8. The Cost of Cost Control
As elaborated in Chapter 7, the fee control system is necessary because those who hire professional firms are spending other people's money. Market incentives to control fees and expenses are either distorted or entirely lacking. The system's ultimate goal appears to be a maximization of the aggregate value of interests in the estates. The interests maximized should not, however, include those of the professionals. The reason for this difference in treatment is that in nearly all bankruptcies, the professionals are being paid in full while the other interest holders are not. The principle seems to be that all interest holders should be made whole before any receive more than is necessary to make them whole. This chapter shows that to accomplish the system's goals, the system must fix standards for the right amounts to be paid and prevent debtors from paying either more or less than those standards.
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