Bankruptcy

No, a Bankruptcy Lawyer Should Not Withdraw from the Case if the Client Won?t Tell the Truth

By Craig Andresen, Minnesota Bankruptcy Attorney

Bankruptcy lawyers often ask one another for advice about difficult questions, especially questions involving how to handle problem bankruptcy clients.  A question that sometimes comes up is what the lawyer should do if the bankruptcy client tells the lawyer that something in the bankruptcy papers is false, because the client has intentionally concealed something from the court and the trustee.

If the client refuses to amend the bankruptcy papers, and insists that the lawyer acquiesce in the deception, the typical response is that the lawyer should withdraw from the case immediately.  However, this is not the lawyer’s primary duty, and it’s clear to this writer that the lawyer should not withdraw.  After all, isn’t it the lawyer’s job to counsel and guide the client through the bankruptcy process?  Should the lawyer really bail from the case when the going gets tough and some real counseling skills are called for?  Isn’t this situation an illustration of why the lawyer is sometimes called a Counselor at Law?

When the bankruptcy client insists that the lawyer allow the client to continue to conceal information from the court, the client is asking the lawyer to allow the client to continue committing a bankruptcy crime, not to mention risking that his or her debts won’t be discharged.  The lawyer could even lose his or her law license, or be charged with a bankruptcy crime along with the client, if the lawyer fails to act quickly.  However, the action taken by the lawyer should be focused on helping the client avoid a possible legal disaster, rather than the lawyer acting to save his or her own skin.

This means that when faced with a client who has lied to the bankruptcy court, the lawyer should know that withdrawal from the case is an absolute last resort.  Instead, the lawyer should explain to the client, over and over again if necessary, why the client must agree to amend the bankruptcy papers.

The client must understand that lying to the court is a federal crime; that lying to the court is grounds for denial of a bankruptcy discharge; that trustees are excellent investigators with substantial resources at their disposal; that deceptions are difficult or impossible to successfully maintain in a federal court proceeding; that explosive secrets of this nature rarely can be kept forever by the human beings involved (except that lawyers have an obligation to do this); and that even legal professionals who should have known better have had their lives ruined by lying in federal court proceedings.

In short, the lawyer needs to make sure the client knows what the lawyer knows: the lie will eventually be discovered.  The client needs to confront this fact and agree to be truthful to the court.  It is a rare client whose force of personality cannot be overcome by his or her lawyer’s carefully presented arguments, especially where the client is clearly wrong, and the client is committing a crime by refusing the lawyer’s advice.

The lawyer’s impulse to withdraw from the case of a bankruptcy client who has lied to the court should be resisted.  This is the moment the client truly needs the lawyer’s advice, where the lawyer help change the course of the client’s life.  Obviously, there is no way for the lawyer to help the client if the lawyer withdraws from the case.  Instead, the lawyer should start out knowing that when confronted with an untruthful bankruptcy client, the client is going to decide, after consulting with the lawyer, to tell the truth to the court.  If this is the lawyer’s approach, it is unlikely he or she will ever have to withdraw from a bankruptcy case based on the client’s untruthfulness.

Full post as published by Bankruptcy Law Network on June 06, 2010 (boomark / email).