2007 NORTON BANKRUPTCY LAW SEMINAR MATERIALS
THE ETHICS OF REPRESENTING DEBTORS &
CREDITORS IN BANKRUPTCY
By Susan M. Freeman
opponents capitulate because litigation is prohibitively expensive may result in sanctions
against counsel as well as adverse consequences to clients. Incompetent representation, not
complying with the Bankruptcy Code and Rules, may likewise be sanctioned. Obnoxious and abusive behavior toward opposing counsel and parties may likewise be sanctioned.
B. Obtaining Sanctions.
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Until the 1997 modification of Rule 9011, upon any violation the court was required to impose an appropriate sanction; it exercised discretion only in deciding what sanction was appropriate under the circumstances. Now, sanctions are discretionary, and there is a safe harbor procedure for serving a sanctions motion and giving an opportunity to withdraw the offensive document before filing the motion. There is no safe harbor for filing a bankruptcy petition violating rule 9011 standards, however, including as an electronic filing without an original debtor's signature, which warrants sanctions no matter what the perceived emergency.
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The 2005 Bankruptcy Code amendments include specific remedies that may be imsposed if the debtor's lawyer violates Bankruptcy Rule 9011 and the case is dismissed or converted under Bankruptcy Code § 707(b). The amendments authorize civil penalties for any Rule 9011 violation. The amendments further incorporate into the Bankruptcy Code a variation on Bankruptcy Rule 9011 that is harsher than the current rule, and applies to every attorney's signature on a petition, pleading or written motion. Among other things, the new Code language requires that all factual contentions be "well
This outline is adapted from Chapter 27, Ethical Responsibilities, Norton Bankruptcy Law & Practice 2d (Thomson-West 2005)
