## Facts

- ASARCO LLC filed for Chapter 11 and, as debtor in possession, retained Baker Botts L.L.P. and another firm as professionals under 11 U.S.C. § 327(a).
- The firms’ work contributed to a reorganization plan under which ASARCO emerged from Chapter 11 and creditors were paid in full.
- After the case, the firms sought compensation under 11 U.S.C. § 330(a)(1) for their services.
- ASARCO, then controlled by its parent, objected to aspects of the fee requests and litigated the objections.
- The firms incurred significant time and expense defending their fee applications (“fee-defense” work).
- The bankruptcy court awarded approximately $120 million for substantive work and about $5 million for fee-defense work.

## Issues

1. Whether 11 U.S.C. § 330(a)(1) authorizes a bankruptcy court to award compensation for time spent litigating to defend a professional’s own fee application.
2. Whether the American Rule bars shifting fee-defense costs absent a specific and explicit statutory or contractual authorization.

## Decision

- The Supreme Court affirmed the Fifth Circuit in a 6–3 decision (Justice Thomas).
- Section 330(a)(1) does not permit bankruptcy courts to award compensation for attorney time spent defending fee applications.
- The American Rule applies: each side bears its own litigation fees unless a statute or contract clearly provides otherwise.
- The Court distinguished compensable time spent preparing a fee application from noncompensable adversarial fee-defense litigation against the estate.

## Legal Principles

- Under the American Rule, fee shifting requires a statute or contract that specifically and explicitly authorizes it.
- Section 330(a)(1)’s authorization of “reasonable compensation for actual, necessary services rendered” covers services performed for the estate (or its administrator), not work undertaken primarily to protect the professional’s own compensation.
- Fee-defense litigation is adversarial work against the estate’s administrator and is not “services rendered” to the estate within the meaning of § 330(a)(1).
- Congress’s omission of prevailing-party or litigation-cost language in § 330(a)(1) indicates no departure from the American Rule.

## Conclusion

The Court held that § 330(a)(1) permits compensation for necessary services rendered to the bankruptcy estate but does not authorize shifting the costs of fee-defense litigation; absent another statutory or contractual basis, bankruptcy professionals must bear the expense of defending their own fee applications.


Baker Botts L.L.P. v. ASARCO LLC, 576 U.S. 121 (2015)