Lamie v. United States Trustee, 540 U.S. 526 (2004)

Decided January 26, 2004 by the United States Supreme Court

In this case, the Supreme Court held that 11 U.S.C. §330(a)(1):

does not authorize compensation awards to debtors’ attorneys from estate funds.

The four appellate court cases cited earlier (Biggar, Bethea, Fickling, and Rittenhouse) concur that prepetition attorney fees are dischargeable, so the Supreme Court’s ruling means that if the obligation to pay the attorney’s fees arises prepetition, Chapter 7 lawyers cannot be paid by the debtor’s estate either.

This implies that a debtor who wishes to retain an attorney can only pay for postpetition legal services using a debtor’s own postpetition funds. In Walton v. Clark & Washington, P.C., 469 B.R. 383 (Bankr. M.D. Fla. 2012), the judge cites this case to note that:

The Supreme Court has also recognized that a debtor is free to use postpetition funds to pay for postpetition legal services.

To be clear, the Supreme Court does not explicitly articulate this in Lamie. It is more accurate to say that Lamie is consistent with that holding.

Here is the full Lamie opinion to read or download: