By: Scott B. Riddle, Esq.
An article in the Georgia Bar Journal, The Ethics of Ghostwriting Pleadings by Paula Frederick (scroll to page 46), raises the issue of whether lawyer or their staff may counsel clients with respect to filing bankruptcy, and actually preparing the petition and schedules for the client to file pro se.
The article starts with the applicable ethcal rule –
Rule 1.2(c) of the Georgia Rules of Professional Conduct allows a lawyer to limit the scope of representation if the client provides informed consent. This concept—also known as “unbundled legal services”— is relatively new. It is based on the modern reality that many clients can’t afford, don’t want, or don’t need a lawyer to handle every aspect of their case. If after consultation the lawyer and the client agree, the lawyer can provide help with specific, concrete tasks such as drafting or reviewing pleadings, or making a limited appearance for a specific hearing.
Paula, the General Counsel of the State Bar of Georgia, provides the following example –
I hate to interrupt,” your assistant says, popping into your doorway, “but Judge Brooks is on line one. She says one of your cases is on for hearing this afternoon, and she wonders why you aren’t there.” … “Remember that potential client from last week? Ms. Jenkins?” “The one with the eviction?” your assistant asks. “Sure. You helped her draft an Answer but you definitely made it clear that you weren’t handling the hearing…. Apparently the judge thought the Answer looked too professional to have been done by a nonlawyer. She asked Ms. Jenkins whether a lawyer actually prepared it. Now the judge is accusing me of deceiving the court by not signing my name or revealing my involvement!” “What?” your assistant squawks. “But you just gave Jenkins some advice without taking the case! You don’t have to do anything else for her!”
This rule, and Paula’s example, may lead one to believe that just as a lawyer may prepare complaints, answers or other pleadings, he or she may also provide advice and preparation of the petition and schedules for a client to file a pro se bankruptcy petition. However, she adds this important caveat –
Georgia lawyers should also review the local rules of court of tribunals where they regularly practice, as some courts have rules requiring a lawyer to reveal that he has provided assistance to a pro se litigant.
Where does that leave lawyers advising bankruptcy clients? First, let’s dispense with the 2005 BAPCPA Amendments regarding "bankruptcy petition preparers." Section 110 of the Bankruptcy Code provides that a bankruptcy petition preparer "means a person, other than an attorney for the debtor or an employee of such attorney under the direct supervision of such attorney, who prepares for compensation a document for filing."
Do the Federal Rules of Bankruptcy Procedure shed light? Maybe a little. Rule 9010 provides the following –
An attorney appearing for a party in a case under the Code shall file a notice of appearance with the attorney’s name, office address and telephone number, unless the attorney’s appearance is otherwise noted in the record.
Under the local rules (discussed below), an attorney "appears" by filing and signing a pleading. Rule 2016 provides the following –
Rule 2016. Compensation for Services Rendered and Reimbursement of Expenses
(b) Disclosure of compensation paid or promised to attorney for debtor.
Every attorney for a debtor, whether or not the attorney applies for compensation, shall file and transmit to the United States trustee within 15 days after the order for relief, or at another time as the court may direct, the statement required by § 329 of the Code including whether the attorney has shared or agreed to share the compensation with any other entity. The statement shall include the particulars of any such sharing or agreement to share by the attorney, but the details of any agreement for the sharing of the compensation with a member or regular associate of the attorney’s law firm shall not be required. A supplemental statement shall be filed and transmitted to the United States trustee within 15 days after any payment or agreement not previously disclosed
Note that this Rule is not expressly limited to attorneys "appearing" for a debtor.
The next place to look are the Local Rules. The Local Rules for the Bankruptcy Court for the Northern District of Georgia may be found by clicking here. The following rules appear to be most relevant –
BLR 9010-4. Appearances.
(a) The filing of a pleading or paper signed by an attorney in a case or adversary proceeding constitutes that attorney’s appearance as attorney of record for the party on whose behalf the pleading is filed. An attorney in a different firm who files a subsequent pleading or paper on behalf of that same party must also file a notice of appearance with the Bankruptcy Clerk. An attorney who fails to make a proper appearance in a case or proceeding may, at the discretion of the Court, be barred from representing the party at trial or in any other proceeding. An attorney who files a petition initiating a case on behalf of a debtor, or who appears for a debtor in a case other than as special counsel for a debtor for limited purposes, shall represent the debtor in all matters in the case, including contested matters and adversary proceedings, unless the Bankruptcy Court permits the attorney to withdraw in accordance with BLR 9010-5.
(b) Pro Se Appearance Limitation. A party represented by an attorney may not appear or act in the party’s own behalf in the case or proceeding or take any step therein unless the party has first given notice to the attorney of record and to the opposing party that the party intends to act pro se. Nonetheless, the Court may, in its discretion, hear a party in open court even though the party has previously appeared, or is represented by, an attorney.
(c) Duty to Supplement. Counsel and parties appearing pro se shall have an affirmative duty in all cases and proceedings to file with the Bankruptcy Clerk a notice of any change in address or telephone number.
BLR 9010-5. Withdrawal; Responsibilities of Party No Longer Represented; Leave of Absence.
(a) Withdrawal Policy. An attorney who has appeared in a case or adversary proceeding, other than for the limited purpose of receiving notices, must obtain permission from the Bankruptcy Court to withdraw as counsel, unless substitute counsel has made an appearance for that party. Counsel may make a fee arrangement limiting the services to be performed without the payment of additional fees, but the failure of the client, including a debtor, to comply with the fee arrangement is merely a ground to seek withdrawal and not a basis on which the attorney may refuse to render services. Counsel will not ordinarily be allowed to withdraw if withdrawal would delay the progress of an adversary proceeding or contested matter.
A fair reading of these rules, in the absence of a General Order addressing the issue, would indicate that a lawyer may give limited "behind the scenes" advice without officially "appearing" in the case by filing signed pleadings. At least in the Northern District of Georgia, a lawyer may be able to come up with an argument that this kind of limited representation is acceptable under a strict reading of the applicable rules and codes.
Whether it is a good idea, and whether Judges will go for it, are different issues. I can see an argument that an attorney may assist a client with a petition, schedules (or a complaint or answer in an adversary proceeding or civil suit), to give the client a head start before the client actually files a case or an answer. Perhaps the client, after initial consultation and preliminary work, decides to proceed pro se and uses documents that have already been prepared and/or paid for? Maybe the client only has limited funds and is willing to pay for some good advice up front? It is hard to argue those examples would be prohibited, because these arrangements may not be clear at the time services are rendered.
In contrast, it would probably be a very bad idea to provide continued behind the scenes representation beyond the above, especially on a paid basis. It may open the door for a malpractice claim where the lawyer cannot be fully involved with the case, trustees, court and other counsel. I would also expect Bankruptcy Judges to not be on board with this arrangement, and may view it as a way to circumvent the Code and Rules insofar as they govern the representation of parties and compensation for attorneys who represent debtors, or an attempt to avoid the jurisdiction of the Court over lawyers who practice before it.
Either way, it should not be a secret when a lawyer provides such limited representation. Question 9 of the Statement of Financial Affairs requires the folling information –
List all payments made or property transferred by or on behalf of the debtor to any persons, including attorneys, for consultation concerning debt consolidation, relief under the bankruptcy law or preparation of the petition in bankruptcy within one year immediately preceding the commencement of this case.
The answer to tthis question does not go unnoticed, and trustees and Judges have a lot of experience in knowing which documents were prepared by people other than the debtor.