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Transformations in the legal industry’s supply chain caused by legal technology and innovative service delivery models have triggered the need for courts to reimagine how to assess the reasonableness of legal fees under 11 U.S.C. § 330. In nearly every other industry, when there are changes or fluctuations in supply chain costs, it is typical for the market price paid by end-users or consumers to fluctuate as well. Market forces organically dictate the reasonableness of the market prices in light of current production cost and demand. In contrast, the legal industry hasn’t kept up with a unified, market-driven supply cost and demand approach when deciding how to use technology to serve client needs. To date, clients haven’t consistently forced lawyers to evaluate the cost of new technology against the efficiency benefits that the technology may have when compared to human labor. This article posits that it’s time to factor in the choice to use, or not to use, technology when determining the reasonableness of fees and expenses under 11 U.S.C. § 330. We believe that the newest technology should be part of our toolbox—in particular, artificial intelligence (AI).

To provide a more robust picture of § 330 and its roots, Part 1 discusses the legislative history of § 330. Part 2 maps the evolution of the case law since the enactment of § 330. Part 3 highlights how technological advancements and innovations in today’s legal industry call for a change to a court’s current § 330 assessment. Part 4 discusses how various constituents in the legal industry might call for change to make it a reality. Finally, Part 5 talks about how the practice of bankruptcy law will benefit if courts’ § 330 analysis starts account for advancements in legal technology.

Publication Citation

97 AM. BANKR. L.J. 254 (2023).