Can a lawyer represent a bankrupt client and also represent creditors filing preferred claims against that client's bankruptcy estate?

Plain-English summary

The question arose out of two disciplinary proceedings before the Board of Governors. In each, a member of the bar had represented a client in obtaining adjudication in voluntary bankruptcy and continued to represent the bankrupt in the proceedings, and then also obtained representation for certain preferred claimants against the same bankrupt estate, filing and prosecuting those preferred claims to collection. The lawyer asked for an opinion on the propriety of his actions.

The Board of Governors concluded that, because the interest of a bankrupt and the interest of his creditors in a bankruptcy proceeding are adverse, it is professionally improper for an attorney to represent both the bankrupt and his creditors in such a proceeding. The Board cited ABA Opinion 40 to the same effect.

Currency note

This opinion was issued in 1932, decades before Oklahoma replaced its original Rules of Professional Conduct (patterned on the ABA Canons of Professional Ethics) with the Oklahoma Rules of Professional Conduct (adopted 1988) and the later Ethics 2000 revisions. The conflict-of-interest standards in force at the time predate the current Oklahoma Rules of Professional Conduct. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific requirement mentioned here.

Common questions

Q: Could one lawyer represent both the bankrupt and creditors in the same bankruptcy case?

A: The Board concluded no. It held that the interests of a bankrupt and his creditors are adverse, so representing both in the same proceeding is professionally improper.

Q: Did it matter that the creditors held preferred claims?

A: The opinion did not distinguish on that basis. The Board treated the bankrupt's and the creditors' interests as adverse and found dual representation improper regardless.

Background and rules framework

The opinion rested on the general principle that a lawyer may not represent clients with adverse interests in the same matter. The Board treated the bankrupt and the creditors filing claims against the estate as having adverse interests and cited ABA Opinion 40 as reaching the same conclusion. The opinion did not cite a specific numbered Oklahoma rule.

Citations and references

Other opinions cited:

• ABA Committee on Professional Ethics, Opinion 40 (Jan. 1932): an attorney may not represent both a bankrupt and the creditors in the same bankruptcy proceeding.

See also

• Okla. Bar Ethics Op. 24: Special Prosecutor With a Contingent Civil Claim
• ABA Formal Op. 05-436: Informed Consent to Future Conflicts
• Okla. Bar Ethics Op. 13: County Attorney Compensation Connected to Prosecution

Source

• Landing page: https://www.okbar.org/ethics/ethics-opinion-no-28/

Original opinion text

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

Adopted May 27, 1932

In two disciplinary proceedings had before the Board of Governors were incidently involved the ethics of a member of The State Bar in connection with bankruptcy proceedings. In both of them the member of the bar represented a client in obtaining his adjudication in voluntary bankruptcy, thereafter representing the bankrupt client in the proceedings. The member of the bar thereafter obtained representation for certain preferred claimants against the estate of each of his bankrupt clients, filed the preferred claims and prosecuted them to collection.

The member of the bar has made an oral request for an opinion as to the propriety of his actions in those proceedings.

It is the opinion of the Board that, inasmuch as the interest of a bankrupt and the interest of his creditors in a bankruptcy proceeding are adverse, it is professionally improper for an attorney to represent both the bankrupt and his creditors in such a proceeding.

To the same effect see Opinion 40 of the American Bar Association Committee on Professional Ethics reported in January, 1932, issue of the American Bar Association Journal.