Will YOUR bankruptcy attorney appear with you in court?

Any attorney who practices consumer bankruptcy has the contact of information of several “appearance” attorneys.  When I go to 341 meetings, I’m often a little taken aback when a debtor, waiting for their case to be called, hears their name being called by an attorney they don’t know.  A recent case from the bankruptcy court of the District of Idaho discussed this practice, but also revealed steps all of the parties involved can take to ensure that representation of the debtor isn’t compromised.

When someone files for a “run of the mill” chapter 7 case, there isn’t too much excitement.  There’s the information-gathering, petition preparation, and the filing.  The next (and last) big thing is often the 341 hearing.  Many attorneys use an “appearance” attorney to appear for them at the 341.  (In theory, it increases the profit of the firm – rather than spend an hour in court, which the attorney bills at $350 per hour, they can pay an appearance attorney $150, and remain in the office handling other work.)

This case out of Idaho highlighted a practice where the firm representing the debtor did this, and appeared to do it on a regular basis.  The firm, however, didn’t timely file the appropriate paperwork, nor did the firm receive express written consent from the debtor to send another attorney to the 341 hearing.  What made this case bad was that the appearance attorney missed the hearing, leaving the debtor to be questioned by a creditor attorney that appeared.

In the court’s analysis, it determined that there is no such thing as a mere appearance.  The court reasoned that any and every attorney that handles the bankruptcy case is representing the debtor, and inherits the responsibilities associated with representation.  That includes timely filing the appropriate paperwork with the court disclosing the relationship and scope of work, and also getting informed and express consent from the debtor to use such an attorney.  At the end of this case, the court decided to disgorge the fees paid to the firm and return them to the debtor, as well as referred the firm to the state bar for review.

This decision sits uncomfortably with me.  I try to attend all of the court appearances scheduled in my cases.  That being said, sometimes you can’t control life.  I had to use appearance counsel several times when I was in a hospital bed for several weeks recovering from surgery.  Moreover, many of the appearance attorneys that I know and see are very competent and diligent in their work.  As long as the attorneys involved timely file the appropriate paperwork, and the client is aware and consents to the fact that another attorney will be appearing on their behalf, these issues do not exist.  Finally, the attorneys involved would do well to talk with the client, go through the process and any questions that they may have.  The last thing you want is, as what happened in this case, a client to say they felt “neglected, unserved, and unimportant.”  Reputation is everything in this industry.  In re Olson, 15-1580-TLM (Bankr. D. Idaho, June 2016).

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