THE ETHICS OF REPRESENTING DEBTORS AND CREDITORS IN BANKRUPTCY

may well entail an evaluation of facts and law for use by third persons often unrepresented themselves. Counsel is to disclose any limitations on information used in making the valuation, and not state or imply that the lawyer is disinterested rather than the advocate of her DIP client.⁴³⁴ The lawyer's duties to third parties and malpractice liability to them in this context may be judged by the standards applicable to other attorney evaluations for unrepresented third parties, such as opinions given in tax shelter and securities offering contexts.⁴³⁵

1. Despite her diligence, an attorney nonetheless may discover that her client has committed perjury on his schedules and statement of affairs by concealing assets or asset transfers, or deliberately omitting creditors or misrepresenting important facts. Counsel also may learn that the client has lied in testimony, or misrepresented facts to the attorney that were the basis of positions taken on his behalf. The attorney must preserve client confidences, but not to the extent of implicitly sanctioning illegality.⁴³⁶ Counsel may not further the illegal purpose, including by suggestions of concealment, nor may counsel continue assisting in conduct discovered to be criminal or fraudulent.⁴³⁷ The client must be warned that he may forfeit his discharge, be liable under the bankruptcy crimes statute and criminal perjury statute, and that a trustee will likely be appointed if not already serving.⁴³⁸ The client must also be warned that the attorney-client privilege does not protect criminal plotting or statements made to counsel about it, and that counsel may be obliged to turn over all books and records.⁴³⁹
2. The client should be counseled to rectify the situation as much as possible, such as by supplemental filings mailed to affected parties.⁴⁴⁰ If the client is unwilling to do so, the attorney must withdraw and, if necessary to remedy the situation or the attorney cannot withdraw, he may have to reveal the misrepresentations to the court.⁴⁴¹ Counsel may withdraw or disaffirm any document, which would probably be deemed necessary to remedy the filing of a misleading document with his signature, such as a disclosure statement, and perhaps also to remedy the filing of fraudulent schedules and statements of affairs signed by the client.⁴⁴²
3. Client failures to communicate or otherwise cooperate with counsel, insistence on pursuing an objective the lawyer considers improper, or client conduct which renders