The Bankruptcy Ethics Task Force's Final Report

Thanks to Bob and Credit Slips for the warm welcome.  In April, after two long years, we completed the American Bankruptcy Institute Ethics Task Force's Final
Report. This week we will be guest blogging about “bankruptcy ethics” and
discussing many of the issues we confronted as Reporters. We will also do
our best to summarize the white papers, “best practices” narratives,
and proposed rules presented in the Final Report.

Here is some background about the Task Force and its work product. In 2011, then-ABI President Geoffrey L. Berman asked us if we would serve as Reporters for the newly formed ABI National Ethics Task Force. The Task Force was constituted to address a problem familiar to all bankruptcy professionals and judges: state ethics rules do not always “fit” with the realities of bankruptcy practice. State ethics rules may also not be a perfect fit in the context of other types of practice, either—for example, states may not yet know how best to handle the increasingly interconnected digital and virtual world—but it is clear that the Model Rules do not fit neatly in a practice that involves numerous parties with changing allegiances, often departing from the classic two-party adversarial proceeding.

Obviously, there are dozens of topics the Task Force could have potentially addressed, but due to time and resource constraints (did we mention this was a two-year project?) we narrowed the field and ultimately produced reports on seven topics. These included the conflicts-related issues that result from the shifting allegiances that can arise during the life of a bankruptcy case, the complexity of disclosure of “connections” when seeking approval of employment, the fleshing out of the duties of counsel for a debtor in possession, and the role of conflicts counsel in business reorganization cases. Other issues implicated in the context of bankruptcy practice, while not specifically at odds with state ethics rules—for example, the concept of attorney competency and the pressing question of how to balance the need for a capable and skilled bar with the need to provide consumers in financial distress access to the bankruptcy system—were addressed in order to provide needed guidance to bankruptcy attorneys. 
   
The Task Force also found several worthy topics—including the issue of retainers and employment, standards for practice competency for creditors’ counsel, and the issue of ghostwriting a debtor’s petition and schedules as a way of addressing bankruptcy access—that time constraints prevented from fully developing.  It is our expectation that these important issues will be taken up in the near future by another ABI working group or committee.

The ABI Ethics Task Force Final Report was a collaborative effort of the Task Force Members.  Our thanks go out to colleagues Judy Miller, as Chair, Chip Bowles, Jr., Richard Carmody and Michael Richman as Vice-Chairs, and Terri Brown-Edwards, Jim Cossitt, Ted Gavin, Rob Charles, Susan Freeman, Hon Barry Russell, Hon Elizabth Stong, Rick Meth, Steve Schwaber, and Andy Vara as members. ABI Presidents (and Past Presidents) Bob Keach, Geoff Berman, and Jim Markus served ex officio.

It is our hope that this Report will be a useful tool for attorneys seeking more guidance on a host of ethics-related issues than they currently get from the bankruptcy code and from state ethics rules.