question. The deficiencies in the Bankruptcy Court's substantive determinations under Section 329 of the Bankruptcy Code requires a reexamination by the Bankruptcy Judge of the fees paid or due in all thirty-eight cases.
The Bankruptcy Judge has broad discretion when he examines the reasonableness of fees paid an attorney for work on a bankruptcy case. 2 Collier on Bankruptcy para. 329.04  -  (15th ed. 1979).
However broad his discretion, it is obvious that when a Bankruptcy Judge examines fees under Section 329, he must in fact examine the fees in relation to the value of services performed. Collier expresses the opinion that the criteria used when fees are awarded by the Court are appropriate criteria in a Section 329 examination of fees paid by a client; the criteria include time, nature, extent and value of services rendered as well as the cost of comparable services other than in a case under the Bankruptcy Code. Id. § 330.05. The Bankruptcy Judge erred when he determined that the value of the services performed in all thirty-eight cases was zero solely because Devers engaged in unethical conduct.
The finding that Devers accepted unauthorized referrals, assisted the unauthorized practice of law, was under the control of one other than the client and engaged in other violations of the Code of Professional Responsibility was not enough, without more, to order the return or cancellation of all fees. The Bankruptcy Judge did not determine how the ethical violations diminished the value of services performed for the thirty-eight debtors. The cancellation of the fees was nothing more than a penalty for violations of the Code of Professional Responsibility. The Bankruptcy Judge is without statutory authority for assessing such a penalty.
Ethical violations are without question relevant to a fee determination. Unethical conduct on the part of an attorney in many cases will lessen the value of services to a client. For example, where a lawyer fails to act competently in violation of Disciplinary Rule 6-101, the value of his services to his client is diminished. However, it is the absence of competency, not the violation of the Code of Professional Responsibility that affects the fee determination. The determination in this case that the Appellant violated various Disciplinary Rules of the Code is but the first step. The Judge must relate the violation to the value of services to the client. There must be specific findings that the unethical conduct lessened the value of the lawyer's services to his clients.
The inadequacy of the Bankruptcy Court's findings is compounded by the fact that the Judge examined only four of the thirty-eight cases in any kind of detail. To determine the reasonableness of the fees in any particular case, the Judge must examine that case. The Bankruptcy Judge apparently concluded that since all the cases were referrals from AFS, the value of the services in each case was zero. This kind of inductive reasoning may be appropriate for scientific experiments but is impermissible in dealing with property rights.
On remand, the Bankruptcy Judge should examine the value of the services performed by Appellant Devers in each of the thirty-eight cases. If unethical conduct on the part of the Appellant diminished the value of his services to a client, the Judge should specifically explain the basis for that conclusion.
The opinion of this Court is not to be interpreted as an exoneration of the Appellant for his relationship with AFS or for his actions on behalf of his clients. The Court expresses no opinion as to the propriety of Dever's conduct. The question as to the professional propriety of Devers' conduct is appropriately left with the disciplinary panels established to examine such conduct. The Bankruptcy Judge's Order is affirmed insofar as he ordered the Bar Counsel to take appropriate disciplinary steps against the Appellant and insofar as he ordered the United States Trustee and Corporation Counsel to investigate American Financial Services, Inc. In all other respects the Judge's Order is reversed, and the case is remanded to the Bankruptcy Judge for proceedings not inconsistent with this Memorandum Opinion.