2006 NORTON BANKRUPTCY LAW SEMINAR MATERIALS
THE ETHICS OF REPRESENTING DEBTORS AND CREDITORS IN BANKRUPTCY
By Susan M. Freeman
*This outline is adapted from Chapter 27, Ethical Responsibilities,
Norton Bankruptcy Law & Practice 2d (Thomson-West 2005)
effective representation unreasonably difficult may also warrant a court request for withdrawal.443 It may also become clear that there are insufficient unencumbered assets to pay counsel, making the representation unreasonably financially burdensome. Although the ethical rules authorize a request for withdrawal in such circumstances, it may not be allowed.444 In the event of withdrawal, counsel must take reasonable steps to protect the client's interests, such as giving the client notice and an opportunity to employ other counsel, turning over the client's papers and property, and refunding unearned retainers.445
VII. Litigation Tactics and Defenses.
A. Attorney-Client Privilege and Ethics.
-
Ethical rules are broader than the attorney-client privilege with respect to the types of information required to be kept confidential.446 Ethical rules permit the disclosure of otherwise confidential information in some circumstances.447
-
The attorney-client privilege continues to exist, even after a client files a bankruptcy petition.448 Federal Rule of Evidence 501 is applicable in bankruptcy, and provides that the availability of privileges turns on federal common law where federal law provides the rule of decision (e.g. most bankruptcy issues), and on state law where state law supplies the rule of decision (e.g. on some claims issues).449 Counsel for a debtor may be required to turnover files to the estate, but only subject to applicable privileges.450 Counsel must also abide by ethical restrictions on any such disclosure. Information provided to compile bankruptcy schedules may not be privileged, because it was intended to be disclosed.451 The existence of an attorney-client relationship and compensation arrangements are not privileged.452
B. Trustee Power to Waive the Debtor's Privilege.
1. The client, not the attorney, holds the attorney-client privilege and can waive it; the client likewise may consent to disclosure of confidential information.453 A trustee in bankruptcy steps into the shoes of the debtor in many respects, taking over management of a corporate debtor. The Supreme Court has held that a bankruptcy trustee is empowered to waive the attorney-client privilege of a corporate debtor just as prior corporate management could
