Avoiding bankruptcy malpractice is a learned skill and necessary for professional survival. If word of mouth from happy clients is the world’s best advertising for a bankruptcy lawyer, loud complaints from unhappy clients in the internet age is professional poison.
So, for both client and lawyer future wellbeing, it’s worth considering how to avoid bankruptcy blunders.
For my purposes, malpractice isn’t confined to those situations that lead to a lawsuit. It includes any time the client gets less relief than was available, or incurred more expense than was necessary.
Two varieties of malpractice
I see two different kinds of blunders by bankruptcy lawyers, both generally avoidable. Only one is a failure to know the law.
FIrst is failing to get the necessary information from the client to see pitfalls: a failure of diligence.
Second is failure to recognize significance of information gathered: a failure of competence.
More often, it’s a case of failing to get the facts rather than misapplying the law to the facts.
Take the official forms seriously
The official forms ask for a comprehensive amount of information, much of it not pertaining to the lives of most consumer debtors: How many airplanes do you have? How many head of cattle? There’s a tendency on the part of lawyers to become blase and become comfortable making assumptions about what doesn’t apply to a given client.
That’s aggravated by the tendency of clients not to read closely, not to question, and again to make unwarranted assumptions. They read “property” as “real estate”. They report they have no clothes, yet they weren’t naked when you met. They exclude the old, outdated, or the simply ordinary “stuff” because it appears to have no resale value.
Communicate what’s required, and how it works, to your client and be able to prove that you did, if necessary. Proof may not head off the bad publicity, but it will head off a successful malpractice claim. That happened to me when a client failed to disclose a meaningful asset and sued me for his loss. I produced the questionnaire in his handwriting, with his signature, that made no mention of the asset. Case dismissed. Bankruptcy malpractice avoided.
Be candid about the unknown
Be upfront about uncertainities. It took me an unjustified number of years to be able to say to a client, I don’t know the answer. I couple that with, But I’ll find an answer if there is one. There is no shame in not having instant answers to novel or complex issues.
And if there is no way to know how some issue will play out, say so. It’s ultimately the client’s job to make decisions about risks.
Insert here a shameless plug for Chapter 13. The ability to dismiss a Chapter 13 is one of the features of 13 that I treasure most. If a question of valuation, avoidance, or the nature of the debtor’s interest goes against the client, dismissal is always available.
Diligence manifests in the client interview
There is simply no substitute for a thorough conversation with a client about their financial life. Ask them to put the needed information on a piece of paper or a computer screen and you’ve exposed yourself to all of their assumptions and mental shortcuts.
Find out about aged or ailing relatives who might leave them an inheritance. About the support they provide family members. About deglected health conditions. About events that might mature into legal claims.
Our culture treats personal finances as highly private information. A bankruptcy lawyer has to break through that cultural norm to find the things that clients wouldn’t easily reveal to anyone else. To do that, I find the lawyer has to be seen as accessible and non judgmental.
Clients tend to withhold things that they are ashamed of or assume would cause trouble in their case. Yet those are the very things we need to know about. My line to clients is “the only problem I can’t solve is the one you don’t tell me about.” It’s a slight exageration, but it makes the point..
Shaping expectations
Finally, client satisfaction is rooted creating reasonable expectations about the bankruptcy experience. Some debt may survive the discharge. Chapter 13’s based on asset value rather than disposable income can be challenging. The demand for documents and disclosure is annoying for many, who are not generally at their best when they come to us.
At bottom, avoiding bankruptcy malpractice is as much about understanding people as it is about understanding the law.
