Bankruptcy Edition 2019

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Practical and entertaining education for
attorneys, accountants, business owners
and executives, and investors.
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DISCLAIMER
The material in this webinar is for informational purposes only. It should not be
considered legal, financial or other professional advice. You should consult with an
attorney or other appropriate professional to determine what may be best for your
individual needs. While Financial Poise™ takes reasonable steps to ensure the information
it publishes is accurate, Financial Poise™ makes no guaranty in this regard.
About this PowerPoint: if you are looking at this PowerPoint without the benefit of
listening to the conversation that surrounded it then you are doing yourself a disservice.
This PowerPoint was prepared in contemplation of being viewed in conjunction with
listening to a one hour webinar on the topic
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Thank You To Our Sponsor
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MEET THE FACULTY
Moderator:
John Martin – Sugar Felsenthal Grais & Helsinger LLP
Panelists:
Bernie Burk –University of Memphis Cecil C. Humphreys School of Law
George Kuney – University of TN College of Law
Matthew Christensen – Angstman Johnson
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ABOUT THIS WEBINAR:
Bankruptcy Edition
Lawyers owe a wide variety of duties to their clients under generally applicable rules of
ethics. What happens to those duties when the client intends to declare bankruptcy, or if
the client is the representative of a bankrupt estate? Join us for a discussion of how rules
relating to communication, conflicts, and candor are modified or expanded in the unique
context of insolvency proceedings.
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ABOUT THIS SERIES:
Legal Ethics – Best Practices 2019
Corporate scandals make the headlines periodically, but businesses and the lawyers that
work with them face ethical challenges every day, even in situations that are legally
compliant. This webinar series examines ethical issues confronted by businesses in a
variety of contexts, from so called “grey areas” to those involving outright corruption. The
panels consider and recommend different approaches to ethical decision-making and the
lawyer's role in advising business clients.
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EPISODES IN THIS SERIES
8/21/19 Episode #1:
Bankruptcy Edition
9/18/19 Episode #2:
Hot Off the Press- Recent Cases & Decisions
10/16/19 Episode #3:
Ethical Problems Associated with Paying for Litigation
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Dates shown are premiere dates.
All webinars will be available
On Demand approximately 4 weeks
after they premiere.

Episode #1:
Bankruptcy Edition
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A Person, Natural or Juridical, Walks
into a Lawyer’s Office
(Some Rules to Keep in Mind)
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Rule 1.1-- Competence
A lawyer shall provide competent representation to a client. Competent
representation requires the legal knowledge, skill, thoroughness and
preparation reasonably necessary for the representation.
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Rule 1.4-- Communications
(a) A lawyer shall:
(1) promptly inform the client of any decision or circumstance with respect to which the client's informed consent, as
defined in Rule 1.0(e), is required by these Rules;
(2) reasonably consult with the client about the means by which the client's objectives are to be accomplished;
(3) keep the client reasonably informed about the status of the matter;
(4) promptly comply with reasonable requests for information; and
(5) consult with the client about any relevant limitation on the lawyer's conduct when the lawyer knows that the client
expects assistance not permitted by the Rules of Professional Conduct or other law.
(b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions
regarding the representation.
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Rule 1.13 (a-b)-- Organization as Client
(a) A lawyer employed or retained by an organization represents the organization acting through its
duly authorized constituents.
(b) If a lawyer for an organization knows that an officer, employee or other person associated with
the organization is engaged in action, intends to act or refuses to act in a matter related to the
representation that is a violation of a legal obligation to the organization, or a violation of law
that reasonably might be imputed to the organization, and that is likely to result in substantial
injury to the organization, then the lawyer shall proceed as is reasonably necessary in the best
interest of the organization. Unless the lawyer reasonably believes that it is not necessary in the
best interest of the organization to do so, the lawyer shall refer the matter to higher authority in
the organization, including, if warranted by the circumstances to the highest authority that can
act on behalf of the organization as determined by applicable law.
