Debt Scavenger Wants Attorney To Break Law In Bankruptcy Proceeding.

27 Jul Debt Scavenger Wants Attorney To Break Law In Bankruptcy Proceeding.

It seems to be happening more often these days.  A bankruptcy case is filed, the law firm for the debtor pursues a debt scavenger for illegal behavior, and the debt scavenger then agrees to certain terms to resolve the illegal behavior, but conditions the same on a provision that the attorney or their law firm will never pursue the debt scavenger or similar claims against the debt scavenger again.


But such a proposal by the attorney for the debt scavenger is actually a violation of the law, at least in California since it restricts the attorney from practicing law and representing other clients with similar problems.  California Rule of Professional Conduct 1-500 governs “Agreements Restricting a Member’s Practice.”  It holds that:


(A) A member shall not be a party to or participate in offering or making an agreement, whether in connection with the settlement of a lawsuit or otherwise, if the agreement restricts the right of a member to practice law…….


Furthermore, there is a Discussion to the Rule that further provides as follows:


Discussion: Paragraph (A) makes it clear that the practice, in connection with settlement agreements, of proposing that a member refrain from representing other clients in similar litigation, is prohibited. Neither counsel may demand or suggest such provisions nor may opposing counsel accede or agree to such provisions.


Why are these attorneys for the debt scavengers violating the rules?  Probably because they do not know the rules themselves, or assume that the attorney on the other side does not know the rules.  And if they can get away with it, think of all the lawsuits they just saved themselves from! Regardless, its a practice which keeps popping its head more and more frequently.


My solution is simple.  Break the Rules and I simply report the same to the State Bar.  They can then decide what to do.  Hopefully, some sort of warning is shot across the bow of the attorney’s desk so that the attorney does not prey on another member of the state bar to commit such a violation.


Its a shame that laws are broken by the debt scavenger in an attempt to collect on the debt, and then in an effort to resolve the previous violations, the debt scavenger then solicits the breaking of more laws……


Written by Michael G. Doan

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