FACTS[1]
The inquiring attorney is appointed as trustee in bankruptcy cases on a regular basis. Lawyers are often appointed as bankruptcy trustees. Similarly, non-lawyers also are appointed to serve as trustees. Each trustee is assigned to many open bankruptcy cases. The trustee in the ordinary course of performance of her duties would have direct personal contact with persons or parties in the bankruptcy case, including debtors, who are represented by counsel in the matter. The trustee is authorized by the Bankruptcy Code to retain counsel with approval of the bankruptcy court, including her firm, but does not retain counsel in the majority of cases. The trustee usually retains counsel to represent the trustee's interest in a dispute, with court approval, under 11 U.S.C. § 327 and Bankruptcy Rule 2014.
In many cases, the trustee must communicate with the debtor on a regular basis - to obtain information, for scheduling purposes, to determine claims, recover and liquidate assets, and on a host of other matters within the trustee's responsibility or discretion. Similarly, the trustee regularly communicates with creditors and other interested parties. In some cases, disputes arise between the trustee, on behalf of the bankruptcy estate, and another party, usually the debtor or creditors. These disputes may give rise to litigation in the bankruptcy case called contested matters or adversary proceedings.
The trustee ordinarily has no personal interest in a bankruptcy case, and serves as a fiduciary to the interests of the debtor, creditors, and other interested parties.
May a member of the State Bar of Arizona, who is a bankruptcy trustee, directly contact a person or party in the bankruptcy case who is represented by counsel?
ER 4.2. Communication with Person Represented By Counsel
In representing a client, a lawyer shall not communicate about the subject of the representation with a party the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized by law to do so.
ER 4.3. Dealing with Unrepresented Person
In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer's role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding.
ER 8.4. Misconduct
It is professional misconduct for a lawyer to:
(a) violate or attempt to violate the rules of professional conduct, knowingly assist or induce another to do so, or do so through the acts of another;
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Ariz. Op. 96-02
Ariz. Op. 00-06
Ariz. Op. 02-02
Lawyer serving in a different role.
A lawyer is subject to ethical rules in a number of contexts beyond situations where the lawyer represents a client. E.g., ERs 8.4 (misconduct) and 3.3 (candor toward the tribunal). The question presented here is narrower - what is the restriction on a lawyer-trustee in bankruptcy with respect to ex parte communications with parties represented by counsel?
In Ariz. Op. 2000-06, the Ethics Committee explained that a lawyer appointed solely as guardian ad litem for a juvenile where the juvenile has separate counsel is not in an attorney-client relationship with the juvenile. Therefore, the lawyer was not bound by ER 1.6's ethical duties of confidentiality. The Ethics Committee explained in Ariz. Op. 2000-06that some of the ethical rules may bind an attorney acting in a particular function while other ERs might not apply:
Attorneys routinely function in roles that draw upon their experience in and knowledge of the law, even though they do not act directly as a lawyer. It is undisputed that attorneys are still bound by the Rules of Professional Conduct regardless of whether their primary function includes an attorney-client relationship or whether other attorneys are involved. See Ariz. Op. 96-01 (attorney-mediator). The application of a particular ethical rule to an attorney acting in another role depends upon the language of the rule and the conduct involved. See, e.g., Ariz. Op. 93-09 (Rule 1.7 does not apply to attorney-legislator).
Ariz. Op. 2000-06 at 3. The plain language of ER 4.2 prevents a lawyer representing a client from contact with a person or entity represented by counsel absent the other lawyer's consent or legal authorization. The rule prohibits both direct contact as well as indirect contact, such as sending a communication to opposing counsel with a copy to the lawyer's client. Ariz. Op. 02-02.
In a different context, Ariz. Op. 96-02 explained the purpose of the rule:
The purpose of the prohibition on ex parte contacts with a party known to be represented by counsel is to "(1) prevent unprincipled attorneys from exploiting the disparity in legal skills between attorneys and lay people, (2) preserve the integrity of the attorney-client relationship, (3) help to prevent the inadvertent disclosure of privileged information, and (4) facilitate settlement." Lang v. Superior Court, 170 Ariz. 602, 604, 826 P.2d 1228, 1230 (App. 1992), citing Polycast Technology Corp. v. Uniroyal, Inc., 129 F.R.D. 621, 625 (S.D.N.Y. 1990).
Ariz. Op. 96-02 at 2. The question presented presumes the other lawyer does not consent, or that the trustee is concerned about the burden imposed by requesting and awaiting consent. The issue, therefore, is whether the trustee's legal responsibility authorizes contact with a represented party without that party's counsel's consent, or whether there is another exception.
Whether the trustee is representing a client.
Ethical Rule 4.2 applies only when a lawyer is "representing a client." A bankruptcy trustee, in contrast to a party in litigation or a transaction, does not have an interest in the bankruptcy case or disputes that arise in the case, except perhaps matters concerning the trustee's compensation. On the contrary, a trustee serves as a fiduciary for the competing interests in the bankruptcy case. See Holywell Court v. Smith, 503 U.S. 47, 112 S.Ct. 1021, 1026 (1992). Thus, the trustee is not representing a client in the course of performing his or her duties in a bankruptcy case.
Ethical Rule 4.2 does not prohibit one client from contacting another directly. The official comment to ER 4.2 acknowledges that "parties to a matter may communicate directly with each other . . ." Accord Restatement of the Law Governing Lawyers § 99, cmt. k (2000).
As such, where the lawyer is acting as the trustee, the lawyer-trustee, as a party, may directly contact other parties in the bankruptcy case without their counsel's consent. See Ariz. Op. 2000-06 (attorney guardian may directly contact minor who is represented by counsel).
This is not to say that a lawyer may have ex parte contacts if he or she is a party to a dispute. In two cases, Arizona lawyers were disciplined for such communications. In re Sproull, 2002 Ariz. Lexis. 45 (Supreme Court No. SB-02-0004-D 2002); In re Hohn, 171 Ariz. 539, 832 P.2d 192 (1992). But see Restatement (Third) of the Law Governing Lawyers § 99(1)(b), cmt. e (2000) (arguing that the rule against contact with a represented non-client does not apply where "the lawyer is a party and represents no other client in the matter").
Some communications may be authorized by law.
As indicated, a lawyer may be appointed as counsel to the trustee, including the trustee's law firm. In that case, the lawyer for the trustee is representing a client. Even so, the lawyer may be authorized by law to have certain limited ex parte communications. In the course of performing the duties of the trustee under Bankruptcy Code § 7004, and giving notices under Bankruptcy Rule 2002, for example, counsel for the trustee may be required to send notice to parties identified on a master mailing list even where they are represented by counsel. To the extent such communication is authorized by law, it is outside the prohibition of ER 4.2 and Ariz. Op. 02-02, which prevent a lawyer from sending a represented client a copy of a communication to the client's lawyer. See, e.g., ABA Formal Op. 95-396 (determining that "authorized by law" includes a constitutional provision, statute, or court rule, having the force and effect of law). So too, would a court order.
The lawyer-trustee may communicate directly with persons who are represented by counsel concerning the subject matter of the bankruptcy case. This direct communication is limited to situations where an attorney is appointed to act exclusively as a bankruptcy trustee. If the attorney has a dual appointment to act also as attorney for the trustee, then ER 4.2 applies and prohibits ex parte contacts and communications, unless otherwise authorized by law.
[1] Formal Opinions of the Committee on the Rules of Professional Conduct are advisory in nature only and are not binding in any disciplinary or other legal proceedings. Ó State Bar of Arizona 2003