In an Oregon bankruptcy, can a lawyer represent the debtor and the debtor's creditors at once, or represent two creditors of the same debtor?

Plain-English summary

A lawyer is asked to represent Individual A in bankruptcy. Individual A owes money to Secured Creditor B and Unsecured Creditor C, both also clients of the lawyer. The opinion asks whether the lawyer may represent all three at once, may represent only Individual A, and (assuming the lawyer never represented Individual A) could represent both creditors in Individual A's bankruptcy.

The opinion concludes no to the first. Simultaneously representing the debtor and the debtor's creditors in the bankruptcy is a non-waivable current-client conflict under RPC 1.7(a) and (b) that cannot be cured even with full disclosure and consent. On the second, it concludes yes: with the informed consent of all three, the lawyer may represent Individual A in the bankruptcy while continuing to represent the creditors on other unrelated matters.

On the third, the opinion concludes yes, qualified, because the answer depends on the facts. If Secured Creditor B's priority is undisputed and B has no interest in challenging C's debt, no conflict appears, because the creditors' interests are not directly adverse and neither representation would be materially limited. But if the two creditors' interests are in fact adverse (they dispute each other's priority or right to payment), representing both is a non-waivable conflict; the lawyer could then represent only one of the two, with both creditors' informed consent under RPC 1.7(b).

In practice

The opinion holds that debtor-versus-creditor adversity in the same bankruptcy is a non-consentable conflict, while overlapping representations that are not directly adverse can proceed with informed consent. Per the opinion, representing two creditors of the same debtor turns on whether their priority or payment interests actually conflict.

Common questions

Q: Can one lawyer represent both the bankruptcy debtor and a creditor in the case?

A: No. The opinion concludes that simultaneous representation of the debtor and the debtor's creditors in the bankruptcy is a non-waivable conflict under RPC 1.7 that consent cannot cure.

Q: Can the lawyer represent the debtor and still represent the creditors on other matters?

A: Yes, with consent. The opinion concludes that, with the informed consent of all three, the lawyer may represent the debtor in the bankruptcy while keeping the creditors on unrelated matters.

Q: Can a lawyer represent two creditors of the same debtor?

A: It depends. The opinion concludes there is no conflict where the creditors' interests are not adverse, but if they dispute each other's priority or payment, the lawyer may represent only one, with both creditors' informed consent.

Background and rules framework

The opinion interprets Oregon RPC 1.7 (current-client conflicts), including the RPC 1.7(b)(3) bar on representations that require contending for and against the same point, and the RPC 1.7(b)(4) written informed-consent requirement. RPC 1.7 tracks Model Rule 1.7.

Citations and references

Rules of Professional Conduct:

• Oregon RPC 1.7 / Model Rule 1.7 (current-client conflicts)

Cases:

• In re Claussen, 322 Or 466, 909 P2d 862 (1996)
• In re Griffith, 304 Or 575, 748 P2d 86 (1987)
• In re Vaile, 300 Or 91, 707 P2d 52 (1985)

See also

• OSB Ethics Op. 2005-37: Representing Both a Bond Issuer and Underwriter
• OSB Ethics Op. 2005-28: Representing Both Sides in an Adoption

Source

• Landing page: https://www.osbar.org/ethics/toc.html
• Original PDF: https://www.osbar.org/_docs/ethics/2005-40.pdf