Court Opinion

ID: 9490627
Source: CourtListenerOpinion
Date Created: 2023-08-05 13:49:45.276335+00
Date Added: 2024-06-11T17:54:13.356364
License: Public Domain

BECKER, Circuit Judge,
concurring.
Judge Garth has written an incisive and, I believe, ultimately correct opinion, in which I join. I do not, however, believe that the result is as clear as Judge Garth believes it to be, a fact that strongly counsels that Bankruptcy Judges should, as a matter of fundamental fairness, explicitly warn persons whose retention is authorized under § 327(e) of the risk that they will not be compensated if they do not produce a benefit to the estate. I write separately to advance this view.
Hantman’s argument proceeds from the premise that when the Bankruptcy Court authorized his appointment, knowing full well his purpose (to attempt to set aside Engel’s criminal conviction), it impliedly found Hant-man’s services to be in the best interest of the estate (because the conviction supported the civil judgment against him, and that judgment was a debt of the estate). That seems to me to be a reasonable conclusion.1 Unlike Judge Garth, I do not find that the final paragraph of the May 17 order made clear the risk inherent in the appointment. Rather, I find the order ambiguous, and believe that the October 13 proceedings underscore the ambiguity as I demonstrate in the margin.2
*581By my concurrence in Judge Garth’s opinion, I acknowledge that, ambiguity vel non, Hantman had to overcome the second hurdle of establishing a benefit to the estate pursuant to § 330. I also note that I doubt that the equities here favor Hantman; indeed, I suspect that any fact finding would result in a conclusion that, during his many conversations with Wasserman, Hantman was alerted to the risk that he would not be paid from the estate. I also believe that the likelihood that Hantman would be paid in any event (given the size of Engel’s assets) was his strongest motivating factor. Finally, Hant-man knew by October 7, 1994, when the motion for disgorgement was filed, that the § 327(e) appointment might be insufficient to entitle him to fees without proof of benefit, and, in continuing his representation, incurred those additional costs at his own risk. All that said, the institutional fairness problem that will affect future cases governed by our precedent here looms large for me.
What is basically at issue is whether the Bankruptcy Judge should be required to make the determination that a professional’s services will benefit or likely benefit the estate (see supra n. 1) before or after those services have been rendered. Requiring a precedential finding ex ante is much fairer to the appointee, but it probably puts undue
pressure on the Bankruptcy Judge at a time when the bankruptcy case is new and there may be neither the time nor an adequate record for an informed judgment. Section 327(e) orders are, I understand, often signed on prepared forms without much colloquy or deliberation. Thus, as a matter of policy, ex post determination would seem preferable. Such policy considerations support Judge Garth’s position.3
Notwithstanding this analysis, an explicit alert to the appointees seems in order. Special purpose appointees under § 327(e) will often be individuals with no prior experience in the bankruptcy courts and with no familiarity with the practices and culture of the bankruptcy bar. They may end up investing a huge amount of time on their appointed rounds, only to be denied compensation. In my view, it is only fair for the bankruptcy judge, upon making a special purpose appointment under § 327(e), to make clear to the appointee the risks of non-payment or reduced payment if it later determines that the estate did not benefit.4
With these observations, I concur in Judge Garth’s opinion and in the judgment of the court.
McKEE, Circuit Judge, dissenting.
*582I agree with my colleagues that Hantman’s authorization to act as special counsel pursuant to 11 U.S.C. § 327(e) does not establish special counsel’s absolute right to be paid from the bankrupt’s estate under 11 U.S.C. § 330(a). I also agree with Judge Becker insofar as he asserts that the relationship between § 327(e) and § 330(a) is not as clear as Judge Garth suggests in the majority opinion. However, I can not join the majority because I believe the bankruptcy court improperly denied Hantman all compensation under 11 U.S.C. § 330(a) without any consideration of the extent to which Hantman reasonably relied upon the initial determination under 11 U.S.C. § 327(e) that his services were indeed in the best interests of the estate. In doing so, the court implicitly revoked its previous order authorizing Hantman’s employment by the debtor-in-possession without following the equitable analysis required by Swietlowich v. County of Bucks, 610 F.2d 1157 (3d Cir.1979). Therefore, I respectfully dissent.
I.
At the outset, it is apparent that my colleagues and I agree that the bankruptcy court authorized Hantman’s retention to represent Engel, the debtor-in-possession,1 under § 327(e), and not some other provision of the Code. That section of the Bankruptcy Code provides:
The trustee, with the court’s approval, may employ, for a specified special purpose, other than to represent the trustee in conducting the case, an attorney that has represented the debtor, if in the best interest of the estate, and if such attorney does not represent or hold any interest adverse to
the debtor or to the estate with' respect to the matter on which such attorney is to be employed.
