Can a lawyer-creditor tell the bankruptcy court that a former client hid property the lawyer learned of during the representation?

Plain-English summary

The lawyer represented a client who signed a personal note for outstanding attorney's fees, did not pay, and moved out of state. The client then filed Chapter 7 bankruptcy naming the attorney as an unsecured creditor and received a "no asset" discharge. The attorney later saw a newspaper article indicating the client continued to own a parcel of property the attorney recognized as having belonged to the former client, and which the attorney had learned about through the attorney-client relationship. The attorney suspected, but had not verified, that the client did not list the property in the bankruptcy petition.

The question was whether the attorney may disclose to the bankruptcy court the former client's failure to list the property, given that the attorney learned of the property in the course of the representation and had filed a claim in the bankruptcy for unpaid fees. The committee concluded that, assuming the client failed to list the property, the attorney may advise the bankruptcy court of this fact under RPC 1.6(b)(2) in order to establish the attorney's claim against the client for the fee, if the claim is still legally viable.

Currency note

This opinion was issued in 1997, before the Washington State Bar Association's adoption of the 2006 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here. Washington's cited rule corresponds to ABA Model Rule 1.6 (confidentiality), and the cited provision allows disclosure to establish a claim or defense in a controversy between the lawyer and client.

Common questions

Q: Can the lawyer tell the bankruptcy court about the hidden property?

A: The committee concluded that, assuming the client failed to list it, the attorney may advise the court of it under RPC 1.6(b)(2) to establish the attorney's fee claim, if the claim is still legally viable.

Q: Why is disclosure permitted despite confidentiality?

A: The committee relied on RPC 1.6(b)(2), which permits disclosure to establish a claim on the lawyer's behalf in a controversy between the lawyer and the client, here the attorney's claim for unpaid fees.

Q: Does it matter that the lawyer had not confirmed the property was omitted?

A: The committee's conclusion was expressly conditioned on the assumption that the client failed to list the property in the bankruptcy proceeding.

Background and rules framework

The opinion applied RPC 1.6(b)(2) (the self-protection exception to confidentiality, corresponding to ABA Model Rule 1.6) to a lawyer-creditor who learned of a former client's property during the representation. The committee tied permitted disclosure to establishing the lawyer's own fee claim in the bankruptcy and conditioned it on the claim remaining legally viable and on the property in fact having been omitted.

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 1.6 (confidentiality; exception to establish a claim between lawyer and client); Washington RPC 1.6(b)(2)

See also

• WA Ethics Op. 1754: Confidences in a Malpractice Defense
• WA Ethics Op. 1714: Reporting Tax Fraud in a Divorce
• WA Ethics Op. 1756: Confidential Client and Conflicts Check

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=831

Original opinion text

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

Advisory Opinion: 1767
Year Issued: 1997
RPC(s): RPC 1.6(b)(2)
Subject: Client confidence or secret; disclosure of client's failure to disclosure property in bankruptcy where lawyer is creditor

Facts Presented: Lawyer represented a client who signed a personal note for outstanding attorney's fees. The client did not pay the note and moved out of state. The client then filed a Chapter 7 bankruptcy naming the attorney as an unsecured creditor and received a "no asset" discharge in bankruptcy. The attorney recently saw a newspaper article indicating this client continued to own a piece of property which the attorney recognized as having been a parcel belonging to the former client. The attorney learned about the client's ownership of this parcel of land as a result of the attorney/client relationship with the former client. The attorney suspects that the client did not list the property in his bankruptcy petition (the attorney has not verified this by obtaining a schedule of assets filed by the client's bankruptcy proceeding).

Question Presented: May an attorney disclose to a bankruptcy court the failure of the former client to list real property owned by the former client when (1) the attorney learned of the existence of the real property in the course of representing the client, and (2) the attorney filed a claim in the client's bankruptcy proceeding for unpaid legal fees?

Applicable Rules: RPC 1.6(b)(2).

RPC Committee Opinion: Assuming that the client failed to list the real property in his bankruptcy proceeding, the attorney may advise the bankruptcy court under RPC 1.6(b)(2) of this fact in order to establish his claim against the client for his fee, if the claim is still legally viable.