THE ETHICS OF REPRESENTING DEBTORS AND CREDITORS IN BANKRUPTCY

A. Standards Under Rule 9011 and Related Rules.

1. Bankruptcy Rule 9011 was amended in 1997 to conform to 1993 changes to Federal Rule of Civil Procedure 11. Not only documents signed by an attorney, but also documents he "presents" by "filing" or "later advocating" entail the lawyer's certification of proper purpose, warranted by law or a nonfrivolous argument for extension or reversal of the law, and evidentiary factual support. Ethics rules are in accord.⁴⁸⁸ Bankruptcy Rule 7037 sanctions failure to cooperate in discovery, and Bankruptcy Rule 7016 sanctions failure to comply with court scheduling and pretrial orders or cooperate in discovery and pretrial practice. 28 U.S.C. § 1927 also prohibits unreasonable and vexatious litigation.⁴⁸⁹
2. Both creditors' and debtors' counsel may be guilty of abusive litigation in a bankruptcy context. The number of cases cited at West Bankruptcy Digest Keynote 2187, "frivolity or bad faith; sanctions," is appallingly lengthy.⁴⁹⁰ Debtors' counsel may file cases in bad faith voluntarily,⁴⁹¹ and creditors' counsel may file cases in bad faith involuntarily or bad faith, unauthorized adversary proceedings.⁴⁹² Debtor plaintiffs have been sanctioned for frivolous adversary proceeding complaints,⁴⁹³ and defendants have been sanctioned for raising meritless defenses.⁴⁹⁴ Counsel have been sanctioned for bad faith objections,⁴⁹⁵ frivolous motions and appeals,⁴⁹⁶ and failing to cooperate with discovery requests.⁴⁹⁷ Burdensome, unnecessary discovery requests may likewise be deemed sanctionable. And counsel for the debtor all too often acquiesces in his client's request to list all claims as disputed on the schedules, or file blanket objections to claims, which creditors may not dispute only because economically infeasible to do so. Strategies designed to make opponents capitulate because litigation is prohibitively expensive may result in sanctions against counsel as well as adverse consequences to clients.⁴⁹⁸ Incompetent representation, not complying with the Bankruptcy Code and Rules, may likewise