11 U.S.C. § 327(e)(emphasis added). It is also apparent that Hantman’s special purpose in being employed was to attempt to obtain post-conviction relief for Engel.2 I think it obvious that the bankruptcy court determined that the services Hantman was to offer the debtor-in-possession were “in the best interest of the estate.” Hantman began his efforts to seek post-conviction relief pursuant to that determination.
Nevertheless, sixteen months after the bankruptcy court authorized Engel to employ Hantman to seek postconviction relief, the bankruptcy court denied Hantman all compensation for the services it had authorized. In doing so, the bankruptcy court confused the analysis required in the first instance under § 327(e) with the analysis required when special counsel employed pursuant to § 327(e) seeks compensation under § 330(a) after having performed the services for which he or she was employed. Indeed, the bankruptcy court’s initial opinion denying Hantman any compensation was grounded in a discussion of In re Duque, 48 B.R. 965 (S.D.Fla.1984), which is the leading case discussing the standards for the retention of special criminal counsel under § 327(e). However, Duque has absolutely nothing to say about compensation of special criminal counsel after an appointment under § 327(e). That court’s analysis was limited to determining whether special counsel should be authorized in the first instance if counsel’s only purpose was to seek post-conviction relief. It is obvious to me that the bankruptcy court could have refused to authorize Hant-*583man’s appointment in the first instance under the reasoning of In re Duque. However, it did not do that. Rather, it authorized Engel to retain Hantman.
In its initial opinion, the court wrote: “[fjurther and of more significance, debtor easily fails the standard for appointment of criminal counsel.” J.A. at 24. But, of course, Hantman had already been appointed. Similarly, in the opinion on the motion for reconsideration, the bankruptcy court wrote: “[t]he employ of criminal counsel was not in the best interest of the estate.” J.A. at 14. However, the propriety of Hantman’s employment under § 327(e) was not the issue. That issue was resolved sixteen months earlier, on May 17,1994, when the bankruptcy court authorized Engel to employ Hant-man. Or so it appeared.
In denying Hantman any compensation, the vehicle for determining the propriety of compensation to counsel previously appointed under 327(e) was transformed into a vehicle for determining that counsel should not have been appointed. Counsel alleges that, in the interim, he performed services, and incurred expenses that the estate should compensate him for.
Hantman argues that the law of the case doctrine precluded the bankruptcy court from implicitly reversing the May 17 order. Nevertheless, I do disagree with Hantman’s argument that the law of the case doctrine precluded the bankruptcy court from implicitly reversing its original order. I believe that the court was precluded from reversing the original order without further analysis not because of the law of the case, but because of the interplay between § 327(e) and § 330(a), and the equitable considerations of the peculiar circumstances here.
II.
In Arizona v. California, 460 U.S. 605, 618, 103 S.Ct. 1382, 1391, 75 L.Ed.2d 318 (1983), the Supreme Court noted:
Unlike the more precise requirements of res judicata, law of the case is an amorphous concept. As most commonly defined, the doctrine posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.
Id. The “[l]aw of the case rules have developed ‘to maintain consistency and avoid reconsideration of matters once decided during the course of a single continuing lawsuit.’” Casey v. Planned Parenthood of Southeastern Pennsylvania, 14 F.3d 848, 856 (3d Cir.l994)(quoting CHARLES A, WRIGHT, ARTHUR R. MILLER & EDWARD H. COOPER, 18 FEDERAL PRACTICE AND PROCEDURE: JURISDICTION § 4478 (2d ed.1981)).
However, the law of the case doctrine does not impose a strait-jacket on the court’s ability to reconsider issues previously decided. The doctrine simply “directs a court’s discretion, it does not limit the tribunal’s power.” Arizona v. California, 460 U.S. at 618, 103 S.Ct. at 1391. Although courts are reluctant to reconsider questions of law that have already been decided in the same proceeding, “it is clear that all federal courts retain power to reconsider if they wish.” CHARLES A. WRIGHT, ARTHUR R. MILLER & EDWARD H. COOPER, 18 FEDERAL PRACTICE AND PROCEDURE: JURISDICTION § 4478 (2d ed.l981).In Justice Holmes’ famous formulation, the law of the case doctrine “merely expresses the practice of courts generally to refuse to reopen what has been decided, not a limit to their power.” Messenger v. Anderson, 225 U.S. 436, 444, 32 S.Ct. 739, 740, 56 L.Ed. 1152 (1912).
