Can a lawyer who is owed fees by a former client now in bankruptcy use what the lawyer learned about the client's affairs to help the trustee or creditors locate assets, while also pursuing the lawyer's own fee claim?
LACBA Ethics Opinion 452: Former Counsel Collecting a Fee in a Client's Bankruptcy
Short answer: The committee concluded that former counsel of a bankruptcy debtor may file a claim for an unpaid fee and may file an adversary proceeding to have the debt declared nondischargeable, but may not assist the trustee or other creditors in locating assets of the estate or prosecute an objection to the debtor's discharge.
Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the Los Angeles County Bar Association's view of California's rules of professional conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.
About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.
Plain-English summary
An attorney who had defended a client in an involuntary bankruptcy was left with a substantial unpaid bill after the client replaced him. Through the representation he acquired substantial knowledge of the former client's complex business affairs, which could help the trustee locate assets, and asked whether he could exercise creditor rights using that knowledge.
The committee identified Business and Professions Code section 6068(e)'s duty to preserve client secrets, adopting (as in its Opinions 386 and 436) the ABA Model Code DR 4-101(A) definition of "secret." It identified that any non-confidential information the attorney proposed to use to the former client's detriment still qualified as a secret, that the duty continues after the representation ends, and that the rule applies even where there are other sources of information.
The committee identified the Evidence Code section 958 exception, which it read as applying to secrets as well as privileged confidences, permitting an attorney to disclose confidences and secrets to the extent necessary to collect a fee or defend a malpractice action. Filing a fee claim, and an adversary proceeding to have the debt declared nondischargeable under Bankruptcy Code section 523, fall within this fee-collection exception, so the attorney may pursue them and use confidences to litigate a contested claim, while seeking protective orders and avoiding disclosure beyond what is necessary.
The committee concluded that collective actions to collect debts generally from a former client do not fall within the fee-collection exception. The attorney may not use or disclose confidential or secret information to challenge the former client's discharge or to assist the trustee or other creditors; in effect the attorney must be a bystander in the collective effort. The committee identified that the section 6068(d) duty to rectify fraud applies only to fraud committed during the representation, so any post-termination nondisclosure by the former client could not support disclosure. It expressed no opinion on the questions of law (fiduciary duty, privilege, and malpractice exposure) the inquiry raised.
Currency note
This opinion was issued in 1988, before California's November 1, 2018 adoption of the renumbered Rules of Professional Conduct. It interprets Business and Professions Code section 6068(e) (duty to preserve client secrets), which parallels current Rule 1.6, and Evidence Code section 958. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule mentioned here.
Common questions
Q: Can a lawyer owed fees pursue a claim in a former client's bankruptcy?
A: Per the opinion, yes. The committee concluded the attorney may file a fee claim and an adversary proceeding to have the debt declared nondischargeable, relying on the Evidence Code section 958 fee-collection exception, while seeking protective orders.
Q: Can the lawyer help the trustee or creditors find the client's assets?
A: Per the opinion, no. The committee concluded that participating in the collective collection effort, or objecting to the discharge, falls outside the fee-collection exception and would improperly disclose the former client's secrets.
Q: Does it matter that some of the information could come from other sources?
A: Per the opinion, no. The committee identified that section 6068(e) applies even where there are other sources for the information.
Background and rules framework
The opinion interprets Business and Professions Code section 6068(e) (duty to preserve client secrets), which corresponds to ABA Model Rule 1.6, together with Evidence Code section 958's exception for fee and malpractice disputes. The committee relied on the DR 4-101(A) definition of "secret" it had adopted in earlier opinions.
Citations and references
Statutes:
- California Business and Professions Code section 6068(e) and 6068(d)
- California Evidence Code section 958
- Bankruptcy Code section 523
Cases:
- People v. Singh, 123 Cal.App. 365 (1932)
- Hinds v. State Bar, 19 Cal.2d 87 (1943) (dictum)
Other opinions cited:
- LACBA Formal Opinions 267, 271, 274, 386, 436
- ABA Model Code DR 4-101(A); ABA Model Rule 1.6 Comment
See also
- LACBA Ethics Op. 535: Charging a Former Client for Fee-Collection Time and Costs
- LACBA Ethics Op. 519: No Self-Defense Exception to Confidentiality for Third-Party Claims
- LACBA Ethics Op. 463: Disclosing a Former Client's Securities Fraud to a Current Client
Source
- Landing page: https://lacba.org/?pg=ethics-opinions
- Original PDF: https://lacba.org/docDownload/2010999