Editor: As you start your tenth year on the bankruptcy bench, what issues and opportunities stand out for the bankruptcy court?
Stong: One of the most important issues that we need to address is how to make the best use of the time of all of the parties that appear before us, including the lawyers. Bankruptcy practice involves a lot of time in the courtroom, for status conferences, motion practice, and evidentiary hearings, and our motion calendars can be long. Even a few extra minutes on each motion heard can translate into lawyers and clients needing to wait for a very long time.
We are making progress on this situation with the use of several tools. These include the opportunity for lawyers to appear telephonically or via videoconference, particularly in uncontested matters. They also include self-scheduling via our court website, so that lawyers with several matters to be heard may schedule them for the same day and time. But with the demands that courts and counsel face these days, we need to continue to improve in this area.
Another issue that we face is how to meet the needs of our pro se debtors and creditors. Most people who file a bankruptcy case need a lawyer, and everyone benefits from good legal advice from someone who represents them and them alone. This is especially true at the outset of a case, and even before a case is filed, where a mistake can be fatal and the opportunity for relief through the bankruptcy system can be severely compromised or lost.
We are working on these issues as a court and with the bar in many ways. For several years, we have made available the services of the court’s pro se attorney, Mary Fox, to provide information about the bankruptcy process. She is also able to provide referrals to legal services and other organizations to people who do not have a lawyer. Recently, with the input and assistance of our pro bono working group, we have launched periodic informational sessions led by Ms. Fox and volunteer lawyers for small groups of individuals who are considering filing a bankruptcy case. These sessions are hosted by Brooklyn Law School and the Brooklyn Bar Association and have been very well received. They could not happen without the support of the lawyers who appear in this court, and we appreciate their participation enormously.
And, of course, we depend on the pro bono programs of the Brooklyn Bar Association Volunteer Lawyers Project, led by Jeannie Costello; the New York City Bar Justice Center Consumer Bankruptcy Pro Bono Project, led by John McManus; and the New York City Bankruptcy Assistance Project, led by William Kransdorf. I don’t know what we would do without them.
Editor: The Eastern District of New York bankruptcy court recently adopted guidelines for practice for the bar and bench. How did this come about?
Stong: For some years now, we have been meeting as a court with leaders in the bar to work on strategic planning. One of the issues that emerged at our meetings in 2010, largely at the instigation of the bar, was what we could do as a court to address the standard of practice in our court. This led to the formation of a working group to consider the issue that included judges, lawyers from the business and consumer bar, and senior members of our clerk’s office staff.
We concluded that it would be helpful for the court to adopt written standards of practice, and we decided that the New York State Standards of Civility for the legal profession (New York Rules of Court, Part 1200, Appendix A) would be an excellent resource. The Board of Judges approved these standards, and by an administrative order dated October 28, 2010, Chief Judge Carla Craig declared that they would be adopted as guidelines for practice in all cases and proceedings in this court.
These guidelines are noteworthy in that they establish, of course, the duties of a lawyer to other lawyers, litigants, and witnesses, as well as to the court and court personnel. But they don’t stop there. They also describe the duties of the judges to lawyers, parties and witnesses, and the duties of court personnel to the court, lawyers and litigants. And they incorporate New York’s Statement of Client Rights. In this way, they reflect our commitment as a court that the bankruptcy process works best when all of the participants – lawyers, clients, judges, and court staff – recognize their duties and obligations to each other as professionals.
We took one additional step in this direction, again in response to concerns that were raised by lawyers during our strategic planning sessions. We now incorporate 30 minutes of training on the basics of bankruptcy practice, including these guidelines, in our electronic case filing training sessions. These sessions are offered free of charge at the Brooklyn and Central Islip courthouses on a periodic basis and continuing legal education credit is provided.
Editor: Many middle-market and small businesses file Chapter 11 reorganization cases in the Eastern District of New York. What steps has the court taken to improve the prospects for success in these cases?
Stong: One of our priorities is to make the Chapter 11 reorganization process as efficient and effective as possible, including for middle-market and small business cases. In these cases, the size of the business may make it difficult for the reorganization effort to bear the administrative costs of a protracted case. So we have tried to improve our procedures, with the help of the bar, in several ways. We adopted guidelines for first-day motions to help practitioners identify issues that typically are of concern when these motions are brought shortly after a Chapter 11 case is commenced. We also adopted guidelines for financing motions, to facilitate the prompt consideration of motions for the use of cash collateral and debtor-in-possession financing, including in the early days or weeks of a case, and bar date order guidelines, to expedite the court’s review and entry of orders to establish deadlines for the filing of proofs of claim.
Transactions can be a big part of a company’s reorganization efforts, and to make this process as efficient as possible, we also adopted guidelines for the conduct of asset sales, again to help practitioners identify issues that typically are of concern to parties and the court.