Perhaps because of the “amorphous” nature of the doctrine of law of the case, no single pronouncement of its limitations has evolved. For example, we have stated “[t]he law of the case doctrine does not preclude a trial judge from clarifying or correcting an earlier ambiguous ruling.” Fagan v. City of Vineland, 22 F.3d 1283, 1290 (3d Cir.1994). However, ambiguity is not a condition precedent to a court’s ability to exercise its discretion to reconsider a prior decision. We have also held:
a trial judge has the discretion to reconsider an issue and should exercise that discretion whenever it appears that a previous ruling, even if unambiguous, might lead to an unjust result.
*584Swietlowich v. County of Bucks, 610 F.2d 1157, 1164 (3d Cir.1979). The Supreme Court has also suggested that a court’s ability to reconsider a prior ruling is related to a need to eliminate an unjust result. In Arizona v. California, the Court stated:
Under the law of the case doctrine, as now most commonly understood, it is not improper for a court to depart from a prior holding if convinced that it is clearly erroneous and would work manifest injustice.
460 U.S. at 619 n. 8, 103 S.Ct. at 1391 n. 8. Similarly, in Al Tech Specialty Steel Corp. v. Allegheny International Credit Corporation,, we listed three “exceptional circumstances,” including preventing an unjust result, that may justify a court’s reconsideration of a prior ruling:
[I]t is appropriate for an appellate court to reconsider a decision made in an earlier appeal in exceptional circumstances, such as where there has been an intervening change in the law, where new evidence has become available, or where reconsideration is necessary to prevent clear error or a manifest injustice.
104 F.3d 601, 605 (3rd Cir.1997).
Although the parameters of the law of the case doctrine are not well defined, it is clear that there are limits on a court’s inherent ability to reconsider a prior ruling. In Fa-gan v. City of Vineland, 22 F.3d at 1290, we stated in a different context: “[ajlthough [the law of the case doctrine] does not limit the power of trial judges from reconsidering issues previously decided by a predecessor judge from the same court ... it does recognize that ... a successor judge should not lightly overturn decisions of his predecessors in a given case.” This applies with equal force to earlier rulings of the same judge in the same case.
In Swietlowich, we identified two prudential considerations that limit a court’s authority to reconsider a prior ruling. First, the reasons for the change should be stated on the record. 610 F.2d at 1164. This requirement allows for meaningful appellate review. Here, the court did state its reasons for implicitly reversing its May 17 order on the record. That reason (that the services were not in the best interest of the estate) would clearly have been sufficient to justify a decision not to authorize Hantman’s appointment when Engel first petitioned for permission to do so.
However, under Swietlowich, the court “must ... take appropriate steps so that the parties are not prejudiced by reliance on the prior ruling.” Id. Under this second requirement, the court must consider any prejudice that may result from reconsidering a prior order because of possible injustice to one who may have relied upon that order. We have continued to rely upon Swietlowich, even after the Supreme Court’s subsequent pronouncements on the law of the case in Arizona v. California. See Fagan, 22 F.3d at 1290. Accordingly, I believe the bankruptcy court should have engaged in the equitable analysis set forth in Swietlowich, before denying Hantman any compensation or reimbursement under § 330(a).3
*585Hantman argues that he relied on the May 17th order in undertaking his post-conviction efforts, and, therefore, he is entitled to compensation for those services. Thus, the issue is not, as Judge Garth claims, whether compensation from the bankruptcy estate under § 330 and approval under § 327 can be compressed into one step. See Majority at 572-573. Nor is the issue whether employment authorized under § 327 is a “go-ahead” rather than a “conclusive determination.” Id. Instead, I believe the real issue is whether the bankruptcy court properly exercised its discretion under § 330(a) in lieu of any reasonable reliance that Hantman may have placed upon the prior authorization under § 327(e).4 This issue goes directly to the second prong of Swietlowich.
III.
The parties dispute when Hantman knew, or reasonably should have known, that the bankruptcy court would not allow him any compensation from the debtor’s estate. The bankruptcy court relied upon its recollection and interpretation of events preceding Hant-man’s request for compensation to conclude that Hantman suffered no prejudice from the reversal of the May 17 order because he should have known that he was not to be paid from the assets of the estate. Similarly, the Administrator’s counsel claims that debtor’s counsel knew early on that the bankruptcy court would not allow any of the estate’s assets to be used to pay for special criminal counsel.
