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MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 1989-47
Whether declaration required of attorney in bankruptcy proceeding that legal alternatives were explained to client violates confidentiality rules or attorney-client privilege
This Committee has been asked whether the execution of a ""Declaration"" as required by Public Law 98-353, verifying that an attorney has informed his client of various debtor relief alternatives available under the Bankruptcy Code, impermissibly breaches the attorney-client privilege or constitutes a breach of Rule 1.6, Maryland Rules of Professional Conduct, which requires that a lawyer ""shall not reveal information relating to representation of a client unless the client consents after consultation The Committee is of the opinion that it does not.In 1984 Congress enacted a series of amendments to the Bankruptcy Code in the Bankruptcy Amendments and Federal Judgeship Act of 1984, Public Law 98-353. Section 322 of that Law added to Official Bankruptcy Form No. 1 (the basic form of petition initiating proceedings under the Bankruptcy Code) a ""Declaration"" required to be executed by the attorney in every instance where a represented bankruptcy petitioner is an individual whose debts are primarily consumer debts. The Declaration reads as follows:
I, the undersigned attorney for the petitioners named in the foregoing petition, declare that I have informed the petitioners that he/she/they may proceed under Chapter 7, 11, 12 or 13 of Title 11, United States Code, and have explained the relief available under each chapter.
Executed on:
_________________
Signature of attorney
for debtor(s)
Congress saw fit to require the attorney Declaration a sa condition for filing a bankruptcy petition. The legislative history links the requirement of a ""mechanism for debtor counseling prior to the final designation by the debtor of the chapter under which relief is requested"" to a provision which emerged as Bankruptcy Code Section 707(b), authorizing a court sua sponte to dismiss a consumer debtor case under Chapter 7 upon a finding of ""substantial abuse"" of that Chapter. See Senate Report 98-65, 98th Cong. lst Sess., pp. 4-22, [discussing the Consumer Credit Amendments which emerged later in the 98th Congress as Subtitle A of Public Law 98-3531. The enactment of the ""Declaration"" requirement by Congress is, of course, within the competence of that legislative body's Constitutional power to establish ""uniform Laws on the subject of Bankruptcies"", Article I, Section 8, Clause 4.
Rule 1.6 of the Maryland Rules of Professional Conduct excepts from the general rule against revealing information relating to a representation ""disclosures that are impliedly authorized in order to carry out the representation"" (Rule 1.6(a)]. It further permits the revelation of information the lawyer reasonably believes necessary ""to comply with . . . a court order or other law' [Rule 1.6(b)(4)].
The Commentary to Rule 1.6 as enacted in Maryland notes under the heading ""Authorized Disclosure"" that ""A lawyer is impliedly authorized to make disclosures about a client when appropriate in carrying out the representation, except to the extent that the client's instructions or special circumstances limit that authority. In litigation, for example, a lawyer may disclose information by admitting a fact that cannot properly be disputed, or in negotiation by making a disclosure that facilitates a satisfactory conclusion.""
A lawyer who is engaged to file a bankruptcy petition for a debtor is obligated by Rule 1.4(b), Maryland Rules of Professional Conduct, to ""explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation"": a requirement little different from that stated in the Declaration. Among the matters the lawyer must discuss with the client are the consequences of filing a bankruptcy petition. If the client is an ""individual whose debts are primarily consumer debts"" and who seeks to be represented by counsel, one of those consequences is that the lawyer will be required to sign the Declaration. If the client wishes to avoid having his attorney execute the Declaration, the lawyer might explain to the client the alternative of filing a petition without counsel. But once that ""informed"" client has determined to have the attorney file the bankruptcy petition on his behalf, the client necessarily brings himself within the exceptions of Rule 1.6(a) and 1.6(b)(4).
The client may expressly direct the attorney not to execute the Declaration; hence, not to reflect that the attorney has advised the client of the Title 11 alternatives. To do so is similar to instructing an attorney not to comply with Federal Rule of Civil Practice 11 or not to comply with other rules which govern attorneys. The attorney must make clear that if he is going to institute the proceeding, he will have to make certain disclosures and comply with the law and rules applicable to that legal process. If the client prohibits such compliance, the attorney may not act. Absent compliance, clients simply may not avail themselves of certain legal processes, or at least may not avail themselves of a lawyer's services in connection there with. If the client - duly informed - authorizes the attorney to proceed, the client must understand that he has authorized the lawyer to make the disclosures required by law, to execute documents required by the rules, and possibly to undertake certain obligations on behalf of the client. The client who authorizes the attorney to proceed, thereby authorizes the disclosures required by law and required ""in order to carry out the representation"".
The attorney-client privilege, a doctrine of evidence, protects a client from unauthorized disclosures of confidential communications made to his/her attorney which relate to the legal advice sought. 8Wigmore, Evidence §2292 (McNaughton rev. 1961). The federal courts have held legal advice or opinion given by an attorney to his client to be within the protection of the privilege. U.S. v. Amerada Hess Corn., 619 F.2d 980, 986 (3d Cir. 1980). However, when the communication is from the attorney to the client, the privilege applies only if the communication is based upon confidential information provided by the client. Mead Data Central, Inc. v. U.S. Dept, of the Air Force, 566 F.2d 242, 254 (D.C. Cir. 1977). As stated by the Court of Appeals for the D.C. Circuit Court in Brinton v. Department of State, 636 F.2d 600, 604 (D.C. Cir. 1980):
""Whatever the precise formulation of this standard, it is clear that when an attorney conveys to his client facts acquired from other persons or sources, those facts are not privileged.""
If there is no confidence, there is no privilege. In an oft-cited extract from U.S. v.United Shoe Machinery, 89 F. Supp. 357, 358-359 (D. Mass.1950) Judge Wyzanski noted that to be within the privilege, the statement must be made ""without the presence of strangers"". In Burlington Industries v. Exxon Corporation, 65 F.R.D. 26 (D. Md. 1974), that was amplified to mean:
The requirement that the communication be made ""without the presence of strangers"" means that the communication must have been intended as confidential, i.e., not intended to be related to others. International Business Machines Corp. v. Sperry-Rand Corp., 44F.R.D. 10 (D. Del 1968); United States v. Tellier, 255 F.2d 441 (2d Cir. 1958).
As noted above, the determination of the client to authorize his attorney to file a bankruptcy petition equates to authority to sign the Declaration and to make those disclosures required by law to carry out the representation. Once the disclosures are authorized by the client, they fall outside the attorney-client privilege.
It has been suggested that the required Declaration involves the threat of a breach of the policy behind the attorney-client privilege: to wit, encouragement of full and frank communication by the client in seeking advice from his lawyer. In the instance of the required Declaration, no such danger is apparent. The Bankruptcy statute requires that an attorney inform the client of the various Bankruptcy Code alternatives as a prerequisite to the attorney's execution of the Declaration, a required part of a bankruptcy petition filing. Whether or not the, client disclosed any confidences to the attorney, the obligation of the attorney to make the required explanation would exist. The attorney's execution of the Declaration merely confirms that the attorney did what was required by Congress as a condition to filing the bankruptcy petition on behalf of his client. The Declaration is not in response to an inquiry about the client, nor does it require the attorney to reveal any specific statement emanating from the client. To the extent that the attorney made the explanation and the client determined to go ahead with the bankruptcy petition filing, it is also apparent that the client has waived any confidentiality privilege, hence any attorney-client privilege, with respect to that limited information.
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