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High court rules against law firm in bankruptcy fee fight

June 15, 2015

The Supreme Court of the United States ruled Monday that one of the nation’s biggest law firms is not entitled to recover $5.2 million in legal fees it incurred in the course of a bankruptcy proceeding.

The 6-3 ruling said the firm Baker Botts could not collect additional fees it billed during a side dispute over whether the firm should be paid $117 million in fees earned representing Tucson-based copper-mining giant Asarco in the underlying bankruptcy.

A U.S. Bankruptcy Court in Texas initially awarded the firm $117 million in 2011 for its work in Asarco’s Chapter 11 bankruptcy proceeding. But Asarco objected and the firm spent another $5.2 million in separate litigation defending its fees. A federal appeals court ruled that “fees for defense of fees” could not be paid.

The Supreme Court affirmed the lower court, finding that federal law does not allow a bankruptcy court to award attorney fees solely for the extra work performed to justify fees in the underlying case.
 

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