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Rule 1.13 (f-g)-- Organization as Client
(f) In dealing with an organization's directors, officers, employees, members, shareholders or other
constituents, a lawyer shall explain the identity of the client when the lawyer knows or
reasonably should know that the organization's interests are adverse to those of the constituents
with whom the lawyer is dealing.
(g) A lawyer representing an organization may also represent any of its directors, officers,
employees, members, shareholders or other constituents, subject to the provisions of Rule 1.7. If
the organization’s consent to the dual representation is required by Rule 1.7, the consent shall
be given by an appropriate official of the organization other than the individual who is to be
represented, or by the shareholders.
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Rule 1.18 (a-c)-- Duties to Prospective Client
(a) A person who consults with a lawyer about the possibility of forming a client-lawyer relationship with
respect to a matter is a prospective client.
(b) Even when no client-lawyer relationship ensues, a lawyer who has learned information from a prospective
client shall not use or reveal that information, except as Rule 1.9 would permit with respect to information
of a former client.
(c) A lawyer subject to paragraph (b) shall not represent a client with interests materially adverse to those of a
prospective client in the same or a substantially related matter if the lawyer received information from the
prospective client that could be significantly harmful to that person in the matter, except as provided in
paragraph (d). If a lawyer is disqualified from representation under this paragraph, no lawyer in a firm
with which that lawyer is associated may knowingly undertake or continue representation in such a
matter, except as provided in paragraph (d).
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What Kind of Help Are You?
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Rule 1.2-- Scope of Representation & Allocation of Authority
Between Client & Lawyer
(a) Subject to paragraphs (c) and (d), a lawyer shall abide by a client's decisions concerning the objectives of representation
and, as required by Rule 1.4, shall consult with the client as to the means by which they are to be pursued. A lawyer may
take such action on behalf of the client as is impliedly authorized to carry out the representation. A lawyer shall abide by
a client's decision whether to settle a matter. In a criminal case, the lawyer shall abide by the client's decision, after
consultation with the lawyer, as to a plea to be entered, whether to waive jury trial and whether the client will testify.
(b) A lawyer's representation of a client, including representation by appointment, does not constitute an endorsement of
the client's political, economic, social or moral views or activities.
(c) A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client
gives informed consent.
(d) A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or
fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may
counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.
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Rule 3.3-- Candor Toward the Tribunal
(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law
previously made to the tribunal by the lawyer;
(2) fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly
adverse to the position of the client and not disclosed by opposing counsel; or
(3) offer evidence that the lawyer knows to be false. If a lawyer, the lawyer’s client, or a witness called by the lawyer,
has offered material evidence and the lawyer comes to know of its falsity, the lawyer shall take reasonable remedial
measures, including, if necessary, disclosure to the tribunal. A lawyer may refuse to offer evidence, other than the
testimony of a defendant in a criminal matter, that the lawyer reasonably believes is false.
(b) A lawyer who represents a client in an adjudicative proceeding and who knows that a person intends to engage, is
engaging or has engaged in criminal or fraudulent conduct related to the proceeding shall take reasonable remedial
measures, including, if necessary, disclosure to the tribunal.
(c) The duties stated in paragraphs (a) and (b) continue to the conclusion of the proceeding, and apply even if compliance
requires disclosure of information otherwise protected by Rule 1.6.
(d) In an ex parte proceeding, a lawyer shall inform the tribunal of all material facts known to the lawyer that will enable
the tribunal to make an informed decision, whether or not the facts are adverse.
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Rule 4.1-- Truthfuleness in Statements to Others
In the course of representing a client a lawyer shall not knowingly:
(a) make a false statement of material fact or law to a third person;
or
(b) fail to disclose a material fact to a third person when disclosure is
necessary to avoid assisting a criminal or fraudulent act by a
client, unless disclosure is prohibited by Rule 1.6.
