I filed a Chapter 7 bankruptcy for my client's mother, and now the client wants me to file his own Chapter 7, but the trustee might try to unwind a property transfer he made to his mother. Is representing him a conflict because of my prior work for her?

Plain-English summary

In 2011, the inquiring attorney filed a Chapter 7 bankruptcy petition for a client's mother, who received a discharge and closed her case. The attorney then agreed to represent the client's son in his own Chapter 7 petition, which arose from a debt collection judgment against him. While preparing the son's petition, the attorney found a March 2010 quitclaim deed transferring the son's (and his sister's) interest in real property to the mother, essentially reversing an earlier August 2003 transfer from the mother to the son and daughter; both transfers had been made at the mother's request for convenience in case something happened to her, and the mother is elderly and partially disabled. Because the 2010 transfer occurred less than two years before a possible bankruptcy filing, the attorney recognized that Bankruptcy Code section 548(a), and Rhode Island law, could give a bankruptcy trustee authority to avoid that transfer and potentially recover the son's property interest through a sale or lien against the mother's property.

The panel applied Rule 1.9, which bars a lawyer who formerly represented a client in a matter from later representing another person in the same or a substantially related matter where that person's interests are materially adverse to the former client, absent the former client's informed written consent. Quoting Comment 3 to Rule 1.9, the panel explained matters are "substantially related" if they involve the same transaction or legal dispute, or if there is a substantial risk that confidential information from the prior representation would materially advance the client's position in the new matter. The panel found the subject of the son's bankruptcy (his own debts and assets against his creditors) is not the same as, or substantially related to, the subject of the mother's earlier bankruptcy (her own debts and assets against her creditors), so representing the son is not a conflict under Rule 1.9(a). The panel added that Rule 1.9(c) still requires the attorney not to use or reveal information from the mother's representation to her disadvantage.

In practice

The opinion holds that a lawyer's prior representation of one family member in a bankruptcy does not, by itself, create a Rule 1.9 conflict against representing another family member in that person's own, separate bankruptcy, even where a property transfer connecting the two could put the former client's property at risk in the new client's case; the test is whether the two bankruptcy matters are the same or substantially related, not whether the former client's interests could be practically affected. The opinion also holds the attorney remains bound by Rule 1.9(c) not to use or disclose information from the mother's representation to her disadvantage.

Common questions

Q: I handled one family member's bankruptcy, and now another family member wants me to handle theirs. Is that automatically a conflict?

A: No. The opinion holds that separate bankruptcy matters, each concerning that person's own debts and assets against their own creditors, are not the "same" or "substantially related" matters under Rule 1.9 simply because the two clients are related or a property transfer connects their cases.

Q: The trustee in the new case might try to claw back a transfer that affects my former client's property. Does that change the analysis?

A: The opinion does not treat that practical effect as dispositive; the Rule 1.9 test asks whether the two matters share the same transaction, legal dispute, or confidential information that would materially advance the new client's position, not whether the former client's property interests could be affected as a consequence.

Q: What can I still not do with what I learned representing the mother?

A: The opinion holds that under Rule 1.9(c), the attorney may not use information relating to the mother's representation to her disadvantage, or reveal that information, except as the Rules would otherwise permit or require.

Background and rules framework

The opinion applies Rhode Island Rule 1.9 (Duties to Former Client). Rule 1.9(a) bars representing a new client in the same or a substantially related matter materially adverse to a former client absent informed written consent; Comment 3 explains matters are "substantially related" if they involve the same transaction or legal dispute, or if there is a substantial risk that confidential factual information from the earlier representation would materially advance the new client's position. Rule 1.9(c) separately bars using or revealing information from a former representation to the former client's disadvantage, regardless of whether the new matter is substantially related.

Citations and references

Rules of Professional Conduct:

• MR 1.9(a) (bar on representing a new client in the same or a substantially related matter adverse to a former client)
• MR 1.9(c) (bar on using or revealing former-client information to their disadvantage)

Statutes:

• 11 U.S.C. 548(a) (Bankruptcy Code authority for a trustee to avoid certain pre-petition transfers)

Cases:

• None cited.

Other opinions cited:

• None cited.

See also

• Alabama Ethics Op. 1994-13: Lawyer who has formerly represented a client may not represent another person in the same or a substantially related matter where the present client's interests are materially adverse to the former client
• Alabama Ethics Op. 1990-03: Lawyer should not undertake representation of client in matter adverse to former client which matter is substantially related to prior representation and where lawyer gained confidential information which may be used to detriment of former client
• Alabama Ethics Op. 1991-42: Suit against former client

Source

• Landing page: https://www.courts.ri.gov/attorney-resources/Pages/Ethics-Advisory-Panel-default.aspx
• Original PDF: https://www.courts.ri.gov/Opinions/EAP%202012-01.pdf

Original opinion text

Final

              Rhode Island Supreme Court Ethics Advisory Panel
                    Opinion No. 2012-01 Request No. 993
                           Issued January 12, 2012

FACTS

   The inquiring attorney seeks to represent a client in a bankruptcy matter in which a

property interest of the client's mother, who is a former client, could be affected. In 2011,
the inquiring attorney filed a Chapter 7 voluntary bankruptcy petition for the former client
(the "Mother"). The Mother received a discharge and the case was closed. Subsequently,
the inquiring attorney agreed to represent the client (the "son") in a Chapter 7 voluntary
bankruptcy petition. There is a debt collection judgment against the son, and as a
professional courtesy, the creditor's attorney agreed to postpone the son's citation hearing.

