BAR ASSOCIATION OF NASSAU COUNTY
COMMITTEE ON PROFESSIONAL ETHICS

Opinion No. 1995-8

(Inquiry No. )

Topics:
Lawyers filing bankruptcy petitions.
Digest:
An attorney who has filed a bankruptcy petition may continue to practice before the courts of the State of New York.
Code Provisions:
DR 1-102
Facts Presented:
Inquiring attorney is contemplating filing a personal bankruptcy petition.
Inquiry:
Is it unethical for an attorney to file a personal bankruptcy petition?
Determination:
Filing a personal bankruptcy petition is not per se a violation of the Code of Professional Responsibility.
Analysis:

Article I, Section 8 of the United States Constitution provides that Congress shall have power to establish uniform laws on the subject of bankruptcies throughout the United States. The Bankruptcy Code, contained in Title II of the United States Code, provides that any person (a “person” as defined in the Code includes individuals, partnerships and corporations, but does not include governmental units.) 11 U.S. C. Sec.101, (40) may voluntarily file a petition in bankruptcy seeking an order for relief under the specific bankruptcy chapter in which relief is sought.

The issue of subjecting a practicing attorney to disciplinary proceedings as a result of the attorney’s filing a. petition for bankruptcy has yet to be addressed by the New York Courts. It may be noted, however, that the New York Court of Appeals has addressed the issue of filing a petition for bankruptcy, as it reflects on the moral character of an applicant to the Bar. Matter of ANONYMOUS, 74 N.Y.2D 938, 549 N.E.2d 472, 550 N.Y.S.2d. 270 (1989) aff’d 79 N.Y.2d 782, 587 N.E.2d 286, 579 N.Y.S.2d 648 (1991). In ANONYMOUS, the Court affirmed the denial of the applicant’s admission. However, the decision was not based, solely, on the fact that the applicant had previously filed for bankruptcy. The Court held that, “A determination of unfitness must rest not on the fact of bankruptcy, but on conduct reasonably viewed as incompatible with a lawyer’s duties and responsibilities as a member of the bar.” (the Court concluded that the applicant therein, lacked the “character necessary to discipline himself to control his standard of living and the amount of his indebtedness, thus showing a lack of financial responsibility necessary for an attorney”) – ANONYMOUS 74 N.Y.2d 938 at 939, 550 N.Y.S. 270 at 272. It follows that barring attendant circumstances surrounding a bankruptcy, it would be violative of Title II Section 525 to deny an applicant admission to the bar based solely on the fact that the applicant had filed a petition for bankruptcy. [Title 11 U.S.C. 525 provides that a governmental unit may not refuse to grant a license solely because the applicant is or has been a bankruptcy debtor.] The reasoning of ANONYMOUS was latter followed in CAMBELL v. GREISBERGER, 865 F.S. upp. 115, 3 A.D. Cases 1114, 5 A.D.D. 830, 5 NDLR 275 (1994).

Neither the Canons, Disciplinary Rules nor Ethical Considerations specifically address an attorney’s filing of a personal bankruptcy petition. Since filing a petition in bankruptcy is a Constitutionally protected privilege, absent an attorney engaging in conduct involving dishonesty, fraud, deceit or misrepresentation in the filing of a bankruptcy petition, an attorney may seek protection from creditors by filing said petition and continue to practice law. It should also be noted that circumstances leading up to, and surrounding an attorney’s bankruptcy may be appropriately scrutinized to determine if there has been a breach of ethics under any of the applicable sections of the Canons, Disciplinary Rules or Ethical Considerations.

(Approved by Executive committee on 5/23/95; Approved by Full Committee on 5/31/95)