Testing the Limits on Unbundled Limited Representation
The concept of limited representation in litigation, frequently called "unbundling," is an emerging issue across the
country, principally in the family law field. While a significant degree of philosophical hostility exists to the
concept that an attorney may limit representation of a client in a judicial proceeding, it is an issue that is not going
to disappear. Indeed, as the following discussion illustrates, acceptance of limited representation in litigation is
gaining momentum across the country. Generally, the trend is driven by economics and the view that some
representation is better than none. A closely related issue is ghostwriting by attorneys—<i>i.e.,</i> the preparation of
documents for filing by the client <i>pro se.</i> Both are antithetical to traditional "full service" representation where,
absent a grant of permission to withdraw for cause, an attorney is expected to represent the client in all stages of
litigation from beginning to end.
</p><p>This article does not attempt to explore all the nuances of, justifications for or arguments against limited
representation. It accepts that limited representation is not only inevitable in the context of consumer bankruptcies,
but may very well be in the best interests of debtors and the "system." The discussion is divided into four discrete
areas: (1) basic rules governing limited representation, (2) a brief summary of the current status of "unbundling" in
some states that permit unbundling, (3) ghostwriting and (4) representation limited to discrete tasks.
</p><h3>Basic Rule</h3>
<p>As with any other aspect of the attorney-client relationship, one must refer to the rules governing the conduct of an
attorney. Rule 1.2(c) of the Model Rules of Professional Conduct, as amended in 2002, provides: "A lawyer may
limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives
informed consent." Limited representation must pass both parts of a two-pronged test: (1) reasonable under the
circumstances and (2) informed consent by the client.
</p><p>What is reasonable generally boils down to a question of whether the lawyer's limited scope of responsibility would
amount to a violation of the lawyer's ethical or legal obligations—a factual, situation-specific determination. There
is one caveat: Even if it may be outside the scope of the limited representation, an attorney has a continuing ethical
obligation to respond to or forward to the debtor, as may be appropriate, any subsequent inquiries or information
that the attorney receives. For example, an attorney whose limited representation does not include reaffirmation
must nevertheless forward to the client any proposed reaffirmation agreements received and advise the creditor of the
fact that the debtor is unrepresented.
</p><p>Informed consent, on the other hand, is a more generic or universal standard. The attorney must clearly explain the
limitations of the representation, including what services are not being provided and the probable effect of limited
representation on the client's rights and interests. Disclosure to a <i>pro se</i> litigant should include a warning that the
litigant may be faced with legal matters he or she may not understand. In the context of a consumer bankruptcy
case, this should include, <i>as a minimum,</i> identification of those matters that appear to be likely to arise based on the
facts disclosed by the client—for example, attending the §341 meeting, cooperation with and turnover of assets to
the trustee, reaffirmation/redemption/ surrender (including appearing at the hearing), non-dischargeable debts,
matters related to the automatic stay (violations/ requests for relief), utility deposits under §366 and, in a chapter 13
case, the formulation and confirmation of a chapter 13 plan.
</p><h3>State Action on Unbundling</h3>
<p>Several states have officially sanctioned limited representation in litigation. The following highlights in summary
form some steps taken to date.
</p><p><i>Alaska:</i> Proposed amendments adopt a modification of the 2002 version of Model Rule 1.2(c) and will permit
limited representation in all civil cases.
</p><p><i>California:</i> In perhaps the most radical shift from the traditional full-service approach, it not only blesses limited
representation but also permits an attorney ghostwriting in family law cases to not disclose his or her involvement
in the process.
</p><p><i>Colorado:</i> Ghostwriting is permitted, but it requires that the attorney be identified and sign the document; although
signing does not constitute an appearance, it does subject the attorney to the same sanctions as if the attorney had
appeared in the action. By district court general order, the change to the Colorado rules does not apply in the
bankruptcy court in adversary actions or contested matters governed by Rule 9014; however, it may be applied to
the main case. <i>See In re Merriam,</i> 250 B.R. 724, 735-36 (Bankr. D. Colo. 2000).
</p><p><i>New Mexico:</i> The state adopted the 2002 version of Model Rule 1.2(c).
</p><p><i>Washington:</i> The state adopted, with modification, the 2002 version of Model Rule 1.2(c) and generally permits
limited representation in both civil and criminal cases.
</p><p><i>Wyoming:</i> The state adopted a modified version of Model Rule 1.2(c) (2002), limiting it to nonprofit limited legal
service programs under Model Rule 6.5.
