FBA Program on Unbundling and Limited Scope Representation

I had a great time on Friday doing a program for the Federal Bar Assn with Judge Sandra Klein.  We tried to summarize the various code sections and rules that circumscribe unbundling and limited scope representation, at least in the central district.   The point was to show that there are really not very many black-letter rules. The point also is that attys may enter into agreements with persons which limit the efforts the atty will make on behalf of the person – subject to only a few rules.

I will summarize the rules.  It helps me get it clear in my head.

United State Constitution – nothing (tongue firmly in cheek).

Bankruptcy Code:

Section 329 deals with disclosing payments made in the past year to the attorney “in contemplation of or in connection with the case.”  The atty must disclose what he has received in the past year.

Section 526 tells the atty basically not to lie to the debtor.  In (c) it says that if you violate this code section any contract between the debtor and the atty is “void,” but may be enforced by the debtor.  It states what the atty must NOT do.

Section 527 requires lots of disclosures by the atty to the debtor “in a clear and conspicuous writing.”  In (c), the atty is required to give the debtor information on such things as “how to value assets.”

Section 528 requires a written agreement between the debtor and the atty “not later than 5 days” after first “providing assistance” to the debtor.

Section 707(b)(4)(C)(i) provides that the atty must “perform a reasonable investigation into the circumstances that give rise to the petition.”

Bankruptcy Rules:

FRBP 2016: requires disclosure to the UST of the payments set forth in section 329.

LBR 2090-1 specifically states that the atty may limit the efforts he will make on behalf of the debtor BUT the atty must 1) advise the debtor about the possibility of any additional proceedings related to or arising from the underlying bankruptcy case,” and 2) appear at the 341(a) or “arrange for an atty knowledgeable about all pertinent information in the case to appear with the debtor at such meeting.”

LBR 3015-1(v) deals with the RARA in chapter 13.

California Rules:

Rule 3-110 says “thou shall act competently.”  “Thou shall volunteer opinions that further the client’s objectives” even if the opinion is outside of the scope of services to be rendered.    “Even when retention is limited, the atty should ‘alert’ the client to legal problems that are reasonably apparent.”  Nichols v. Keller, 15 Cal. App. 4th 1672.

Cal Bus & Prof Code 6148 requires a written agreement when the fees are going to exceed $1,000 although if there is no written agreement, the atty may still seek reasonable fees.

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