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The Certification Requirement
11 U.S.C. § 707(b)(4)(D):
The signature of an attorney on the petition shall constitute a
certification that the attorney has no knowledge after an inquiry that
the information in the schedules filed with such petition is incorrect.
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Federal Rule of Bankruptcy Procedure 9011 (a-b)
(a) Signature. Every petition, pleading, written motion, and other paper, except a list, schedule, or statement, or
amendments thereto, shall be signed by at least one attorney of record in the attorney's individual name. A party who is
not represented by an attorney shall sign all papers. Each paper shall state the signer's address and telephone number,
if any. An unsigned paper shall be stricken unless omission of the signature is corrected promptly after being called to
the attention of the attorney or party.
(b) Representations to the Court. By presenting to the court (whether by signing, filing, submitting, or later advocating) a
petition, pleading, written motion, or other paper, an attorney or unrepresented party is certifying that to the best of the
person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances,— 1
(1) it is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless
increase in the cost of litigation;
(2) the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous
argument for the extension, modification, or reversal of existing law or the establishment of new law;
(3) the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to
have evidentiary support after a reasonable opportunity for further investigation or discovery; and
(4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably
based on a lack of information or belief.
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Federal Rule of Bankruptcy Procedure 9011 (c)
(c) Sanctions. If, after notice and a reasonable opportunity to respond, the court determines that
subdivision (b) has been violated, the court may, subject to the conditions stated below, impose
an appropriate sanction upon the attorneys, law firms, or parties that have violated subdivision
(b) or are responsible for the violation.
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Getting Creditors Their Due
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Rule 1.7-- Conflict of Interest: Current Clients
(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent
conflict of interest. A concurrent conflict of interest exists if:
(1) the representation of one client will be directly adverse to another client; or
(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's
responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.
(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client
if:
(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each
affected client;
(2) the representation is not prohibited by law;
(3) the representation does not involve the assertion of a claim by one client against another client represented by the
lawyer in the same litigation or other proceeding before a tribunal; and
(4) each affected client gives informed consent, confirmed in writing.
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11 U.S.C. § 327(a-d) -- Employment of professional persons
(a) Except as otherwise provided in this section, the trustee, with the court’s approval, may employ
one or more attorneys, accountants, appraisers, auctioneers, or other professional persons, that
do not hold or represent an interest adverse to the estate, and that are disinterested persons, to
represent or assist the trustee in carrying out the trustee’s duties under this title.
(b) If the trustee is authorized to operate the business of the debtor under section 721, 1202, or 1108
of this title, and if the debtor has regularly employed attorneys, accountants, or other
professional persons on salary, the trustee may retain or replace such professional persons if
necessary in the operation of such business.
(c) In a case under chapter 7, 12, or 11 of this title, a person is not disqualified for employment
under this section solely because of such person’s employment by or representation of a
creditor, unless there is objection by another creditor or the United States trustee, in which case
the court shall disapprove such employment if there is an actual conflict of interest.
(d) The court may authorize the trustee to act as attorney or accountant for the estate if such
authorization is in the best interest of the estate.
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Federal Rule of Bankruptcy Procedure 2014(a)–
(a) Application for and Order of Employment. An order approving the employment of attorneys,
accountants, appraisers, auctioneers, agents, or other professionals pursuant to §327, §1103, or
§1114 of the Code shall be made only on application of the trustee or committee. The application
shall be filed and, unless the case is a chapter 9 municipality case, a copy of the application shall
be transmitted by the applicant to the United States trustee. The application shall state the
specific facts showing the necessity for the employment, the name of the person to be employed,
the reasons for the selection, the professional services to be rendered, any proposed
arrangement for compensation, and, to the best of the applicant's knowledge, all of the person's
connections with the debtor, creditors, any other party in interest, their respective attorneys
and accountants, the United States trustee, or any person employed in the office of the United
States trustee. The application shall be accompanied by a verified statement of the person to be
employed setting forth the person's connections with the debtor, creditors, any other party in
interest, their respective attorneys and accountants, the United States trustee, or any person
employed in the office of the United States trustee.
