MSBA’s Consumer Bankruptcy Session held its June Mary Park McLean Brown Bag Lunch on June 25, on the topic of Ethics. Nearly 70 attendees logged on to the presentation, which began with welcoming remarks from Chief Judge Thomas J. Catliota, U.S. Bankruptcy Court for the District of Maryland. 

The lunch kicked off with speaker Erin A. Risch, Deputy Bar Counsel, guiding attendees through an in-depth look at Attorney Grievance Commission v. Smith-Scott, in which an attorney was disbarred after what the Court of Appeals called “an attorney’s overzealous self-representation in a voluntary bankruptcy proceeding in the United States Bankruptcy Court for the District of  Maryland.” Ms. Risch noted particularly egregious facts, including the attorney’s refusal to follow court orders, appear for hearings, and repeated obstructive behavior. The Court of Appeals found 16 rule violations, some multiple times; Ms. Risch explained that dishonesty and misrepresentation were at the heart of the attorney’s personal bankruptcy case. 

Gerard R. Vetter, Assistant U.S. Trustee in Baltimore, then turned the discussion toward the American Bar Association’s recent Formal Opinion No. 496 (Jan. 2021), which focused on how to best handle responding to online criticism from a client while complying with ABA Model Rule of Professional Conduct 1.6, “Confidentiality,” which prohibits an attorney’s voluntary disclosure of “any information that relates to a client’s representation” without a client’s informed consent, prior authority to disclose, or the application of an exception to the general rule. 

Mr. Vetter reviewed the Opinion’s suggested best practices in responding to online criticism. These include requesting that the host of a website remove the post, indicate in a posting that professional obligations prevent the attorney from responding, or, seriously consider not responding in all situations, because responding could cause an online criticism to move up in search results. Although this Opinion was not specifically bankruptcy-related, Mr. Vetter noted that on occasion, trustees bring to an attorney concerns about their representation of clients, specifically as it relates to the rule against disclosure. Mr. Vetter noted that a trustee may sometimes have an obligation to refer attorneys to bar counsel.

L. Jeanette Rice, Assistant U.S. Trustee, reviewed bankruptcy-related legal fees and the obligations an attorney has to notify the court of fees charged. Ms. Rice referred to 11 U.S.C. § 329, under which disclosure is mandatory and must be direct and comprehensive. Ms. Rice noted that the consequences for failure to disclose include a court order of disgorgement of fees, or a return of excessive fees to the state.

In addition to disclosure requirements, Ms. Rice touched on the requirement that bankruptcy legal fees must be reasonable and that the court will determine reasonableness. As an illustration she pointed to In re Starner, in which the Bankruptcy Court reduced some legal fees in a case in which the attorney charged a high hourly rate for some work that was routine and could have been handled by a paralegal and because the fee was significantly higher than in similar cases.  

Attorney Frederick Nix, of the Law Office of Rebecca A. Herr, concluded the webinar with a discussion of an attorney’s responsibility to maintain an attorney trust account under the Maryland Attorneys’ Rules of Professional Conduct. Mr. Nix’s discussion ranged from Rule 19-403, the duty to maintain the account; to 19-404, required deposits (which includes all funds, including those paid in cash); to 19-406, requiring deposit slips to be clearly marked as IOLTA. Mr. Nix noted that attorneys should obtain an independent software system to track the requirements of the statute. He also urged listeners that if maintaining these financial records is beyond their skill set, professional help should be retained. 

Mr. Nix emphasized the dire consequences of failure to meet these requirements, noting, for example, that if an account goes into a negative balance, the bank must report that information to Bar Counsel.