United States Bankruptcy Court

For The District Of Maine

In re:

Catherine Duffy Petit

Debtor

Order Conditionally Approving Application To Employ

Cohn & Kelakos As Trustee’s Counsel

Before the Court is the Chapter 7 Trustee’s Application to Employ the firm of Cohn & Kelakos as special bankruptcy counsel, to provide legal advice to his previously appointed special bankruptcy counsel, while he still retains the services of separate general counsel. See Application to Employ, Docket #549, at 1-2:

The Trustee, who is already represented by general counsel and special Key Bank litigation counsel, has, since his apointment filed the following applications to employ counsel:

1. Stephen Morrell, Esq., as general counsel to Trustee (#299) filed 12\2-\95; Granted 1/17/96
2. Steven Cope, Esq., as special counsel to Trustee (#314) filed 2/1/96; Granted 1/21/96 (#324)
3. Ronald Caron, Esq., as special litigation counsel to Trustee (#445) filed 3/21/97; Denied 5/28/97 (#456)
4. Paul Moore, Esq., of Choate, Hall & Stewart (#475) filed 6/27/97; Withdrawn 7/10/97 (#481);
5. Hill & Barlow (#484) filed 7/16/97; Withdrawn 7/21/97 (#485)’
6. Hanify & King (#493) filed 8/11/97; Denied 9/8/97 (#512)
7. Foley, Hoag & Eliot (#515) filed 9/26/97; Denied December 31, 1997 (#527)
8. S. Peter Mills, Esq., and the firm of Wright & Mills, P.A., (#529) filed January 21, 1998; Granted April 13, 1998.

Given the travel of this case, vis-à-vis the Trustee’s lawyer-seeking problems, the very filing of the present motion gives this Court ongoing and increasing concern over his ability to adequately administer this case.1 Tahnkfully, however, the Debtor has filed a Limited Objection, suggesting that Cohn & Kelakos should serve as general bankruptcy counsel, rather than as an additional special counsel, because of the heavy influence and presense of Key Bank in this bankruptcy case. The Debtor also points out that replacement of Trustee’s present general counsel would result in more efficient administration of the bankruptcy case. The Debtor’s position is very well taken, and we are at a loss to understand why the U.S. Trustee does not adopt a similar position, rather than endorsing the layering of professionals propsed by the Trustee. Notwithstanding this, we will adopt the Debtor’s recommendation and authorize the Trustee to hire Cohn & Kelakos as his general counsel, conditional upon the termination of the employment of his present general counsel, whose scope of authority is severly limited due to its well known conflict problems.

At pages 1-2 of his Application, the Trustee explains the need for additional counsel on account of Attorney Stephen Morrell’s inability ot advise either the Trustee or his special litigation counsel on any matters involving Key Bank. We accept the accuracy of this representation and in light of it withdrawn and/or retract the part of our June 20, 1997 ruling where we declined the invitation to remove Mr. Morrell as the Trustee’s general bankrupty counsel due to his technical conflict with Key Bank. In disqualifying Mr. Morrell from acting on Key Bank matters only, I stated that:

Bench Decision, June 20, 1997, Transcript p.2. That comment, while appropriate in 1997, is no longer valid or relevant.

If the Trustee decides to proceed in accordance with the new Debtor’s suggestion, we note that as a condition of ti’s employment, Cohn & Kelakos requires prior approval of its customary hourly billing rates. The United States Trustee correctly points out that: (1) Due to the prior representation by Cohn & Kelakos of the creditor P & M Associates, "the estate would be better served if Cohn & Kelakos did not represent the estate in any substatial P & M Associates matter that might arise;" (2) while it is customary for out-of-state counsel to bill the estate at its usual and customary rate in determining reasonable compensation the court will not be bound by the firms usual hourly rate; (3) Cohn & Kalakos will bill the estate, rather than the Trustee, for services rendered; (4) the effective date for authorization of Cohn & Kalakos’ employment should be the date the Application to Employ was filed – July 21, 1998; and (4) absent extraordinary circumstances the only services compensable prior to that date will be for work related to the application to employ. See In re Jarvis, 53 f.3d 416 (1^st Cir. 1995). We agree with these comments and approve this application conditional upon their acceptance by Cohn & Kelakos.

Dated at Providence, Rhode Island, this 22^nd Day of December, 1998.

Arthur N. Votolate

U.S. Bankruptcy Judge

*Of the District of Rhode Island, sitting by designation.

1. We are equally concerned with the United States Trustee’s oversight, or lack thereof, in this case, regarding 28 U.S.C. § 586, which requres the U.S. Trustee to:

1. … Supervise … private trustees … in cases under chapter 7 of title 11: …