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What Can I Reasonably Charge for
Bankruptcy Work?
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Rule 1.5: Fees
a) A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for
expenses. The factors to be considered in determining the reasonableness of a fee include the following:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the
legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other
employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent.
(b) The scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible
shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the
representation, except when the lawyer will charge a regularly represented client on the same basis or rate. Any changes
in the basis or rate of the fee or expenses shall also be communicated to the client.
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11 U.S.C. § 329 -- Debtor’s transactions with attorneys
(a) Any attorney representing a debtor in a case under this title, or in connection with such a case,
whether or not such attorney applies for compensation under this title, shall file with the court a
statement of the compensation paid or agreed to be paid, if such payment or agreement was
made after one year before the date of the filing of the petition, for services rendered or to be
rendered in contemplation of or in connection with the case by such attorney, and the source of
such compensation.
(b) If such compensation exceeds the reasonable value of any such services, the court may cancel
any such agreement, or order the return of any such payment, to the extent excessive, to—
(1) the estate, if the property transferred—
(A) would have been property of the estate; or
(B) was to be paid by or on behalf of the debtor under a plan under chapter 11, 12, or 13 of
this title; or
(2) the entity that made such payment.
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11 U.S.C. § 330(a)(1-2) -- Compensation of officers
(a) (1) After notice to the parties in interest and the United States Trustee and a hearing, and
subject to sections 326, 328, and 329, the court may award to a trustee, a consumer privacy
ombudsman appointed under section 332, an examiner, an ombudsman appointed under
section 333, or a professional person employed under section 327 or 1103—
(A) reasonable compensation for actual, necessary services rendered by the trustee,
examiner, ombudsman, professional person, or attorney and by any paraprofessional
person employed by any such person; and
(B) reimbursement for actual, necessary expenses.
(2) The court may, on its own motion or on the motion of the United States Trustee, the United
States Trustee for the District or Region, the trustee for the estate, or any other party in
interest, award compensation that is less than the amount of compensation that is
requested.
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11 U.S.C. § 330(a)(3) -- Compensation of officers (cont.)
(3) In determining the amount of reasonable compensation to be awarded to an examiner, trustee under
chapter 11, or professional person, the court shall consider the nature, the extent, and the value of such
services, taking into account all relevant factors, including—
(A) the time spent on such services;
(B) the rates charged for such services;
(C) whether the services were necessary to the administration of, or beneficial at the time at which the
service was rendered toward the completion of, a case under this title;
(D) whether the services were performed within a reasonable amount of time commensurate with the
complexity, importance, and nature of the problem, issue, or task addressed;
(E) with respect to a professional person, whether the person is board certified or otherwise has
demonstrated skill and experience in the bankruptcy field; and
(F) whether the compensation is reasonable based on the customary compensation charged by
comparably skilled practitioners in cases other than cases under this title.
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11 U.S.C. § 330(a)(4) -- Compensation of officers (cont.)
(4) (A) Except as provided in subparagraph (B), the court shall not allow compensation for—
(i) unnecessary duplication of services; or
(ii) services that were not—
(I) reasonably likely to benefit the debtor’s estate; or
(II) necessary to the administration of the case.
(B) In a chapter 12 or chapter 13 case in which the debtor is an individual, the court may allow reasonable
compensation to the debtor’s attorney for representing the interests of the debtor in connection with
the bankruptcy case based on a consideration of the benefit and necessity of such services to the
debtor and the other factors set forth in this section.
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ABOUT THE FACULTY
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John Martin – jmartin@sfgh.com
John C. Martin is a partner at Sugar, Felsenthal, Grais & Helsinger LLP. John’s law practice is devoted to
providing representation and counsel in complex business disputes, including contractual, fiduciary, and
attorney professional responsibility matters. John’s clients range from individuals and small businesses to
multinational corporations, and he represents both plaintiffs and defendants in a wide variety of commercial
disputes, including corporate governance suits, trust litigation, and matters arising out of lending and other
financial relationships. He has extensive trial and appellate experience before the State and Federal courts in
Chicago, and frequently collaborates with other firms as local counsel.
