04 Oct May a Bankruptcy Trustee Directly Contact a Debtor Represented by Counsel?
One reason that people considering bankruptcy hire lawyers is to prevent other lawyers involved in the matter from communicating directly with them, to avoid being taken advantage of. The rules of legal ethics or professional responsibility governing lawyers unquestionably prevent creditors’ lawyers from making direct contact with represented parties. But according to many legal ethics opinions (including from California, Arizona, and North Dakota), the bankruptcy trustee, who is usually a lawyer, may be free to contact represented debtors directly. However, that trend may be changing, as the Virginia State Bar Ethics Committee just released Draft Legal Ethics Opinion 1861, proposing to find such direct contact by a trustee prohibited.
Most states’ legal ethics rules are modeled on the American Bar Association Model Rules. ABA Model Rule 4.2 states: “In representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized to do so by law or a court order.” Virginia’s Rule 4.2 is virtually the same.
The issue is whether the bankruptcy trustee is “representing a client” when making the communication. The authorities allowing direct communications have found a trustee not to be representing a client, at least if the trustee has not also been appointed as counsel to the trustee. But the Virginia Ethics Committee relied on a number of its prior opinions to the effect that “a lawyer acting as a fiduciary may be disciplined for actions taken in that role if the same actions would have warranted discipline if the relationship had been a traditional attorney-client relationship,” and held that the same is true for a bankruptcy trustee, who “represents” the bankruptcy estate in a fiduciary capacity.
This makes good sense. As official comment  to Model Rule 4.2 explains, the “Rule contributes to the proper functioning of the legal system by protecting a person who has chosen to be represented by a lawyer in a matter against possible overreaching by other lawyers who are participating in the matter, interference by those lawyers with the client-lawyer relationship and the uncounselled disclosure of information relating to the representation.” This purpose is served by barring direct Trustee-Debtor communications. Any proper communication between the trustee and debtor may equally be conducted through debtor’s counsel – the trustee can request documents and information through counsel just as easily (or more easily) than doing it directly, and thereby prevent any overreaching or interference in the lawyer-client relationship. This prevents misunderstandings and makes sure the lawyer can address the rare improper request while making sure the debtor understands and complies with proper requests.
The Virginia draft opinion is open for public comments until November 3, 2011.
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