When Engel filed his pro se voluntary petition under Chapter 11, the Administrator’s wrongful death and survival action, which included a pending motion for prejudgment attachment of the monies that Richard Engel was to pay Engel under their settlement agreement, became subject to the automatic stay provisions of the Bankruptcy Code. See 11 U.S.C. § 362. The Administrator subsequently filed a motion for relief from the automatic stay and a hearing was held on the Administrator’s motion on March 21,1994. During that hearing, the bankruptcy court did state:
This debtor has nothing to lose appealing for the rest of his life, because until he gets out of there, he’s there for the rest of his life. So under the circumstances I would anticipate the process of appeals might go on interminably. And of course, the question then becomes whether or not the estate — now speaking of the bankruptcy estate — bears that cost in any way, shape or form. My instinct is that it’s like a dischargeability issue. The estate does not pay the legal fees, and they have to be paid from some source outside of estate property.
J.A. at 43. The Administrator argues that this is the first clear indication that Hant-man’s fee would not be paid from the assets of the debtor’s estate, that debtor’s counsel was therefore clearly aware of the court’s position on the issue, and Hantman cannot now claim he was prejudiced by relying upon the May 17, 1994 order authorizing Engel to retain him.
The Administrator also claims that during the May 16, 1994 conference call the bankruptcy court again stated that Hantman’s fee would not be paid from assets of the debtor’s estate. David Nicolette, counsel for the Administrator, participated in that conference call and he has filed an affidavit in which he states “the Court allowed the retention but specifically noted that no funds could be used from the estate to pay [Hantman].” J.A. at 234.
Moreover, during the October 13, 1994 hearing on the Administrator’s motion to disgorge Hantman’s $30,000 retainer, the court indicated that the debtor, and not the debt- or’s estate, was responsible for Hantman’s fee. The court said: “The issue before me— and I thought that this is what was resolved in the telephone conference and if it was not clear in the order then it’s my difficulty as *586well — that if there are funds available, Mr. Engel can pay.” J.A. at 115-16. Later in that hearing the court said:
“I believe that what was intended is that when matters went along, I would take another look at it, and this is without prejudice to a further application. It may very well be — and I don’t recall that this was articulated in the telephone conversation; it probably should have been — that if it is of benefit to the estate, under 503, an application can always be made. And that would make it a proper administration expense. But I don’t think I ever approved a retainer and I believe that the further argument, the further — not argument — the further application would be looked at not in terms of 330 but in terms of 503 and I therefore must grant the motion to set aside the retainer and direct disgorgement.”
J.A at 126-27.5
Finally, on April 6, 1995, during a hearing on a motion to reconsider that portion of the court’s February 15 order, which denied Hantman a retainer in connection with his appointment as defense co-counsel in the wrongful death and survival action, the bankruptcy court stated: “I said [Hantman] had the right to represent the debtor but I never agreed in any of that representation that this Court would pay for it — permit the debtor to pay for it from a State (sic) funds.” J.A. at 135.
The Administrator relies upon these excerpts to argue that Hantman knew that his fee was to be paid by the debtor, and not his estate, and that Hantman cannot now claim he has been prejudiced by relying upon the May 17 order.
However, Hantman claims that neither debtor’s counsel nor the bankruptcy court warned him that he would not be allowed compensation from the debtor’s estate. Daniel Yablonsky, counsel for the debtor, participated in the May 16, 1994, conference call. He has filed a certification regarding that call in which he states: “I do not recall any statement by the Court that such fees could not be paid from the Debtor’s estate nor that such fees would have to be paid from the Debtor’s personal funds.” J.A at 71.
I do not question the veracity of the court or counsel. To its credit, the bankruptcy court very candidly conceded that there was some merit to Hantman’s position because of the confusion that resulted from the May 17 order. During the hearing on the motion to disgorge the retainer, debtor’s counsel argued that an order approving retention under § 327(e) requires a finding by the court that the proposed retention is in the best interest of the estate. The bankruptcy court responded: “[A]n application was made. A determination was made. There — and I’m not so sure that [debtor’s counsel’s] argument is wrong.” J.A. at 119. Immediately thereafter, the bankruptcy court said: “There’s a certain amount of ambiguity in the Order of the Court____” Moreover, after the bankruptcy court suggested that Hant-man could make an application for compensation under 11 U.S.C. § 503, debtor’s counsel asked whether the court was also revoking the retention order. The court replied:
No. The Order of Retention says he can do the work. The order of retention says he makes an application when it’s all done. When he makes an application, he may be able to make an application under 503. I did not guarantee that I would, under any circumstances, — and I did not make a determination ... that he was entitled to a retainer. I’ll reconsider on the issue of any application when he makes it but I believe that it has to be justified under benefit to the estate. That’s my view.
J.A. at 127.
