Can A Bankruptcy Attorney Represent Both A Filing And Non-filing Spouse?
In a typical bankruptcy case, there are few, if any, hearings. Sometimes, a bankruptcy trustee may want what is known as a 2004 examination. A 2004 examination is much like a deposition, where a trustee will sit down and take an extended statement from a bankruptcy debtor to ask detailed questions about the debtor’s bankruptcy filing.
Luckily, 2004 examinations don’t happen very often. Statements are usually only taken when the trustee suspects the debtor may have been dishonest, may have assets, or where there may be questions about the paperwork the debtor submitted.
When a Non-Filing Spouse Gets Deposed
It should go without saying that it is crucial when you have a 2004 examination to have a lawyer with you. But sometimes, one spouse files for bankruptcy and the other doesn’t. In that case, the trustee can still notice the non-filing spouse for a 2004 examination. The attorney technically represents the filing spouse. So if the non-filing spouse is noticed for deposition, can the same attorney represent both the filing and non-filing spouse at their 2004 examination?
In one case, this is exactly what happened. As a rule, an attorney may not represent two clients where their interests are in opposition to each other, or where helping one client can potentially hurt another.
In that case, the bankruptcy trustee objected, saying that the debtor’s lawyer had an inherent conflict of interest by also representing the non-filing spouse at the examination. The trustee argued that the non-filing spouse could be hiding assets, or, if the parties divorce their interest could be opposite each other. The spouse may have information that could hurt the filing spouse, and thus, their interests could be opposite.
Court Allows Dual Representation
But the court disagreed, saying that while a conflict was possible, that isn’t enough to disqualify an attorney from representing the non-filing spouse. Possibility of a conflict isn’t enough—there has to be an actual, present conflict of interest between the filing and non-filing spouse, something that didn’t exist in the case.
The court further noted that even if there was a conflict, there are ways that clients can, with proper disclosures and by signing agreements, waive the conflict—that is, clients can give permission for an attorney to represent another party that may have a conflict of interest.
The lesson from the case is that there cannot be any actual, current conflict between a filing and non-filing spouse for the attorney to represent birth parties at a 2004 examination. But even if there is a conflict, the parties can agree, with proper disclosures, to waive the conflict, and allow the bankruptcy attorney to represent both parties.