2006 NORTON BANKRUPTCY LAW SEMINAR MATERIALS
THE ETHICS OF REPRESENTING DEBTORS AND CREDITORS IN BANKRUPTCY
By Susan M. Freeman
*This outline is adapted from Chapter 27, Ethical Responsibilities,
Norton Bankruptcy Law & Practice 2d (Thomson-West 2005)
allow the lawyer to withdraw.325 The offer, acceptance and consideration must all be postpetition for the contract to be a postpetition contract, and the lawyer cannot ethically urge a new contract on a client already entitled to have the services performed for him.326 It will be difficult, at best, for the attorney to give unbiased advice to reaffirm the fee contract.327
4. The 2005 Bankruptcy Code amendments define lawyers providing consumer bankruptcy assistance in return for compensation in certain circumstances as "debt relief agencies".328 The amendments impose restrictions on debt relief agencies that include requirements of written contracts with clients, and required provisiosn for such contracts.329 If the lawyer intentionally or negligently fails to meet these or other designated requirements, the lawyer is liable to the client.330 Further, State officials and agencies are authorized to enforce the new Code restrictions.331
D. Limiting the Scope of Representation.
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As a general matter, a lawyer ethically may limit the objectives of the representation if the client consents after consultation.332 Some courts will allow counsel to limit representation only to the administrative aspects of a bankruptcy case, without any representation in potential adversary proceedings, or to representation only through the preparation of schedules and appearance at the Code §341 meeting. Others will not, especially if discharge or other adversary litigation was foreseeable.333
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Any agreement as to limitations on representation must be fully disclosed and clearly understood.334 Any such agreement must also be in accord with the Rules of Professional Conduct and other applicable law. Thus, the client may not agree to representation so limited as to violate the competent representation requirement of Model Rule 1.1.335 The lawyer, not a legal assistant, must counsel with the client to avoid ethical violations.336
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Counsel must file a disclosure of fee payments even if he does not appear of record, or will be subject to complete disgorgement of all fees.337 Regardless of limitations on representation, a lawyer must sign every document he prepares, or "ghost-writes," to avoid misleading the court, under Rule 9011 and professional ethics rules.338