Hantman argues that these excerpts show that, while there may have been some confusion about the terms of his employment, he was never told that he would not be compensated from the bankrupt’s estate, and the contrary conversations do not negate the determination that his services were a benefit to the estate that was implicit in the May 17 *587order. He thus contends that he continued to rely upon that order and authorization and argues the court could not thereafter deny him all compensation for the work he performed in furtherance of his authorized employment under § 327(e).
In its opinion denying Hantman’s motion for reconsideration, the bankruptcy court stated that Hantman assumed the risk of non-compensation because he was “warned repeatedly as early as May 17,1994, that[his] counsel fees were not to be paid out of the bankruptcy estate.” J.A. at 15. Although I do not doubt that the bankruptcy court believed that Hantman understood that he had been warned about the risk he would not be compensated at all, even the bankruptcy court agrees that the circumstances surrounding his appointment are ambiguous. While debtor’s counsel was aware as early as May 17, 1994, that the bankruptcy court would not allow Hantman’s fees to be paid from the debtor’s estate, it is undisputed that Hantman was not a party to the telephone conference call on that date. In addition, there is nothing in the record that is before us that establishes that debtor’s counsel told Hantman the substance of the bankruptcy court’s statements at either the March 21, 1994 or the May 16, 1994 hearings. Judge Garth imputes Yablonsky’s knowledge to Hantman, but that is impossible on this record, and it is beyond our appellate function.
Moreover, the transcript of the October 13, 1994, hearing on the retainer disgorgement motion suggests that Hantman was not present either as counsel or as a witness. See J.A. at 107-29. In fact, the October 14,1994, hearing regarding the disgorgement of Hant-man’s retainer provides little clear guidance on the compensation issue generally. The bankruptcy court’s comments were ambiguous at best. One comment is illustrative.
The issue before me — and I thought that this is what was resolved in the telephone conference and if it was not clear in the order then it’s my difficulty as well — that if there are funds available, Mr. Engel can pay. The difficulty here is priority. Is he entitled to $30,000 — I think that’s the figure, is it not — up front or is he going to wait in line, even with all of the professionals.
J.A. at 115-116. This comment can be interpreted to mean that Engel must pay for Hantman’s services out of his personal funds. The bankruptcy court stated that “Mr. Engel can pay,” not that the estate will pay. However, the remainder of the comment indicates that the bankruptcy court would allow compensation out of estate funds. The latter conclusion flows inescapably from the court’s reference to “priority”.
The ambiguity concerning the source of Hantman’s compensation is also evidenced later in the hearing during an exchange between Nicolette, the Administrator’s counsel, and the bankruptcy court. When Nicolette suggested to the court that the court indicated that Hantman’s compensation would come only from Engel personally, the bankruptcy court referred to the order itself.
Mr. Nicolette: Your Honor, I think that under the circumstances here, Your Honor specifically stating when we had the application and the hearing on the motion, that he could not be paid from the assets of the estate.
The Court: What does the order say?
Mr. Nicolette: The order is ambiguous.
The Court: What does the order — the order is ambiguous.
Mr. Nicolette: The order says he will come back and file an application.
The Court: Application. Yes. And I’ll make a determination then.
J.A. at 120-21. Admittedly, the transcript does not indicate whether the bankruptcy court was simply repeating or questioning Nicolette’s statement about the ambiguity. However, moments earlier Wasserman had argued as follows:
Mr. Wasserman: Your Honor, Mr. Hant-man believed, as did we believe, that your order encompassed an approval of the retention arrangements____ He' believed that the payment of the $30,000 retainer was appropriate. He has performed tirelessly in pursuing and is about to file the motion for post-conviction relief. I personally believe that he had a right to rely *588upon the fact that he thought it was appro-priate____ He’s performed the services.
* * *
But the one argument I can make is that the interpretation of the Code by case law is that this kind of retention and the payment of this kind of special counsel is appropriate where the relief being sought would be in the best interest of the estate. And I submit to your Honor that it’s unquestionable that if this conviction were overturned it would certainly be in the best interest of the Debtor’s estate. And I think to argue about whether at this point he should have to disgorge and then make an application for services already rendered and then have Your Honor rule on that application when he’s about to file the motion that has been based upon hundreds of hours of preparation in an estate where there’s going to be a $7 million gross would be inequitable.
J.A. at 115-118. Mr. Nicolette’s rejoinder included an attempted analogy to In re United Church of Ministers of God, swpra, wherein an attorney’s unethical conduct was a factor in denying compensation from a convicted murder’s bankrupt estate. The court appeared to reject the rejoinder. The court stated: “I am not sure that Mr. Wasserman’s argument is wrong. There’s a certain amount of ambiguity in the Order of the Court, and there is no question but that there was no unethical action here [as there had been by the attorney representing Heidnik in Church of Ministers of God].” J.A. at 119 (emphasis added). This is a clear recognition by the bankruptcy court that the order was ambiguous.
