Available at SSRN: https://ssrn.com/abstract=5641971 or http://dx.doi.org/10.2139/ssrn.5641971
Abstract:
Traditional historical accounts posit that federal bankruptcy specialization in the United States first developed under the system established by the Bankruptcy Act of 1898. That view assumes that the structural and temporal conditions necessary to foster specialization did not exist under the nation’s earlier federal bankruptcy systems—those created by the Bankruptcy Acts of 1800, 1841, and 1867. This Article theorizes that federal bankruptcy specialization very likely occurred under the pre-1898 systems and marshals evidence to that effect, primarily focusing on the Bankruptcy Act of 1841 (the 1841 Act). That statute marked a critical turning point in federal bankruptcy law, shifting its primary focus to debtor relief and granting federal district courts substantial policymaking authority and administrative responsibilities to effectuate the law’s reorientation. Drawing on a detailed framework for assessing specialization, this Article shows how the surge of cases under the 1841 Act reshaped the operation of federal district courts, producing a specialized judiciary that facilitated specialization among attorneys and other legal professionals through the creation of patronage networks. Recovering this history invites a broader investigation into federal bankruptcy specialization before 1898, not merely to determine whether it existed, but to reconsider the extent to which it was a causal factor in the emergence of a durable bankruptcy regime in the twentieth century.
Summary:
In Specialization and the Permanence of Federal Bankruptcy Law (forthcoming BYU Law Review 2026), Rafael Pardo challenges the traditional narrative that a specialized bankruptcy bar—and thus the political durability of federal bankruptcy law—only emerged with the 1898 Act. Building on David Skeel’s Debt’s Dominion, Pardo argues that specialization in bankruptcy practice arose far earlier, particularly under the 1841 Act, and that this specialization among judges, attorneys, and administrators shaped the institutional evolution of federal bankruptcy law.
Drawing on political scientist Lawrence Baum’s framework, Pardo distinguishes between “judge concentration” (how narrowly judges focus on certain cases) and “case concentration” (how concentrated cases are among judges), extending the analysis to lawyers and other professionals. Using archival and quantitative methods, he suggests that even under short-lived nineteenth-century bankruptcy statutes, clusters of judges and lawyers developed focused expertise. This created proto-institutional networks—patronage-based, regionally concentrated, and self-reinforcing—that foreshadowed the specialized bar later recognized as key to the 1898 Act’s permanence.
Pardo also expands the field of view beyond the federal statutes to state-level bankruptcy and insolvency regimes, which continued to function during the long interregna when Congress repealed national laws. These state systems, he contends, provided the continuity and professional pathways that sustained specialization even in the absence of federal jurisdiction. The result was not an absence of bankruptcy practice, but a fragmented and uneven “ecosystem” of specialized work that persisted beneath the surface of formal repeal.
Ultimately, Pardo argues that nineteenth-century specialization—judicial, administrative, and professional—was both more extensive and more important to the endurance of modern bankruptcy law than historians have recognized. The 1898 Act did not invent the specialized bankruptcy bar; it merely nationalized one that had already emerged through decades of intermittent practice.
Commentary:
Pardo’s rediscovery of the antebellum bankruptcy bar’s quiet persistence gives new depth to Skeel’s famous “interest-group” thesis—that bankruptcy endured because lawyers made it their livelihood. Where Skeel saw the 1898 Act as the birth of specialization, Pardo uncovers a much older lineage: district judges in the 1840s who built local patronage networks, lawyers who mastered the mechanics of debtor relief under state insolvency statutes, and a growing cadre of practitioners whose professional survival depended on the continued availability of bankruptcy relief. It was not a sudden professional creation but an evolution—interrupted by repeal, but never extinguished.
The article’s most practical contribution for modern courts lies in its careful definition of *specialization*. In footnote 8, Pardo identifies two complementary measures:
- The number of attorneys whose practice primarily focuses on a single legal field, and
- The extent to which a relatively small number of professionals handle a disproportionate share of that field’s work.
This framework fits neatly within how bankruptcy courts should interpret 11 U.S.C. § 330(a)(3)(E), which directs them to consider “whether the professional person is board certified or otherwise has demonstrated skill and experience in the bankruptcy field.” Under Pardo’s analysis, specialization is not self-promotion—it is a measurable concentration of expertise and caseload. The same historical logic that made specialized lawyers essential to the survival of bankruptcy law should make specialized lawyers today eligible for higher presumptive compensation.
Moreover, Pardo’s insight that specialization historically developed in “layered” fashion has striking relevance under today’s Bankruptcy Code. Even now, the ecosystem of debtor relief extends beyond Title 11. Non-bankruptcy regimes—consumer-protection statutes such as the FDCPA, RESPA, and UDTPA, as well as state receivership and debt-adjustment laws—continue to illustrate how bankruptcy specialization evolves across overlapping state and federal frameworks. Just as nineteenth-century lawyers moved fluidly between state insolvency systems and federal bankruptcy courts, modern consumer advocates also need to be able to navigate among these administrative, regulatory, and bankruptcy remedies, building precisely the kind of integrated professional expertise that Pardo describes.
That continuity extends even to the culture of practice. The much-maligned advertising of modern consumer bankruptcy firms, so often derided as a tawdry innovation, has a venerable pedigree. North Carolina itself provides the lineage: A. W. Shaffer of Raleigh advertised his bankruptcy services in 1868 much as John T. Orcutt has continued on in current time —reaching out directly to struggling debtors and democratizing access to legal relief. Far from degrading the profession, such public visibility has always been part of how bankruptcy practice sustains itself.
Pardo’s broader lesson is that specialization is not necessarily elitist; it is the mechanism through which bankruptcy has endured and evolved. Just as nineteenth-century courts relied on experienced practitioners to translate congressional policy into meaningful relief, modern bankruptcy courts depend on a certified, specialized bar—tested through the American Board of Certification (ABC) and devoted to the field—to keep the system both expert and humane. Recognizing that expertise under § 330(a)(3)(E) would not merely reward professionals; it would affirm the very historical tradition that has made bankruptcy, in America, permanent.
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