John also frequently writes and speaks on issues related to attorney professional ethics and fees. He has
served as a past co-chair of the ABA Section of Litigation’s Ethics and Professionalism Committee and as chair
of the Chicago Bar Association’s Professional Fees Committee, in which capacity he has served as an arbitrator
and mediator in attorney fee disputes.
To read more, go to https://www.financialpoise.com/financialpoisewebinars/faculty/john-martin/
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Bernie Burk – bernie.burk@bernieburk.com
Professor Bernard Burk is currently a visitor at the University of Memphis Cecil C.
Humphreys School of Law. Professor Burk's scholarship focuses on Professional
Responsibility, the Legal Profession (what lawyers actually do), and Legal Education. He
blogs regularly on The Faculty Lounge (www.thefacultylounge.org) and his Professional
Responsibility textbook, Ethical Lawyering: A Guide for the Well-Intentioned (with Nancy
B. Rapoport and Veronica R. Finkelstein), will be published by Aspen Press in 2020.
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George Kuney – gkuney@utk.edu
Prior to joining the faculty in 2000, Professor Kuney was a partner in the San Diego office of Allen Matkins
Leck Gamble & Mallory LLP where he concentrated his practice on insolvency and reorganization matters
nationwide. Before that he received his legal training with the Howard, Rice and Morrison & Foerster firms in
his hometown of San Francisco, California. He holds an AV Peer Rating, Martindale-Hubbell’s highest peer
rating for ethical standards and legal ability and is admitted to practice in the state and federal courts of
California and Tennessee and the federal courts of Arizona, and the Supreme Court of the United States of
America.
Professor Kuney’s expertise and scholarly interests relate to business transactions and litigation with an
emphasis on mergers and acquisitions, recapitalizations, and reorganizations. He is the faculty editor and
advisor of Transactions: The Tennessee Journal of Business Law and the faculty advisor for the Sports and
Entertainment Society. He consults with law firms and clients nationwide in his areas of expertise in a limited
number of matters annually, generally related to business law, bankruptcy, contracts, legal drafting and
writing, commercial law, chapter 11, and insolvency. He conducts transactional training seminars and clinics
for law students, lawyers, and law firms across the country.
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Matthew Christensen – mtc@angstman.com
Matt Christensen joined Angstman Johnson in 2008 as an associate attorney. Now a member of the firm, Matt has
a civil litigation practice involving commercial law (finance and secured transactions), bankruptcy, real property,
and business matters. He also has a transactional practice involving real estate, finance and business matters,
including franchising. Matt frequently represents bankruptcy trustees and other fiduciaries in recovering assets
and administering estates.
Prior to joining the firm, Matt was a Junior Partner at a Meridian, Idaho, law firm and also established a solo
practice.
In addition to practicing law, Matt is an adjunct professor at the University of Idaho College of Law where he
teaches international trade/business, real estate transactions and law practice management courses.
Matt obtained his Bachelor of Arts in International Studies from Brigham Young University in 2002. He earned his
J.D. and LL.M in International and Comparative Law degrees from Duke University School of Law in 2005. While
at Duke, he was an Articles Editor for the Duke Journal of Gender Law & Policy.
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QUESTIONS OR COMMENTS?
If you have any questions about this webinar that you did not get to ask during
the live premiere, or if you are watching this webinar On Demand, please do
not hesitate to email us at info@financialpoise.com with any questions or
comments you may have. Please include the name of the webinar in your email
and we will do our best to provide a timely response.
IMPORTANT NOTE: The material in this presentation is for general educational purposes only. It has been prepared primarily
for attorneys and accountants for use in the pursuit of their continuing legal education and continuing professional education.
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Bankruptcy Edition 2019