Finally, when the bankruptcy court spoke about whether the May 17, 1994 order allowed compensation, the court seemed to limit its comments to the retainer:
Mr. Wasserman: Your Honor, can I ask for a point of clarification? Is the court reversing the Order of Retention?
The Court: No.... I did not make a determination, Mr. Wasserman, that he was entitled to a retainer. I’ll reconsider on the issue of any application when he makes it but I believe that it has to be justified under benefit to the estate. That’s my view.
J.A. at 127.
Further, as Judge Becker notes, see concurring opinion at 22, the May 17, 1994, order authorizing Hantman’s retention is itself ambiguous. While that order did mention payment, it mentioned it only insofar as to note that compensation would be determined upon an application. However, the order did reference Hantman’s application, which was annexed to the order and which included a fee schedule. In referring to the annexed application, the May 17 order states “and good cause appearing therefrom for the making of this Order.” The application stated affl 8: “The Debtor respectfully submits that it is completely appropriate to pay both the retainer and the ongoing cost of his post-conviction relief out of property of the estate.” I understand that the order may well have been “boilerplate” in form and content and that the court may well have simply signed generic language when acting upon Engel’s application. However, that does not void the language of the order. Indeed, we hold parties to the contents of documents, all the time. The language of the May 17 order may well have been ill advised, but that does not make the May 17 order go away, nor render it a legal nullity.
The preceding recitation of the respective positions of the parties concerning whether Hantman knew or should have known is only offered because I believe that there is a legitimate dispute about Hantman’s knowledge that his compensation would not come from the estate. I do not think that issue can be decided here, and should be decided only upon remand. In his opinion, Judge Garth appears to conclude that Hantman knew as early as March 21, 1994, that he would not be compensated from estate assets. See Majority at 576. Judge Becker, in his concurring opinion, expresses his view, not only that the equities may not favor Hantman, but also that after a proper fact-finding process, Hantman would be found to have known that he was not to be paid from estate funds. See Concurring opinion at 581.
*589Both of my colleagues may well be correct on that score. However, we are not fact-finders. That is the function of the trial court and given what I see is the bankruptcy court’s candid concession that there was some arguable merit in Hantman’s position, I do not believe that the record, as established so far, conclusively determines as a matter of law when, or if, Hantman had either actual or constructive knowledge that his compensation would not come from the estate. In part IV of the majority opinion, Judge Garth notes that Hantman could not have relied upon the May 17 order because he has billed the estate for representation purportedly undertaken before that date. This is a factor that the bankruptcy judge would consider upon remand, and it is clearly a factor that would weigh heavily against Hantman’s position. I do not, however, think that it supports a decision to deny Hantman all compensation (including reimbursement of all expenses) under the rationale used by the bankruptcy court. Absent explanation, the “pre order expenses and compensation” could certainly be deducted from the total fees claimed, and they may even convince the bankruptcy court that Hantman never really relied upon the May 17 order at all. However, that is the analysis that I believe must be performed to support the bankruptcy court’s actions. I do not believe that, under these circumstances, the bankruptcy court’s actions can be justified by relying upon a de novo review of Hantman’s section 327(e) appointment using the hindsight refraction purportedly found in section 330(a).
The discussion concerning the ambiguity of the May 17th order is offered not in support of any particular position, but only to demonstrate that there is a legitimate argument that the ambiguity of the order could create the impression that estate funds could be used to pay special counsel. Judge Garth, while not conceding that the order is ambiguous, believes that resolving any ambiguity in Hantman’s favor would fly in the face of our decision in Zolfo Cooper & Co. v. Sunbeam-Oster Co., 50 F.3d 253 (3d Cir.1995), which Judge Garth reads as holding that a fee applicant has the burden of resolving any ambiguity in an order. See Majority at 576. I believe that Zolfo is distinguishable from the situation here. The issue here is not an ambiguity as to an approved rate of compensation — a proper inquiry under § 330(a)— but the propriety of the initial appointment. Thus, I am not as convinced that Zolfo offers us guidance as my colleague is. In any event, we need not reach that question. I do not suggest that the ambiguity be resolved for or against Hantman. I believe that Hantman should be given an opportunity to prove the extent to which he relied upon the May 17 order, that any such reliance was reasonable in view of all of the circumstances surrounding his appointment and representation including, (but certainly not limited to) the May 17,1994 order.
I cannot conclude that the scrutiny required when special counsel seeks compensation under § 330(a) permits a de novo review of the retention question and an implicit reversal of a prior order under § 327(e) without any equitable analysis. But that is precisely what happened here.
