THE ETHICS OF REPRESENTING DEBTORS AND CREDITORS IN BANKRUPTCY

I. Sources of Applicable Law.

1. Attorneys confront ethical issues and problems daily in all aspects of their practice. Ethical guidance for all attorneys may be found in the 1969 ABA Model Code of Professional Responsibility and the 1983 ABA Model Rules of Professional Conduct. A variation of one of those standards is applicable in every state. In addition to court opinions, ABA Ethics Opinions are published, as are state bar rulings, and sometimes county and city bar rulings. Bankruptcy counsel, like other attorneys, are bound by these ethical standards and interpretations. Bankruptcy courts in particular have found that state codes or rules of professional ethics apply in bankruptcy cases, and are relevant to attorney disqualification. The ethical rules for the district in which the bankruptcy case is pending generally govern lawyers admitted pro hac vicein that case, or otherwise appearing.
2. Many lawyers find the relevant ethical guidelines difficult to understand and apply, even when counseling and litigating on behalf of only one client. Problems increase for counsel for a debtor-in-possession ("DIP") or trustee, since those clients bear responsibilities to other entities and people as well. They are fiduciaries to the bankruptcy estate, perform duties for the benefit of creditors, and operate only with restraint.

©2010 Susan M. Freeman. This outline is adapted from Chapter 172, Ethical Responsibilities, Norton Bankruptcy Law & Practice 3d (Thomson-West 2008).