Chapter 7 trustee filed an application to employ his own law firm as litigation counsel. Section 327(d) requires a showing that such employment is “in the best interests of the estate.” While the employment of any professional must be in the best interests of the estate, Congress’ addition of this requirement when the trustee seeks to hire his own firm is intended to signal that there must be special circumstances to justify keeping legal work “in-house.” The Court traced the relevant legislative history and the various multi-factor tests employed by the courts. It found that the underlying concerns with “in-house” retention boil down to two issues: an appearance of impropriety and a lessening of independent judgment. Given these two concerns, the trustee must justify employment of his firm by demonstrating substantial, tangible benefits to the estate that could not also be achieved with outside counsel. The Court detailed possible examples of such benefits, but concluded that the application in this case did not meet any of these criteria.
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