Can a lawyer keep jointly representing a husband and wife in a Chapter 13 bankruptcy after they divorce?

Plain-English summary

The opinion addresses a lawyer who filed a Chapter 13 bankruptcy petition for a husband and wife who then separate and divorce while the proceeding is pending. They want the lawyer to keep representing them jointly, have agreed how to make the mortgage and plan payments, and cannot afford separate counsel. The question is whether the lawyer may continue the common representation until a disagreement arises.

The opinion concludes yes, subject to Rule 1.7(b). That rule lets a lawyer represent two clients despite a concurrent conflict if (1) the lawyer reasonably believes he can provide competent and diligent representation to each, (2) the representation is not prohibited by law, (3) it does not involve one client asserting a claim against the other in the same proceeding before a tribunal, and (4) each client gives informed consent confirmed in writing. Assuming bankruptcy law does not bar the joint representation and the spouses have no claims to assert against each other in the proceeding, the lawyer may continue if he reasonably believes he can competently represent both and has both clients' informed consent.

On documentation, the opinion confirms the consent must be confirmed in writing under Rule 1.7(b)(4); the client's signature is not required, though asking the client to sign can reinforce the importance of the disclosures and the meaning of consent. On the bankruptcy court's role, whether court approval is required is a question of law outside the committee's purview, so the lawyer must check the court rules and federal law; if approval is not required, the lawyer may proceed on the Opinion #1 conditions. Finally, obtaining informed consent (Rule 0.1(f)) requires the lawyer to explain the effect, if any, of bankruptcy privilege and disclosure requirements on the joint representation, and to advise each client (per comment [31] to Rule 1.7, citing 2006 FEO 1) that information will be shared and that the lawyer must withdraw if one client decides that something material should be kept from the other.

In practice

Under the North Carolina rules as they stood at the time of the opinion, a lawyer may keep representing a divorced couple jointly in their Chapter 13 case while the four Rule 1.7(b) conditions hold. Per the opinion, the representation can continue only so long as the spouses are not asserting claims against each other in the proceeding and the lawyer reasonably believes he can competently and diligently represent both; the analysis is conditional, lasting until an issue they cannot agree on arises.

Per the opinion, the consent must be confirmed in writing, the lawyer must explain how bankruptcy privilege and disclosure rules may bear on the joint representation, and the lawyer must advise the clients that information will be shared and that he will withdraw if one wants material information kept from the other.

Common questions

Q: Can one lawyer keep representing both spouses in a Chapter 13 case after they divorce?

A: Yes, if Rule 1.7(b) is satisfied. The opinion concludes the lawyer may continue the joint representation if he reasonably believes he can competently represent each, the law does not bar it, neither asserts a claim against the other in the proceeding, and both give informed written consent.

Q: Does the clients' consent have to be in writing?

A: Yes. The opinion concludes the consent must be confirmed in writing under Rule 1.7(b)(4); the client's signature is not required, though asking for one can help the client understand the disclosures and the consent.

Q: Does the lawyer need the bankruptcy court's permission to stay in?

A: That is a legal question. The opinion concludes whether court approval is required is a matter of law outside its purview; the lawyer must check the court rules and federal law, and if approval is not required, may proceed on the stated conditions.

Q: What must the lawyer tell the clients about confidentiality between them?

A: That information will be shared. The opinion concludes the lawyer must advise each client that information will be shared in the joint representation and that the lawyer will have to withdraw if one client wants something material kept from the other (Rule 1.7, cmt. [31]).

Background and rules framework

The opinion applies North Carolina Rule 1.7(b) (the conditions under which a lawyer may undertake a representation despite a concurrent conflict of interest) and Rule 0.1(f) (the definition of informed consent), with reference to comment [31] to Rule 1.7 on common representation and information sharing. These track Model Rules 1.7 and 1.0(e). The opinion leaves questions of bankruptcy privilege, disclosure, and court approval to federal law.

Citations and references

Rules of Professional Conduct:

• MR 1.7 / NC Rule 1.7(b), cmt. [31] (concurrent conflicts; conditions for common representation; information sharing)
• NC Rule 0.1(f) (definition of informed consent)

Other opinions cited:

• NC 2006 FEO 1: in a joint representation, the lawyer must advise clients that information will be shared and withdraw if one wants material information withheld from the other.

See also

• NC 2006 FEO 1: Withholding Information in a Joint Representation
• NC 2006 FEO 3: Representation in the Purchase of Foreclosed Property
• ABA Formal Op. 05-436: Informed Consent to Future Conflicts

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/2007-formal-ethics-opinion-7/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Inquiry #1:

Husband and Wife hire Attorney A to file a Chapter 13 bankruptcy petition. While the proceeding is pending, Husband and Wife separate and ultimately divorce. Husband and Wife want Attorney A to continue to represent them jointly and they want to continue to pay creditors pursuant to the Chapter 13 plan. Husband and Wife have reached an agreement on how they will make the mortgage payment and the Chapter 13 plan payments. They believe that they can resolve amicably any other issues that may come up in the case. Attorney A has discussed the potential conflict of interest that might arise due to his common representation. Husband and Wife indicated that they cannot afford to hire other lawyers and that they consent to the common representation.

May Attorney A continue to represent Husband and Wife under these circumstances until an issue upon which they cannot agree arises?

Opinion #1:

Yes. Rule 1.7(b) permits a lawyer to represent two or more clients, despite a concurrent conflict of interest, provided the following conditions can be met:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;

(2) the representation is not prohibited by law;

(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and

(4) each affected client gives informed consent, confirmed in writing.

Assuming the common representation is not prohibited by bankruptcy law and Husband and Wife do not, at this juncture, have any claims to assert against each other in the bankruptcy proceeding, Attorney A may proceed with the common representation provided he reasonably believes that he can provide competent and diligent representation to both Husband and Wife and he has the informed consent of both clients.

Inquiry #2:

Should Attorney A get something in writing about the issue?

Opinion #2:

Yes, the consent of each client must be confirmed in writing. Rule 1.7(b)(4). While the signature of the client on the written confirmation of consent is not required by the rule, asking a client to sign a statement confirming consent may help the client to understand the importance of the lawyer's disclosures relative to the conflict and the meaning of the consent.

Inquiry #3:

The law of privilege and disclosure requirements for a bankruptcy proceeding may be different than the ethical constraints on Attorney A arising out of the Rules of Professional Conduct. In light of this, is Attorney A required to ask the bankruptcy court for permission to stay in the case?

Opinion #3:

Whether the rules of the bankruptcy court or federal bankruptcy law require Attorney A to obtain the consent of the court is a question of law outside the purview of the Ethics Committee. Attorney A must examine the court rules and federal law to determine whether the court's consent is required. If it is not required, Attorney A may proceed with the common representation subject to the conditions set out in Opinion #1.

To obtain the informed consent of clients to a common representation, a lawyer must "communicate adequate information and explanation appropriate to the circumstances." Rule 0.1(f)(definition of "informed consent.") In the current situation, Attorney A must explain to Husband and Wife the effect, if any, that the law of privilege and disclosure requirements in a bankruptcy proceeding might have on the common representation. In addition, Attorney A must inform each client of the right to information about the representation. As noted in comment [31] to Rule 1.7, "[t]he lawyer should, at the outset of the common representation and as part of the process of obtaining each client's informed consent, advise each client that information will be shared and that the lawyer will have to withdraw if one client decides that some matter material to the representation should be kept from the other." See 2006 FEO 1.