</p><p>Several other courts have initiated or commissioned studies of the issue of limited legal representation. Additional
information on limited representation may be found on the internet at www.unbundledlaw.org. In October 2003, the
ABA released a 155-page <i>Handbook on Limited Scope Legal Assistance,</i> accessible at <a href="http://www.abanet.org/litigation/taskforces/modest/home.html">http://ww…;.
</p><h3>Ghostwriting</h3>
<p>Should an attorney be permitted to limit the services rendered to assisting in preparing the schedules in a chapter 7
case? If unbundling is to be permitted at all, it probably should permit the attorney to limit the services rendered to
preparing the petition and the accompanying schedules and statements in a chapter 7. The schedules and statement
of financial affairs are the heart of every consumer bankruptcy proceeding, from the simplest to the most complex. It
is the schedules and financial affairs from which the trustee and other interested parties, <i>i.e.,</i> the creditors, obtain
information concerning the debtor's assets and liabilities as well as certain pre-petition transactions. Schedules that
are properly, completely and accurately prepared materially assist the trustee and creditors in identifying those areas
that warrant further exploration at the §341 creditors' meeting. It has been my experience over the past 20+ years
that a substantial percentage, if not a majority, of the problems that arise in consumer cases could have been avoided
by adequate schedules.
</p><h3>Attorney Signature Requirements</h3>
<p>Assuming that limiting representation to preparation of schedules is permitted, should the attorney nevertheless be
required to sign the petition? In my opinion, the answer is "yes." An attorney who is paid to assist the debtor in
preparing the petition and schedules should not be held to a lesser standard than that imposed by §110 on
bankruptcy petition preparers. Many attorneys who ghostwrite documents do not want to be identified. However, it
is almost impossible for an attorney to be a true "ghostwriter" unless the attorney assists in preparation of the
schedules on a <i>pro bono</i> basis or more than a year preceding the filing. The debtor is required to disclose all
compensation paid in the year preceding the filing for bankruptcy counseling. In addition, an attorney who
represents a debtor "in connection with such a case" is required to file the disclosure statement required by §329(a)
("in contemplation of or in connection with such a case") and Rule 2016(b). These eliminate the ability to remain
anonymous.
</p><p>Attorneys in this situation also may fear becoming the attorney of record, and if listed as the attorney of record,
interested parties may mistakenly serve the attorney instead of the debtor. This objection may be overcome by
adopting the approach set forth in <i>Merriam:</i> include a specific statement in the §329(a)/Rule 2016 disclosure that
the attorney is not appearing on behalf of the debtor. The debtor would be shown as appearing <i>pro se,</i> and interested
parties would not mistakenly believe they must go through the attorney.
</p><p>Requiring the attorney who assists in the preparation of the schedules to sign the petition removes any question of
whether the attorney is subject to Rule 9011. Some may argue that may not be necessary because the court has in its
arsenal §329(b), which permits the court to order disgorgement. On the other hand, an attorney who assists a debtor
in preparing the petition and accompanying schedules should still be required to certify to the court and all
interested parties, including the debtor, that the attorney has made a reasonable investigation of the debtor's affairs
and the petition is filed in good faith. Signing the petition, which is covered by Rule 9011, fulfills this
requirement.
</p><p>Ghostwriting in the context of a chapter 13, is probably contraindicated. The economic basis for unbundling is not
the same in chapter 13 as it is in chapter 7. While many chapter 7 debtors are true "economic basket-cases," if a
debtor has the financial wherewithal to fund a chapter 13 plan, the debtor can afford representation. Indeed, the
reverse is likely true: The debtor cannot afford to forego representation.
</p><h3>Contested Matters and Adversary Actions</h3>
<p>In a chapter 13 case, the required minimum services should be expanded to include formulation and confirmation of
the chapter 13 plan. Anything less than that, and a debtor may as well be appearing <i>pro se</i> throughout.
</p><blockquote><blockquote>
<hr>
<big><i></i><center>
<i>With 1.5 million consumer filings a year, if only 30 percent are</i> pro se, <i>there will be 450,000</i> pro se <i>filings a year. The majority of those are likely to be individuals who cannot afford "full service" representation. For them, limited representation is, perhaps, their sole
source of any legal assistance.
