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There is an alarming decrease in the number of attorneys representing debtors these days.  No new attorneys are entering the field. Attorneys in the prime of their career are exiting the field.  The attorneys remaining are quite older and they are scaling back their practice.  In the next 5 years several senior attorneys will fully retire.What is more, the attorneys still actively practicing are not hiring. No one is hiring junior associates. No one is building.This trend is not limited to consumer bankruptcy cases. Chapter 11 and 12 attorneys have also left the field. At a time when business and farm bankruptcies are rising, there is a lack of attorneys willing to take on these cases.The trend in consumer cases is for attorneys to work from home without supporting staff. Where are all the bankruptcy attorneys? Why are attorneys leaving the field in the prime of their career? Why is no one hiring? Something is wrong, but what is it?Three technology factors account for some of the decline in hiring:

• Remote 341 Hearings: Established bankruptcy firms hired associates to represent clients before the bankruptcy trustee, but those hearings transitioned to telephonic and later Zoom video hearings during Covid. It is no longer necessary to hire associate to cover hearings spread out in Omaha, Lincoln, Grand Island, North Platte and Scottsbluff, Nebraska.  In-person trustee meetings are a thing of the past.
• Digital Signatures: New court rules allowing clients to sign documents with digital signatures.  Clients no longer meet personally with an attorney to sign documents.
• Digital Documents:  Instead of dropping off a pile of bills, paystubs, bank statement, tax returns and other documents required to prepare a bankruptcy petition, most clients upload documents digitally.  Although some clients still hand over paper documents, most do not.  There is no need to meet with clients to receive paper documents.

These changes account for some of the reduction in bankruptcy attorneys and for the trend towards working from home without staff. But this does not explain why attorneys are exiting the field in the prime of their career. Shouldn’t the ability to represent clients remotely throughout the entire state without the need to travel to distant court hearings actually encourage entrepreneurial attorneys to expand their practice by hiring new associates? Shouldn’t cost reductions in gathering and signing documents cause firms to expand?  Something is wrong here.Lack of Compensation:The number one cause of a decline in the debtor’s bar is the lack of compensation.  Firms are not hiring new attorneys because they are not confident they can afford the salaries. Chapter 13 attorneys have seen a decrease of their income drop by nearly 20% over the past five years due to inflation.  The court’s response?  Apparently a 6% fee increase is arriving soon and Nebraska fees are in line with other courts in the 8th Circuit, but nevertheless a permanent pay cut has been levied. Chapter 13 attorneys are paid flat fee set by the court (currently $4,700) and attorneys lack the ability to charge hourly.  Attorneys are leaving the field to practice in other areas of law where they can get paid for their time.Chapter 7 attorneys charge a flat fee that is reviewed by the US Trustee’s office. Attorneys cannot collect fees after a case is filed (since their debt is discharged along with all other debts), and debtors cannot finance their case with personal loans.No Fee Splitting: Debtor attorneys may not share compensation or split fees with other attorneys without court approval, although creditor attorneys can and do split fees routinely. It is difficult to “team up” with other attorneys for this reason.Increase in Bureaucratic Complexity:  Our bankruptcy process becomes more complicated by the day. New rules and forms pop up every year. I recently handled a probate case and I was amazed that the procedures and forms were the same as 30 years ago. Everything was exactly the same.  Not so with bankruptcy practice.Bankruptcy Reform Act of 2005:  Congress made radical changes to the bankruptcy law in 2005 with the specific purpose of making the process expensive and difficult. They succeeded.  At first we did not notice the impact since the Great Recession of 2008 swelled the bankruptcy filings, but 20 years later the result is clear.  The incredible burden of gathering so much information has made the process miserable and tedious. Where do we go from here?Without reform this trend will continue. Attorneys will continue to leave the field and debtors will struggle to find competent representation. Farm clients are being turned away routinely. Business clients have few attorneys to pick from. Consumer attorneys are declining to represent difficult clients knowing they can never recoup the time expended in handling their cases.Suggestions:

• Review compensation rules to ensure attorneys receive fair compensation in comparison to other fields of law. Index fees to inflation.
• Cut down on burdensome procedural changes.
• Engage debtor attorneys in regular and informal settings to get real feedback.
• Sponsor “nuts and bolts” seminars to teach young attorneys how to practice.
• Fix the chapter 13 confirmation process. The stipulated confirmation order process is a failure. The Chapter 13 trustee attorneys are unwilling to resolve simple objections with a stipulation. 
• Promote uniformity in the Chapter 7 process.  Every trustee uses a different system to gather documents and has different practice rules. 
• Encourage attorneys to take on chapter 11 and 12 cases. Attorneys must feel confident they will be paid for taking on these complex matters. More educational and procedural information is needed. Sample plans, forms, and examples are needed to instruct new attorneys.
• Community Building.  Nobody likes working alone. Attorneys need a place to routinely visit with other local attorneys to improve their skills. Informal workshops that give CLE credit would be attractive.

Nebraskans need competent professionals to help them through hard times.