion and $28,288 for chapter 7 administrative expenses. Included in those fees were $3,768 in preconversion bills for exemption work and $2,224 in post-conversion for exemption work. Copeland Landye was attempting to claim a homestead except for the debtors Pickworth. Judge Ross reduced the exemption fees to $800 preconversion and $0 post-conversion. His ruling was based

3 ABR 53 primarily on cases which have denied fees in chapter 7 dischargeability or exemption objection hearings. Judge Ross stated:

While some amount may be justified even if it relates to a debtor's self-centered concerns, the exorbitant amount sought to be charged the estate for matters in which Copeland Landye was primarily looking after the debtor's problems will not be allowed.

In re Pickworth, 1 A.B.R. at 77.

The situation here is radically different. This was not a chapter 7 debtor attempting to salvage a homestead after conversion of a case. This was a complex and subtle reorganization of an Alaska Native corporation. It involved a myriad of competing interests. Judge Ross recognized that some amount may be justified to a debtor's self-centered concerns even in a case as extreme as Pickworth. Given the enormity of this case and the unique issues arising under ANCSA, I conclude that the debtor's attorneys did not cross the line in representing the debtor's "self-centered concerns." Moreover, the UCC has given no specific itemization of time spent on such concerns. My review of the individual statements did not show any abuse. I find the "benefit to the estate" argument submitted by the UCC to be meritless, except as to attendance at board meetings and shareholders' meetings.

Billing for Para-professionals

The fee paid to an attorney is calculated to include overhead, including, but not limited to, secretarial and clerical services, use of a word processor, and the fees paid to computer research services, such as Westlaw or 3 ABR 54 Lexis. These are not expenses which are reimbursable in addition to an award of attorney's fees.

In re Four Star Terminals, Inc., 42 B.R. 419, 427 (Bankr. D. Alaska 1984).

While legal secretaries acquire vast knowledge of the subject matter and are certainly an integral part of any law office, their service is considered one of the many items that make up the cost of office overhead which in turn is reflected in the hourly rate charged by the attorney. Simply classifying a secretary as a paralegal for billing purposes does not justify compensating secretary time. (Citations omitted.)

In re Carter, 101 B.R. 170, 175 (Bankr. D.S.D. 1989). Legal secretarial time is not reimbursable as a professional fee. In re Convent Guardian Corp., 103 B.R. 937, 939-41 (Bankr. N.D. Ill. 1989); In re Wabash Valley Power Ass'n, Inc., 69 B.R. 471, 479 (Bankr. S.D. Ind. 1987); In re Pacific Exp., Inc., 56 B.R. 859, 865 (Bankr. E.D. Cal. 1985); In re Sapolin Paints, Inc., 38 B.R. 807 (Bankr. E.D.N.Y. 1984).

I respect the abilities of the Giannini staff. They played a meaningful role in the success of this reorganization. However, when the functions performed by Carol Giannini and other Giannini para-professionals are primarily clerical or legal secretarial in nature, I must disallow or reduce the fees appropriately. In such circumstances the expenses are properly a part of the hourly fees charged by Peter Giannini, Robert Crowther, or other attorneys for the firm.

As an example, on July 7, 1992, Peter Giannini briefly attended the confirmation hearing, obtained a continuance, then met

   3 ABR 55 with other counsel and revised the plan. He charged the bankruptcy estate $2,800 for 16 hours' work. I have allowed those fees in full. On the same day, Carol Giannini met with Peter and other attorneys to review and revise the plan. She stayed until 3:00 a.m. to complete typing revisions and print a new plan. She charged the estate 18 hours worth of time at $75 per hour, or $1,350. While I appreciate the hard work put forth by Ms. Giannini, the fact that she met with the attorneys, got their input to revise the plan, and stayed until 3:00 a.m. revising and printing a new draft of the plan does not alter the fundamental nature of what she was doing:  performing legal secretarial functions that are not reimbursable by the estate. Her costs are overhead functions that are included in the $2,800 charged by Peter Giannini on the same date.

     There are numerous other instances in which the bankruptcy estate has been inappropriately charged for clerical and legal secretarial functions that are not properly reimbursable as professional fees. They are set out in the attached exhibit. While Ms. Giannini billed extensively for her time in the budget and fee application categories, as well as the claims review process, I have concluded that her functions there were primarily professional in nature and have allowed her fees in such categories in full. There were no Birch Horton para-professional fees that I felt were inappropriate based upon my review of their itemized statements.

   3 ABR 56

Miscellaneous

     I concur with the UCC in regard to excessive charges for Robert Crowther on Giannini's December 31, 1991 billing for matter no. 609. I have reduced his charges appropriately. There were other items incurred by Mr. Crowther for research on fundamental principles of bankruptcy law that I did not think were properly reimbursable from the estate. They have been disallowed in accordance with the attached exhibit.

     Finally, the Birch Horton charges for discovery in the Saent II litigation appear unreasonable and will be reduced by 50 percent.

Costs

     The debtors billed copy charges at 15 cents per copy. Birch Horton has billed copying charges at 20 cents per copy. Given the size of this case and the extensive number of copies involved, I determine a reasonable rate for copying costs to be the sum of 10 cents per copy. Allowance for copying charges will be reduced appropriately for both firms.

     There has been very little information submitted as to the actual cost of fax charges in this case. The fax charges submitted by Giannini of $39,790.60 seem unreasonably high. The actual cost of the faxes appears to be substantially less. Based upon a review of Giannini's costs at the hearing, the actual cost of fax charges is less than 50 percent of those actually billed. It is inappropriate to bill paralegal time for time spent

3 ABR 57 monitoring a fax machine. Such clerical time is not reimbursable for the estate. In the absence of definitive evidence as to the cost of the fax charges incurred in this case, I am reducing Giannini's fax charges by 50 percent. I will do the same with Birch Horton fax charges. If either Giannini or Birch Horton has definitive evidence demonstrating that their actual cost of fax charges exceeded those allowed in this case, they may move for reconsideration and present such evidence at a hearing.

Charges for messenger and courier costs, Westlaw, Lexis, and secretarial overtime are all overhead expenses. They are disallowed as costs.

Calculation of Final Awards

Giannini & Associates
Fees Requested	$229,537.75
Costs Requested	39,298.32
Hold Back	102,145.46
Total Request	$370,981.53

Fees Disallowed (Exhibit "A")	$55,588.75
Costs Disallowed
Fax	19,895.30
In House Copy costs	22,583.51
Messenger	1,460.00
Research	3,512.35
Total Deductions	$103,039.91

Final Allowance Fees and Costs	$267,941.62

3 ABR 58

Birch, Horton, Bittner and Cherot
Fees and Costs Requested	$244,270.00

Fees Disallowed
CAC Matters 208 and 210	18,500.00
Attendance at Shareholder and Board of Directors Meetings	11,550.00
Saent II	1,560.00

Costs Disallowed
Fax	2,235.66
In House Copies	8,146.93
Secretarial Overtime	359.88
Courier	1,955.70
Computer Research	11,233.11
Total Deductions	$55,541.28

Final Allowance Fees and Costs	$188,728.72

THEREFORE, IT IS HEREBY ORDERED:

1. Giannini & Associates is allowed the total sum of $267,941.62 in fees and costs for its final application for allowance of attorney's fees and costs;

2. Birch, Horton, Bittner and Cherot is allowed the total sum of $188,728.72 in fees and costs for its final application for allowance of attorney's fees and costs.

Judgment shall be entered accordingly.

DATED: September 29th,1992.

	BY THE COURT
	DONALD MacDONALD IV
	United States Bankruptcy Judge