In Re Richard H. Reimers and Jeanne R. Reimers, Debtors. Claude Pitrat, Trustee W.J. Giles, III v. Richard H. Reimers Jeanne R. Reimers

Trustee Claude Pitrat and W.J. Giles, special counsel to the trustee, appeal the district court’s affirmance of the bankruptcy court’s order authorizing compensation to Giles. Pitrat and Giles argue that the bankruptcy court erred in refusing to allow compensation in accord with a contingent fee arrangement agreed to by them and approved by the bankruptcy court at the time of the agreement. Instead, when Pi-trat petitioned for authorization to pay the fees, the bankruptcy court awarded substantially reduced compensation.

Because the bankruptcy court did not apply the correct law in determining the fee, we reverse.

BACKGROUND

In September, 1983, Claude Pitrat, trustee for the estate of debtor Richard Reim-ers, requested the bankruptcy court’s permission to employ W.J. Giles as special counsel to prosecute a fraud claim in Iowa. The fee agreement between the trustee and Giles provided that Giles would be awarded compensation of 40% of the amount he recovered for the estate. The bankruptcy court approved the employment and fee agreement in an order dated November 15, 1983.

Giles succeeded in recovering $37,871.30 for the estate on the claim. In August, 1986, the trustee filed an…