Bifurcation Case Law Summary

This case law summary features the top 20 cases relevant to bifurcated Chapter 7 bankruptcies. I have listed these cases chronologically, except for a few similar cases which I have grouped together.

To download all 20+ of the case briefs in our Bifurcation Case Law Summary (as well as the full text of all opinions) , click the button below:

There is no national precedent for bifurcation. Instead, there’s been a slow evolution towards a constellation of business practices that define the modern bifurcated Chapter 7, including:

Segregation of services

  • a two-contract approach, with the first contract (signed prepetition) covering solely prepetition legal services, and a separate (signed prepetition) contract covering solely postpetition legal services
  • actually doing the postpetition work after the petition is filed

Commitments

  • promising to represent clients until a judge allows the law firm to withdraw, even if those clients don’t retain them to finish the bankruptcy by signing a postpetition contract
  • granting clients a right of rescission after signing the postpetition contract, or alternatively, allowing clients to delay signing their postpetition agreement, to give clients the opportunity to carefully consider their options

Disclosures

  • disclosing to clients that the attorney has promised to represent the debtor until they were allowed to withdraw, as well as listing exactly what services are covered in the prepetition and postpetition agreements
  • using a “three option disclosure” that lets debtors signing a prepetition agreement know that they may either (i) proceed pro se, (ii) retain the same law firm by signing a postpetition agreement, or (iii) retain another law firm to finish their bankruptcy
  • full disclosure to the court of the use of a two-contract bifurcated approach, including disclosure on a customized Form 2030 of all payments already paid and expected to be paid, as well as disclosing expected monthly future payments on Schedule J, as well as the details on whether a filing fee has been advanced

Fees and Collections

  • the collection of payments using automatic debits from a client’s bank account, rather than collecting post-dated checks prepetition
  • ensuring that the court filing fee is paid before attorney’s fees, to comply with Rule 1006(b)(3)
  • charging a reasonable fee for postpetition work
  • charging the same amount of attorney’s fees whether the client chooses to pay in cash or finance payments over time

At this point, with one exception, courts have repeatedly blessed modern bifurcated Chapter 7 bankruptcies, with only minor quibbles.

Here are the opinions reviewed in this case law summary:

  1. In re Hines, 147 F.3d 1185 (9th Cir. 1998)
  2. In re Biggar, 110 F.3d 685 (9th Cir. 1997), Bethea v. Robert J. Adams Associates, 352 F.3d 1125 (7th Cir. 2003), In re Fickling, 361 F.3d 172 (2d Cir. 2004), and Rittenhouse v. Eisen, 404 F.3d 395 (6th Cir. 2005)
  3. Lamie v. United States Trustee, 540 U.S. 526 (2004)
  4. In re Griffin, 313 B.R. 757 (Bankr. N.D. Ill. 2004)
  5. In re Mansfield, 394 B.R. 783 (Bankr. E.D. Pa. 2008)
  6. In re Waldo, 417 B.R. 854 (Bankr. E.D. Tenn. 2009)
  7. In re Lawson, 437 B.R. 609 (Bankr. E.D. Tenn. 2010)
  8. Walton v. Clark & Washington, P.C., 454 B.R. 537 (Bankr. M.D. Fla. 2011)
  9. Walton v. Clark & Washington, P.C., 469 B.R. 383 (Bankr. M.D. Fla. 2012)
  10. In re Slabbinck, 482 B.R. 576 (Bankr. E.D. Mich. 2012)
  11. In re Wright, 591 B.R. 68 (Bankr. N.D. Okla. 2018)
  12. In re Hazlett, Bankruptcy Number: 16-30360 (Bankr. D. Utah Apr. 10, 2019)
  13. In re Carr, 613 B.R. 427 (Bankr. E.D. Ky. 2020)
  14. In re Brown, No. 20-23632-BKC-LMI (Bankr. S.D. Fla. Jun. 16, 2021)
  15. In re Baldwin, 20-10009(1)(7) (Bankr. W.D. Ky. Oct. 5, 2021)
  16. Ridings v. Casamatta (In re Allen), 628 B.R. 641 (B.A.P. 8th Cir. 2021)
  17. In re Prophet, Civil Action 3 21-cv-01080-JMC (D.S.C. Mar. 14, 2022)
  18. In re Rosenschein, 651 B.R. 677 (D.S.C. 2023)
  19. In re Shatusky

To download all 20+ of the case briefs in our Bifurcation Case Law Summary (as well as the full text of all opinions) , click the button below: