2007 NORTON BANKRUPTCY LAW SEMINAR MATERIALS
THE ETHICS OF REPRESENTING DEBTORS &
CREDITORS IN BANKRUPTCY
By Susan M. Freeman
4. The 2005 Bankruptcy Code amendments define lawyers providing
consumer bankruptcy assistance in return for compensation in certain circumstances as
"debt relief agencies". The amendments impose restrictions on debt relief agencies that include requirements of written contracts with clients, and required provisiosn for such contracts. If the lawyer intentionally or negligently fails to meet these or other designated requirements, the lawyer is liable to the client. Further, State officials and agencies are authorized to enforce the new Code restrictions.
D. Limiting the Scope of Representation.
-
As a general matter, a lawyer ethically may limit the objectives of the representation if the client consents after consultation. 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.
-
Any agreement as to limitations on representation must be fully disclosed and clearly understood. 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. The lawyer, not a legal assistant, must counsel with the client to avoid ethical violations.
This outline is adapted from Chapter 27, Ethical Responsibilities, Norton Bankruptcy Law & Practice 2d (Thomson-West 2005)
