Ezel / Ethics Opinions / OSB
OSB August 2005

Can a lawyer advise and represent a client in bankruptcy when the client owes the lawyer substantial fees that the bankruptcy would discharge?

Short answer: Yes, qualified. The discharge of the lawyer's own fees creates a personal-interest conflict under RPC 1.7(a)(2), so the lawyer may advise and represent the client only with informed consent confirmed in writing; the lawyer may also condition the representation on prepayment of the prior fees if bankruptcy law permits.

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This page answers the general question as of 2005. Ezel answers yours: whether it's allowed on your facts, under the current Oregon Rules of Professional Conduct, with citations.

Currency note: this opinion is from 2005
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page as a PDF) is the authoritative source for any reliance.
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Plain-English summary

A client owes the lawyer substantial fees from a completed prior representation and now seeks the lawyer's advice about bankruptcy. The opinion answers three questions: whether the lawyer may advise the client about bankruptcy (yes, qualified), whether the lawyer may represent the client in the bankruptcy proceeding assuming bankruptcy law permits it (yes, qualified), and whether the lawyer may condition that representation on prepayment of the prior fees if bankruptcy law allows (yes).

The opinion applies Oregon RPC 1.7(a)(2). Because a bankruptcy will likely discharge the fees the client owes, the lawyer's advice and representation may be materially limited by the lawyer's own economic interest in being paid rather than having the fees discharged, which raises a personal-interest conflict. Under Oregon RPC 1.7(b), the lawyer may proceed only if the client gives informed consent confirmed in writing.

The opinion adds that the representation is not prohibited by Oregon RPC 1.8(i), which bars a lawyer from acquiring a proprietary interest in the cause of action or subject matter of litigation. If the lawyer's fee claim is a lien on the bankruptcy assets, RPC 1.8(i) expressly allows it; if the claim is not a lien, the lawyer has no proprietary interest and the rule does not apply. Finally, no Oregon rule requires the lawyer to take on new matters while prior fees are owing, so the lawyer may demand payment of the prior fees before undertaking the bankruptcy representation, assuming bankruptcy law does not prohibit the demand.

In practice

The opinion holds that, under the Oregon rules as they stood at the time, the lawyer's stake in collecting the disputed fees is the controlling concern: it is a personal-interest conflict under RPC 1.7(a)(2) that requires the client's written informed consent before the lawyer advises on or handles the bankruptcy. The opinion also notes a limit drawn from a cited case: a lawyer may not acquire a lien on the client's property to secure fees with the intention of helping the client defraud creditors. Verify the current text of Oregon RPC 1.7 and 1.8 before relying on any specific point.

Common questions

Q: Can a lawyer advise a client about bankruptcy when the client owes the lawyer fees that would be discharged?

A: Yes, qualified. The opinion concludes the lawyer's interest in being paid creates a personal-interest conflict under RPC 1.7(a)(2), so the lawyer may proceed only with the client's informed consent confirmed in writing.

Q: Can the lawyer require the old fees to be paid before taking the bankruptcy case?

A: Yes. Per the opinion, no Oregon rule requires the lawyer to take new matters while prior fees are owing, so the lawyer may demand prepayment if bankruptcy law does not prohibit it.

Q: Does representing the client violate the rule against acquiring an interest in the litigation?

A: No. The opinion concludes Oregon RPC 1.8(i) is not violated: if the fee claim is a lien it is expressly allowed, and if it is not a lien there is no proprietary interest for the rule to reach.

Background and rules framework

The opinion interprets Oregon RPC 1.7 (current-client conflicts, including the personal-interest conflict in 1.7(a)(2) and the consent conditions in 1.7(b)) and Oregon RPC 1.8(i) (acquiring a proprietary interest in litigation), corresponding to Model Rules 1.7 and 1.8(i). It reads the informed-consent and confirmed-in-writing requirements through Oregon RPC 1.0(b) and (g).

Citations and references

Rules of Professional Conduct:

  • Oregon RPC 1.7(a)(2), (b) / Model Rule 1.7 (current-client and personal-interest conflicts)
  • Oregon RPC 1.8(i) / Model Rule 1.8(i) (proprietary interest in litigation)
  • Oregon RPC 1.0(b), (g) (confirmed in writing; informed consent)

Cases:

  • In re Stauffer, 327 Or 44, 956 P2d 967 (1998)
  • In re Taylor, 319 Or 595, 878 P2d 1103 (1994)

Other opinions cited:

  • OSB Formal Ethics Op. No. 2005-97 (mid-matter fee adjustments)
  • OSB Formal Ethics Op. No. 2005-8 (lawyer as witness)

See also

Source

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