The most appropriate remedy here, and, indeed, the one required under Swietlowich, is to remand so that the bankruptcy court can conduct an appropriate inquiry into the degree (if at all) to which Hantman reasonably relied upon the court’s May 17th order, and the extent of any prejudice that may have resulted from the court’s subsequent implicit reversal of that order. Remand is required by the statute, our case law, and the Congressional policy driving enactment of § 330. In enacting § 330, Congress was concerned that no professional would want to work in the bankruptcy setting, so it included § 330 to ensure that competent professionals would get adequate compensation for services rendered to bankrupts. In re Busy Beaver, 19 F.3d 833, 849-50 (3d Cir.1994). Thus, it seems to me that once special counsel is appointed under section 327(e), he or she has a right to proceed under the assumption that his or her professional labors and expenses will be compensated at a reasonable rate to the extent that counsel can establish that the work was performed in a reasonable and professional manner consistent with the factors enumerated in § 330. Those factors allow a reviewing court to ensure that the *590time spent, hours billed, and expenses incurred were reasonable, and consistent with the attorney’s undertaking to assist the estate. For example, a special counsel appointed under § 327(e) ought not to charge an estate a fee of $2,000 to compensate him or her for trying to recover an asset worth $1,000.
I realize that 11 U.S.C. §§ 330(a)(4)(A)(ii)(I) and (II) preclude a court from authorizing compensation for services that were not “reasonably likely to benefit the debtor’s estate; or necessary to the administration of the case”, however, I believe those provisions will usually apply more properly to an appointment under § 327(a) where there has been no initial determination that the proposed services will benefit the estate. In the rare situation where special counsel is authorized under § 327(e), and counsel then engages in a course of representation or conduct that is beyond the scope of his or her authorization, that subsection would also operate to limit or prevent compensation from the estate. However, that is not our case, and I cannot conclude that Congress intended § 330(a) to allow for a de novo review of an appointment previously authorized under § 327(e) with no further analysis than occurred here.
I do not suggest that a remand here would mean that Hantman automatically receives every cent that he requested in his fee application. On the contrary, the amount of his compensation will be limited not only by the extent to which he can establish that he reasonably relied upon the May 17th order but also by the criteria set forth in § 330(a). Moreover, to the extent that funds remain after debts of the estate are properly discharged, Hantman may be able to recover some or all of his fees from Engel personally. That would certainly be a relevant consideration of the bankruptcy court in determining to what extent, if any, Hantman will be prejudiced by denying him recovery (in whole or in part) from the bankrupt’s estate.
A remand does mean, however, that the original order appointing him under section 327(e) cannot be rendered a nullity by hindsight reconsideration absent an analysis under Swietlowich.

. More precisely, in order to allow Hantman's appointment, the court must have found that the representation was "in the best interest of the estate.” 11 U.S.C. § 327(e). By allowing the appointment, then, the court seems to have found that Hantman’s services were "reasonably likely to benefit the debtor's estate," a finding necessary for the court to allow compensation of an attorney appointed pursuant to § 327(e). Id. § 330(a)(4)(A)(ii)(I). (The cited provision of § 330 was added after the events that gave rise to this case. However, the consensus is that the provision is merely a codification of existing judicial practice and precedent.)

. See for example, the exchange between Nico-lette, the Administrator’s counsel, and the Bankruptcy Court. When Nicolette suggested to the court that it had indicated that Hantman's compensation would come only from Engel personally, the bankruptcy court referred to the order itself.
Mr. Nicolette: Your Honor, I think that under the circumstances here, Your Honor specifically stating when we had the application and the hearing on the motion, that he could not be paid from the assets of the estate.
The Court: What does the order say?
Mr. Nicolette: The order is ambiguous.
The Court: What does the order — the order is ambiguous.
Mr. Nicolette: The order says he will come back and file an application.
The Court: Application. Yes. And I'll make a determination then.
J.A. at 121. Perhaps the court was merely repeating or questioning Nicolette’s statement. However moments earlier Wasserman had argued as follows:
Mr. Wasserman: Your Honor, Mr. Hantman believed, as did we believe, that your order encompassed an approval of the retention arrangements ____ He believed that the payment of the $30,000 retainer was appropriate. He *581has performed tirelessly in pursuing and is about to file the motion for post-conviction relief. I personally believe that he had a right to rely upon the fact that he thought it was appropriate.... He’s performed the services.
