Lamie v. United States Trustee
The Supreme Court ruled that a bankruptcy law provision means exactly what it says, even though Congress apparently botched the wording when it amended the statute in 1994: a debtor's attorney can only be paid from the bankruptcy estate in a Chapter 7 case if the trustee formally hired that attorney.
The decision resolves a split among federal appeals courts over how to read a clumsily worded fee provision, and it reinforces a broader principle that courts should apply a statute's plain text even when the wording seems like a drafting mistake, rather than rewrite the law based on guesses about what Congress meant.
“The statute is awkward, and even ungrammatical; but that does not make it ambiguous on the point at issue.”
The majority explains why a clumsily worded statute is not necessarily an unclear one.
How it got here: The Bankruptcy Court, District Court, and Fourth Circuit all denied the attorney's fee request, and he asked the Supreme Court to review that ruling.
The Case in Depth
What happened
A bankruptcy attorney represented a company in a Chapter 11 reorganization with court approval. When the case converted to Chapter 7 liquidation, a trustee took over and the attorney's court-approved role ended. The attorney nonetheless kept doing legal work for the company — preparing reports and appearing at a hearing — without being hired by the new trustee, then sought payment from the estate for that post-conversion work.
The question before the Court
Can a bankruptcy lawyer get paid from the estate's funds for work on a Chapter 7 case if the bankruptcy trustee never hired that lawyer?
The Court's answer
No — the Court ruled that the fee statute, 11 U.S.C. § 330(a)(1), does not let a debtor's attorney get paid from estate funds in a Chapter 7 case unless the trustee formally hired that attorney under a different provision, § 327. The Court reached this conclusion by reading the current text of the statute on its own terms, even though a 1994 amendment left it grammatically awkward and arguably contained a drafting mistake.
The Court found the text's meaning clear enough that it didn't need to dig into confusing and inconclusive legislative history to figure out what Congress "really" meant. It also rejected the argument that this reading was absurd, noting that debtors' attorneys can still get paid in other ways, such as being paid up front before a case converts to Chapter 7.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Bankruptcy lawyers who keep working for a debtor after a case converts to Chapter 7 liquidation without being formally hired by the trustee risk going unpaid from estate funds for that work. Attorneys can protect themselves by getting paid up front or being formally appointed, and the ruling gives lower courts a clear, text-based rule to apply in fee disputes nationwide.
What changes now
This is a final merits decision resolving a split among federal appeals courts. The attorney's fee request for his post-conversion work remains denied. Going forward, bankruptcy lawyers and courts nationwide must apply this reading of § 330(a)(1), meaning debtors' attorneys need formal trustee authorization to be paid from estate funds in Chapter 7 cases; any change to this outcome would require Congress to amend the statute.
What this does not decide
The Court's ruling is limited to Chapter 7 liquidation fee awards from estate funds under § 330(a)(1); it does not disturb attorney compensation rules in Chapter 12 or 13 cases, and it does not prevent debtors from paying their attorneys directly or in advance outside the estate's funds.
Concurrences and dissents
Concurrence — Justice Stevens
Justice Stevens agreed with the outcome but thought the Court should have examined the legislative history, since there was a plausible case that the 1994 amendment resulted from a drafting mistake. He reviewed that history anyway and found that a consumer bankruptcy lawyers' group had flagged the apparent error to Congress at the time and chose not to object, which convinced him the Court's plain-text reading was correct.
How the Court got there
The legal reasoning, step by step
- The Court began with the rule that when a statute's language is plain and doesn't produce an absurd result, courts must apply it as written rather than start with legislative history or a predecessor version of the law.
- Reading the current text of § 330(a)(1), the Court found that the first part of the sentence names only three categories of people eligible for fees — trustees, examiners, and professionals hired under § 327 — and a debtor's attorney who wasn't hired that way simply isn't on the list.
- The Court concluded that a missing word ('or') and an unmatched reference to 'attorney' later in the sentence made the wording clumsy but did not actually create ambiguity about who could be paid, since the sentence could still be read in a straightforward, consistent way.
- The Court considered whether this reading led to an absurd result and decided it did not, because debtors' attorneys remain able to get paid through other routes, such as being paid in advance or being formally hired by a Chapter 7 trustee.
- The Court declined to read an omitted phrase back into the statute to match what the previous version said, reasoning that doing so would be rewriting the law rather than interpreting it, which is Congress's job and not the courts'.
- Having found the text plain and not absurd, the Court held that § 330(a)(1) does not authorize fees to a debtor's attorney from estate funds in a Chapter 7 case unless that attorney was employed under § 327.