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Brooklyn Journal of Corporate, Financial & Commercial Law

Abstract

Historically, bankruptcy attorneys received the short end of the stick and were paid less for their services than attorneys in other fields of law. With the Bankruptcy Reform Act of 1978, Congress attempted to reduce the discrepancy in compensation. However, after the Supreme Court’s decision in Baker Botts v. ASARCO; L.L.C., the playing field remains unequal for bankruptcy attorneys. Following this decision, if a debtor disputes their attorney’s fee application, attorneys are at a disadvantage and cannot recover fees for defending their fee application. As a result, bankruptcy attorneys take an effective pay cut if they are faced with a fee application dispute, because they must either settle or litigate. Without adequate safeguards in place, the Supreme Court has left bankruptcy attorneys defenseless. This Note argues that creating a higher standard for disputing fee applications, one involving the United States Trustee’s Office more, would protect bankruptcy attorneys from prejudicial treatment and fix the unfair situation they are currently placed in.