[CLBS] Fwd: Utah Ethics Advisory Opinion Committee Revises Previous Opinion Related to “Zero-Down” Chapter 7 Bankruptcy Practices

[Paul Ross]

Thought I would share this with the bar since the Utah bar opinion and the
response were a hot discussion at the Seminar earlier this year.


Paul




Last September, the Utah Ethics Advisory Opinion Committee issued Opinion
No. 17-06. BK Billing responded by broadcasting this opinion to all of its
subscribers, but as of August 16, 2018, this Ethics Opinion has been
revised.

Substantial portions of the original Opinion have been deleted or
clarified. For example, the following content has now been added to the
Revised Opinion:


   -

   “No case can be unbundled where prohibited by statute, case law or court
   rules.” (For an example of such rules see, e.g., Local Rule 2091-1,
   mandating that an attorney who is retained to represent a client in a
   Chapter 7 case “must represent and advise the debtor in all aspects of the
   case, including the meeting of creditors, motions filed against the debtor,
   and post-confirmation matters . . . The scope of the representation
   cannot be modified by agreement” (emphasis added)).



   -

   “A representation that speed is needed in filing the initial petition is
   subject to the duty of diligent representation under Rule 1.3 of the Utah
   Rules of Professional Conduct. A false representation that speed in filing
   is needed is precluded as a “false or misleading communication about the
   lawyer’s services” and thus, precluded by Rule 7.1(a) of the Utah Rules of
   Professional Conduct.”



   -

   “A lawyer must comply with all general and local rules of the bankruptcy
   court, and this Opinion does not mean to imply or suggest otherwise.”



   -

   “The Committee expresses no opinion on when a debt might be considered
   post-petition under applicable bankruptcy law. Such a question goes beyond
   the interpretation of the Utah Rules of Professional Conduct.”



   -

   “Should the United States Bankruptcy Court for the District of Utah
   decide that unbundling of Chapter 7 petitions is not allowed, this opinion
   relates only to situations in which unbundling is allowed by law. The
   Committee expresses no opinion as to local Utah bankruptcy rules and law.”



   -

   “ . . . in cases of financed Chapter 7 bankruptcies, the financing
   lawyer increases his fee by as much as 50% to 184%. This Opinion should not
   be read as indicating approval of such price increases. Indeed, such price
   increases may implicate Rule 1.7(a)(2) of the Utah Rules of Professional
   Conduct, in that the representation of a client might be adversely impacted
   by the personal interest of the lawyer.”



   -

   “Care must be taken to include only fees generated post-petition in the
   post-petition attorney fee contract. Care must also be given to full
   disclosure of the necessity for further work and the amount to be charged.”


Read the full Revised Opinion here
<https://drive.google.com/open?id=1x_34HgRLfSpz4CmsF2bsKppt9J5vZAU5>.


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