Halow engaged Turnbow as his attorney when threatened by several creditors with a bankruptcy proceeding. Halow’s assets consisted of $85,000 and his debts were $125,000. A petition was subsequently filed and was uncontested.  Several of the creditors are concerned that the suspected large legal fees charged by Turnbow will diminish the size of the distributable estate.  What are the rules of limitation which apply to such fees?
　　A. None, since it is within the attorney-client privileged relationship.
　　B. The trustee must approve the fee.
　　C. The fee is presumptively valid as long as arrived at in an arm’s-length negotiation.
　　D. Turnbow must file with the court a statement of compensation paid or agreed to for review as to its reasonableness.
　　Answer:D
　　D is corrent because according to the Rules of Bankruptcy Procedure, it is necessary to file a proof of claims against the debtor’s estate. The filing must be timely (within a 6-month period) or the claim will be barred. A claim that is filed on time is given prima facie validity and is approved unless there is an objection by one of the creditors. The filing would include a statement of compensation paid or agreed.
　　A is incorrect because although the attorney is allowed reasonable compensation, the fees are subject to filing and review.
　　B is incorrect because it is the courts, not the trustee, which approve the fees.
　　C is incorrect because a fee may result from an arm’s-length negotiation and still be disallowed by Bankruptcy Procedure. Claims for services by an attorney of the debtor, to the extent a fee exceeds a reasonable value for services rendered, are disallowed. The court must approve the reasonableness of the claim even if the transaction is an arm’s-length negotiation.