It is worth noting that as a court, we undertook each of these steps in close cooperation with the bar, including attorneys who regularly represent both debtors and creditors and the United States Trustee’s office, and with professionals from our clerk’s office staff. These are our constituencies, and their input was simply invaluable.
Editor: How does the court use technology to assist in case management?
Stong: A bankruptcy case may be anywhere on a spectrum from a straightforward no-asset Chapter 7 liquidation case filed by an individual debtor, leading to a discharge within a period of a few months, to the most complex business reorganization involving dozens of entities, hundreds or more employees, and assets and liabilities around the country and even around the world – and technology has a role to play at every stage of every kind of case.
A bankruptcy case is generally commenced when the debtor files a voluntary petition for relief, or bankruptcy petition. This happens electronically via the Internet, on our Case Management-Electronic Case Filing system, or “CM-ECF.” That is, as of the moment the case is filed, all of the information in the petition and schedules is available to anyone with an interest in the matter. And as additional documents are filed in the case, these too are available to the public, anytime, day or night, via the electronic docket. This kind of transparency and access to information builds confidence in the bankruptcy process. The numbers tell the story of how useful the CM-ECF system is: in 2011, for example, nearly 520,000 electronic docket entries were made in cases pending in this district. That works out to an average of some 10,000 entries per week.
In addition, we recognize that many of the lawyers who practice in our court have national practices and may not be able to appear in person at every proceeding. As a result, lawyers may request the opportunity to appear telephonically or via video conference in many matters, and we do our best to accommodate these requests.
Finally, in our exceptionally diverse district, which includes Brooklyn and Queens, we often need access to interpreters – and sometimes, on very short notice. This can be especially important for people who are representing themselves without the assistance of a lawyer, for whom the law and legal procedures are already something of a foreign language. During court proceedings, we are now able to obtain the services of highly skilled professional interpreters in more than 180 languages, and we can do so within minutes of making a telephonic request. Access to justice is an empty promise for a party who cannot understand or make him or herself understood, and this service has been indispensable in improving our ability to meet the needs of our district.
Editor: Has the court taken any steps to address the problems faced by homeowners and lenders arising out of the mortgage crisis?
Stong: Several judges in our court participate in a mortgage loss mitigation program that brings together homeowners and lenders and permits them to exchange information and determine whether it is possible to reach an agreement to modify the homeowner’s mortgage, to the mutual benefit of the parties. No one is required to reach an agreement, but if loss mitigation is ordered, the parties are required to participate in the process. The goal of the program is to facilitate consensual resolutions for individual debtors whose primary residence is at risk of loss due to foreclosure, and quite often, the process leads to a successful agreement on a modified mortgage. But even when a modification is not accomplished, it can still be counted as a success because it can provide a homeowner with the opportunity to pursue a modification and to understand the reasons why one may not be possible.
As our Chief Judge Carla Craig stated in the General Order that adopted our most recent loss mitigation procedures, “the loss mitigation program has helped avoid the need for various types of bankruptcy litigation, reduced costs to debtors and secured creditors, and enabled debtors to reorganize or otherwise address their most significant debts and assets. . . .”
Editor: Has anything surprised you during your time on the bench?
Stong: Several things come to mind. First, after some twenty years of practice as a litigator and a year as a law clerk to a federal judge, I thought I had experienced a wide range of professional experiences in my practice. And I was aware that many view the bankruptcy court as a “specialized court.” But it is hard to describe the breadth and variety of matters that come before this court, every single day, or how satisfying it can be to see how well the bankruptcy process can work to preserve and even create value for everyone involved in the case, whether the case is that of a consumer debtor, a small business or a large company. More than 1.4 million bankruptcy cases were filed in the United States last year, and it is highly likely that most tell a pretty compelling story. The promise of a fresh start isn’t easy to achieve, but it can be transformative.
Second, in a similar vein, I thought I appreciated all of the benefits that involvement in the organized bar holds out for professionals, at every stage in their careers. These include access to the best continuing legal education, networking and mentoring, pro bono and public service opportunities, and the kind of professional support that helps all of us share the joys and manage the challenges of our legal profession.
Now as a judge, I appreciate even more the need that we all have to stay connected to each other and to the profession. There aren’t many ways for judges and lawyers to hear from each other and exchange their views about how to improve our courts, our legal system, and access to justice. At the local level, I value the opportunity to work with the pro bono and public service organizations that serve our court, and to participate and benefit from continuing legal education offered by the New York State Bar Association and New York County Lawyers Association, among other entities. At the national level, the role of the American Bar Association in bringing together a wide range of views on the most challenging issues of the day is simply unmatched. Lawyers need these opportunities, tools and resources – but judges may need them even more.