* * *
But the one argument I can make is that the interpretation of the Code by case law is that this kind of retention and the payment of this kind of special counsel is appropriate where the relief being sought would be in the best interest of the estate. And I submit to your Honor that it’s unquestionable that if this conviction were overturned it would certainly be in the best interest of the Debtor’s estate. And I think to argue about whether at this point he should have to disgorge and then make an application for services already rendered and then have Your Honor rule on that application when he’s about to file the motion that has been based upon hundreds of hours of preparation in an estate where there’s going to be a $7 million gross would be inequitable.
J.A. at 116-118. Nicolette's rejoinder included an attempted analogy to In re United Church of the Ministers of God, 84 B.R. 50 (Bankr.E.D.Pa. 1988), wherein an attorney’s unethical conduct was a factor in denying compensation from a convicted murder's bankrupt estate. The court here appeared to reject the rejoinder. The court stated: "I’m not so sure that Mr. Wasserman’s argument is wrong. There's a certain amount of ambiguity in the Order of the Court, and there is no question but that there was no unethical action here [as there had been by the attorney representing Heidnik in Church of Ministers of God].” J.A. at 119 (emphasis added).

. So too does the language of 11 U.S.C. § 328(a), which gives the Bankruptcy Judge power to allow compensation different from the compensation decreed under § 327 if the terms and conditions of the appointment proved to have been improvident in light of developments not anticipated at the time of the fixing of such terms and conditions. This provision, incidentally, does not apply to all appointments hut it does apply to appointments under § 327, further supporting Judge Garth.

. Indeed, the phraseology in § 330(a)(4) “likely to benefit the estate,” which suggests a prospective determination, seems to counsel that result.

. Engel was a debtor-in-possession when he sought court approval to retain Hantman. A debtor in possession has the same power to employ professionals under § 327 as the trustee. II U.S.C. § 1107(a); see also United States Trustee v. Price Waterhouse, 19 F.3d 138, 141 (3d Cir.1994).

. The conclusion that Hantman was retained to obtain post-conviction relief is apparent from the record. See, e.g., ¶¶ 3, 4, 5, and 9 of Engel’s § 327(e) application, which state;
3.Since his conviction in 1986, the Debtor has actively pursued post-conviction relief in order to prove his innocence, obtain his freedom and resurrect his life.
4. In order to permit the Debtor to continue pursuing post-conviction and habeas corpus relief, it is essential that special criminal counsel be retained.
5. The Debtor has identified [Hantman] as the [attorney] he wishes to retain to assist him in pursuing those rights.
9. lT]he Debtor ... has the constitutional right to pursue postconviction and habeas corpus relief. ...
J.A. at 55-56 (emphasis added).

. Swietlowich is not a bankruptcy case and it can therefore be argued that its equitable analysis ought not to control an inquiry under § 330(a) absent some indication that Congress intended equitable principles to guide an inquiry under that section of the Code. However, we have previously recognized that principles of equity can guide a court’s discretion under the Code. In In Re Arkansas, 798 F.2d 645 (3d Cir.1986), we considered whether a bankruptcy court has the authority under the Code to grant retroactive approval of the employment of an attorney by a creditors committee, and if so "what standard should govern the grant of retroactive approval?” Id. The dispute there arose after the Committee of unsecured creditors recommended that a law firm ("B & S”) be employed as the Committee’s counsel. However, through its own admitted oversight, B & S never returned the required affidavit certifying its retention, and it never filed an application for court approval of its employment on behalf of the Committee. Thirteen months after it began rendering legal services for the Committee, B & S discovered the oversight and promptly sought retroactive approval of the bankruptcy court. The only justification it gave for not seeking such approval before doing the work was "inadvertence." Id. at 646. We noted that the question posed was an open one, and held “retroactive approval of appointment of a professional may be granted by the bankruptcy court in its discretion but that it should grant such approval only under extraordinary circumstances.” Id. at 650. We then held that the district court correctly concluded that ”[i]n this case, ... the 'equities' simply do not fall in appellant’s favor,” id., and affirmed the ruling of the district court wherein it had upheld *585the bankruptcy court’s denial of retroactive authorization. Thus, it was the equities of a particular situation that guided the court’s discretion in deciding whether or not to grant retroactive approval.

. Accordingly, I am unpersuaded by the numerous cases Judge Garth cites in support of his reading of these statutes as none of those cases turned upon an interpretation of § 327(e). Rather, they were concerned with § 327(a).

. 11 U.S.C. § 503 allows for administrative expenses. However, that section does not negate consideration of section 330 as 11 U.S.C. § 503(b)(2) specifically allows compensation awarded under section 330(a) as an administrative expense under section 503, and section 330(a) specifically provides for compensation of those persons appointed under section 327.