THE ETHICS OF REPRESENTING DEBTORS &
CREDITORS IN BANKRUPTCY

the attorney-client privilege. But while the privilege may be absolute with respect to disclosures sought by those not represented by the committee, a narrower construction of the privilege is utilized where a committee's constituent seeks information.

1. Attorney communications with the committee that are directed at advancing or reconciling the needs of individual committee members, rather than protecting the interests of the committee or its constituents, may be considered business advice and assistance to committee members instead of the committee client, and thus not protected by the committee's attorney-client privilege.
2. As in other cases, the presence of outsiders, including other committee advisors, may destroy the privilege. If the financial advisor's presence is necessary or useful to effective consultation between lawyer and client, it does not destroy the privilege in some circuits.
3. The 2005 amendments to the Bankruptcy Code include requirements that committees provide access to information for creditors who hold claims of the kind represented by the committee but are not committee members, solicit and receive comments from such constituents, and be subject to a court order that compels any additional report or disclosure to them. Caselaw with respect to disqualifying a committee member from discussion of issues on which that member has a conflict and withholding information from a committee member-competitor of the debtor should apply to committee constituents too.

5. Committee counsel should consider seeking a court order on notice

This outline is adapted from Chapter 27, Ethical Responsibilities, Norton Bankruptcy Law & Practice 2d (Thomson-West 2005)