Baker Botts L.L.P. v. ASARCO LLC, 135 S. Ct. 2158

ASARCO, a Chapter 11 debtor in possession, retained two law firms under 11 U.S.C. § 327 to represent the estate and prosecute claims, recovering billions that enabled reorganization.
The firms submitted fee applications under 11 U.S.C. § 330(a)(1); ASARCO (post-reorganization) and others objected and litigated the fee requests.
After discovery and a six-day fee trial, the Bankruptcy Court awarded about $120 million for estate work, a $4.1 million enhancement, and over $5 million for time spent defending the firms’ fee applications.
The District Court affirmed recovery for fee-defense work; the Fifth Circuit reversed, holding the American Rule applies unless a statute explicitly authorizes fee-shifting and § 330(a)(1) does not cover fee-defense litigation.
The Supreme Court granted certiorari and affirmed the Fifth Circuit: § 330(a)(1) does not permit bankruptcy courts to award attorney’s fees for litigating in defense of fee applications.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether 11 U.S.C. § 330(a)(1) authorizes awarding attorney’s fees for litigating in defense of a fee application	Petitioners: fee-defense is part of the “services rendered” to the estate and thus compensable under § 330(a)(1)	United States/ASARCO: § 330(a)(1) does not cover fee-defense; the American Rule requires explicit statutory authorization	No — § 330(a)(1) does not authorize fees for defending fee applications; American Rule controls absent explicit statutory language
Whether courts may treat fee-defense costs as a component of “reasonable compensation” for underlying estate services	Petitioners/Govt: fee-defense dilutes net compensation and can be included in reasonable compensation for underlying services	Majority: § 330(a)(1) conditions awards on “actual, necessary services rendered”; fee-defense is not a service to the estate and thus not compensable	No — the text requires compensation for actual, necessary services; fee-defense is not within that text and cannot be folded into “reasonable compensation” absent clear congressional authorization

Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010) (describing the American Rule and its statutory exceptions)
Buckhannon Board & Care Home, Inc. v. West Virginia Dep’t of Health & Human Resources, 532 U.S. 598 (2001) (presumption against fee-shifting absent explicit statutory authority)
Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240 (1975) (statutory fee-shifting must be specific and explicit)
Commissioner v. Jean, 496 U.S. 154 (1990) (EAJA authorizes fees for fee-defense litigation under its text)
Woods v. City Nat. Bank & Trust Co. of Chicago, 312 U.S. 262 (1941) (interpretation of predecessor to § 330 and meaning of compensable "services rendered")
Arcambel v. Wiseman, 3 Dall. 306 (1796) (historical roots of the American Rule)
Perdue v. Kenny A., 559 U.S. 542 (2010) (factors for determining reasonable attorney’s fees; acknowledges possible enhancements)