    During the preparation of the son's bankruptcy petition, the inquiring attorney

identified a transfer of real property from the son and his sister to the Mother in March
2010, which transfer may be at risk of being avoided during the son's bankruptcy case.
The transfer pertains to the Mother's current residence and was effected using a quitclaim
deed conveying the interests of the son and the daughter to the Mother. The inquiring
attorney states that this 2010 transfer essentially reversed a transfer made from the Mother
to the son and daughter in August 2003. He/she further states that both transfers were
made at the request of the Mother, and were for convenience if something happened to the
Mother. The mother is elderly and partially disabled.

     The inquiring attorney explains that because the transfer of the property to the

Mother in March 2010 occurred less than two years ago, if the son were to file bankruptcy
at this time, section 548(a) of the Bankruptcy Code would provide the bankruptcy trustee
with authority to consider avoiding the March 2010 transfer of the son's interest. The
Code also provides the trustee with authority to consider avoiding the transfer under Rhode
Island law. The inquiring attorney states that should a trustee choose to avoid the transfer,
the trustee could potentially recover the son's property interest through either a sale of the
Mother's property, or by placing a lien on the Mother's property and possibly liquidating
the lien to raise cash to pay creditors. The inquiring attorney further states that as a
practical matter, it is within the discretion of each bankruptcy trustee to determine if
moving to avoid the transfer and recovering any value is worthwhile.
Final Op. 2012-01
Page 2 of 3

ISSUE PRESENTED

   The inquiring attorney asks whether there is a conflict of interest in the

representation of the son in a bankruptcy matter in which a property interest of the Mother,
a former client, could be affected.

OPINION

    It is not a conflict of interest under Rule 1.9 for the inquiring attorney to represent

the son in a bankruptcy matter in which the property of the Mother, a former client, may be
affected. The son's bankruptcy matter is not the same matter or substantially related to the
Mother's bankruptcy matter.

REASONING

     Rule 1.9 entitled "Duties to former client" is applicable to this inquiry. In pertinent

part, it states:

   Rule 1.9. Duties to former client. (a) A lawyer who has formerly
   represented a client in a matter shall not thereafter represent
   another person in the same or a substantially related matter in
   which that person's interests are materially adverse to the interests
   of the former client unless the former client gives informed
   consent, confirmed in writing.

   (c) A lawyer who has formerly represented a client in a matter or
   whose present or former firm has formerly represented a client in a
   matter shall not thereafter:
   (1) use information relating to the representation to the
   disadvantage of the former client except as these Rules would
   permit or require with respect to a client, or when the information
   has become generally known; or
   (2) reveal information relating to the representation except as these
   Rules would permit or require with respect to a client.


   The question to be resolved in this inquiry is whether the bankruptcy petitions of

the son and of the Mother are the same or substantially related matters. Comment [3] to
Rule 1.9 is instructive. It provides in part:

   [3] Matters are "substantially related" for purposes of this Rule if
   they involve the same transaction or legal dispute or if there
   otherwise is a substantial risk that confidential factual information
   as would normally have been obtained in the prior representation

Final Op. 2012-01
Page 3 of 3

   would materially advance the client's position in the subsequent
   matter. For example, a lawyer who has represented a
   businessperson and learned extensive private financial information
   about that person may not then represent that person's spouse in
   seeking a divorce. Similarly, a lawyer who has previously
   represented a client in securing environmental permits to build a
   shopping center would be precluded from representing neighbors
   seeking to oppose rezoning of the property on the basis of
   environmental considerations; however, the lawyer would not be
   precluded, on the grounds of substantial relationship, from
   defending a tenant of the completed shopping center in resisting
   eviction for nonpayment of rent.

    The subject of the son's bankruptcy matter are his debts and assets vis-a-vis his

creditors. The subject of the Mother's bankruptcy matter were her debts and assets vis-a-
vis her creditors. The Panel is of the opinion that the Mother's bankruptcy matter and the
son's bankruptcy matter are not the same or substantially related matters. Therefore, the
Panel concludes that it is not a conflict of interest for the inquiring attorney to represent the
son in his bankruptcy petition. The Panel further advises the inquiring attorney that under
Rule 1.9 (c), the inquiring attorney shall not use information relating to the Mother's
representation to the disadvantage of the Mother, or reveal information relating to the
representation, except as the Rules would permit or require.