The First Circuit Bankruptcy Appellate Panel came down on the side of the majority of courts of appeals by holding that a law firm, not just an individual attorney, can be sanctioned under 28 U.S.C. Section 1927.

The case involved a contract lawyer with a law firm who did not return a blizzard of phone calls and emails. The bankruptcy judge sanctioned her and the firm about $14,000. On appeal, the firm argued that Section 1927 cannot be used to sanction a firm.

The section allows a court to impose sanctions on “any attorney or other person admitted to conduct cases” who multiplies proceedings “unreasonably and vexatiously.” For the appellate panel, Bankruptcy Judge Peter G. Cary of Portland, Maine, noted in his opinion on Feb. 17 that the statute on its own “does not provide for vicarious liability.”

He said that the First Circuit “implicitly” sided with five circuits that impose liability on the law firm for the conduct of one of its lawyers in violation of Section 1927. Three circuits, according to Judge Cary, do not sanction a firm for the conduct of the firm’s attorneys.