Supreme Court Expected to Rule on Bankruptcy Fees — What it Means for Bankruptcy Law

On Thursday, Oct. 2, the U.S. Supreme Court agreed to rule on a case involving a debate over how much Chapter 7 bankruptcy attorneys, Chapter 11 bankruptcy attorneys and Chapter 13 bankruptcy attorneys should be paid by the clients they represent. According to Texas Lawyer, the Supreme Court’s ruling will determine the fate of some $5 million — and could also set an important precedent regarding how bankruptcy attorneys are paid for providing bankruptcy help. Houston’s Baker Botts and Corpus Christi’s Jordan, Hyden, Womble, Culbreth and Holtzer had provided debtor’s council as Chapter 11 bankruptcy attorneys to copper mining, smelting and refining company ASARCO, Texas Lawyer reports. After ASARCO’s Chapter 11 bankruptcy, the bankruptcy court awarded $120 million to the lawyers in attorney’s fees. However, the two law firms ended up arguing against ASARCO’s parent company, Grupo Mexico, that they deserved to be paid more for helping ASARCO come back from near-ruin and transform itself into a competitive, successful company. According to the Courthouse News Service, Baker Botts and Jordan Hyden successfully litigated for a 20% fee enhancement, which they won — however, they now seek repayment for the additional $5 million in fees they spent on litigating for the fee enhancement. If Baker Botts and Jordan Hyden end up proving their case to the Supreme Court, an important precedent could be set for future federal court cases and in terms of the amount Chapter 11 bankruptcy attorneys are paid for helping businesses file for bankruptcy. If the Supreme Court rules in favor of the attorneys, then bankruptcy attorneys will likely be able to argue for higher payment in return for their services successfully in the future. The Supreme Court’s hearing date for the Baker Botts and Jordan Hyden case remains to be determined, Texas Lawyer reports.