</i></center><i></i></big>
<hr>
</blockquote></blockquote>
<h3>Unbundling Under the FRBP</h3>
<p>Assuming that unbundling is permissible under the otherwise applicable rules governing the attorney-client
relationship, should there be any limitation on the ability of an attorney to limit representation? First, we must
recognize that unbundling is already recognized, at least implicitly, by the Federal Rules of Bankruptcy Procedure
(FRBP). Under the FRBP, a bankruptcy case is divided into three separate component parts: the main case,
contested matters under Rule 9014, and adversary actions under Rule 7001, et seq. Almost all agree that adversary
actions are separate actions, but many will question the separation of contested matters. Rule 9014 specifically
provides that service of a contested matter is governed by Rule 7004. Service under 7004 is made on the party, not
the attorney for the party. It is only the service of subsequent documents to which Rule 5(b), F.R.Civ.P. applies.
There is no requirement in the FRBP that a contested matter be served on the attorney for any party, including the
debtor. Service on an attorney for a party to a contested matter is either a requirement of local rule, custom or
practice, or a matter of professional courtesy. Logically, if the FRBP deemed the opposing party in a contested
matter to be represented by counsel appearing in the main case, service of the motion would be under Rule 5(b), not
Rule 7004. In addition, Form B203, "Disclosure of Compensation of Attorney for Debtor," and the accompanying
instructions promulgated by the Judicial Conference clearly indicate that "unbundling" is contemplated.
</p><p>To what extent then should unbundling, other than ghostwriting schedules discussed above, be permitted? It is
suggested that an attorney who appears in a case on behalf of a debtor, other than in a contested matter or adversary
proceeding, must provide certain minimum services in addition to preparing and filing the schedules. The attorney
who appears of record for the debtor should, as a minimum, be required to attend the §341 creditors' meeting,
represent and assist the debtor in carrying out the debtor's duties under §521 and Rule 4002, and assist and counsel
the debtor with respect to reaffirmations and redemptions.
</p><p>The situation is different for contested matters and adversary actions. An attorney should be permitted to either
exclude contested matters and/or adversary proceedings, or limit representation to a particular contested matter or
adversary proceeding. Quite frequently a debtor can handle the main case <i>pro se,</i> especially a no-asset case, but when
it comes to a contested matter—<i>e.g.,</i> relief from stay—or an adversary action—<i>e.g.,</i> a challenge to discharge or
dischargeability—a <i>pro se</i> debtor can, figuratively speaking, "get creamed." Some jurisdictions permit an attorney
to limit representation in litigation to a particular segment of the litigation—<i>e.g.,</i> discovery, a single motion or the
trial itself. While that might be workable in the context of a complex adversary action, given the nature of most
contested matters, it is of questionable practicality.
</p><h3>Conclusion</h3>
<p>The extent to which unbundling is permitted is a subject that must be addressed on a district-by-district basis, not
by a set of national rules. First, state rules of professional conduct governing limited representation are not uniform.
Second, there is a marked difference in the situations confronting the bench and bar; the approach in one district
may not work in another. In some districts a <i>laissez-faire</i> approach may be appropriate, in others a complete prohibition, and in yet others something in between.
But whatever approach is taken, in those states where unbundling is permitted under the rules of professional
conduct, the court should adopt local rules delineating the extent, if any, to which limited representation is
permissible in bankruptcy cases. In fairness to the bar and the consumer, the rules must be set in advance; the
determination cannot be on an <i>ad hoc</i> basis.
</p><p>Is limited representation inevitable in consumer bankruptcies? The answer is "probably yes." With 1.5 million
consumer filings a year, if only 30 percent are <i>pro se,</i> there will be 450,000 <i>pro se</i> filings a year. The majority of
those are likely to be individuals who cannot afford "full service" representation. For them, limited representation
is, perhaps, their sole source of any legal assistance. An integrated solution has several component parts: bankruptcy
petition preparers (discussed in the March 2003 Consumer Corner), <i>pro bono</i> representation, limited representation
or a combination. This will take a concerted effort by the bench, bar and, necessarily, Congress. For example, where
the case involves issues beyond the capability of a <i>pro se</i> debtor, a sliding-scale fee arrangement where the attorney
is paid in part and provides the balance on <i>pro bono</i> may be appropriate. The bench should take a hard look at
permitting limited representation so that available <i>pro bono</i> hours can be more effectively allocated. Congress
should re-examine its attitude toward petition preparers. Unless all components work together, the system is
destined to become clogged with <i>pro se</i> debtors, and far too many individuals will not receive the relief to which
the law says they are entitled because they are unaware of what the law provides or how to make it work for them.
</p><hr>
<h3>Footnotes</h3>
<p><small><sup><a name="1">1</a></sup></small> Board-certified in business and consumer bankruptcy by the American Board of Certification. <a href="#1a">Return to article</a>