Thomson Reuters reported turnaround guru Wilbur Ross told one of the biggest annual gatherings of restructuring professionals on Friday the industry's system of basing pay on hours worked should be scrapped to control the spiraling cost of Chapter 11.

Ross, who made his billion-dollar fortune buying bankrupt companies, told a panel of restructuring experts that the current system encourages too many lawyers and advisers to pile into a Chapter 11 case and then spend too much time fighting about it.

Ross said compensation for lawyers and advisers should be capped as a "modest" percentage of the value available to a class of creditors. To determine the appropriate level of fees, Ross suggested the U.S. Trustee's office or the American Bankruptcy Institute could study past cases and develop a fee range.

If professionals seek more than the fee range, they would have to prove in court why higher fees are merited. Further, Ross said professionals should bear the risk of pursuing litigation.

Ross was speaking at the 10th meeting of an American Bankruptcy Institute's commission to study the reform of Chapter 11. Over the past year the 22 panel members have been gathering information for a proposal to modernize the bankruptcy code, which was last rewritten in 1978.

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