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Letters to the 107th Congress

April 22, 2002

Re: Bankruptcy Reform Act of 2002 (H.R. 333) - Enhanced Attorney Liability Issues

Dear Conferee:

As the Chair-Elect of the American Bar Association's Section of Business Law, I write to express our opposition to the attorney liability provisions contained in H.R. 333, the bankruptcy reform bill that will be the subject of a House-Senate conference committee meeting on April 23. The ABA Business Law Section, like the American Bar Association, strongly opposes those provisions in the bill that would require attorneys to: (1) certify the accuracy of the individual debtor's schedules of assets, under penalty of mandatory sanctions; (2) certify the debtor's ability to make payments under a reaffirmation agreement, and (3) identify and advertise themselves as "debt relief agencies" subject to a host of new intrusive regulations.

The ABA Business Law Section, with over 63,000 members nationwide, is one of the largest organizations of business lawyers in the United States. Most of our members are corporate attorneys, working in law firms or as in-house counsel, and the vast majority of the bankruptcy lawyers in our section represent companies in commercial bankruptcy disputes or creditors in consumer bankruptcy cases.

We believe that the three attorney liability provisions outlined above, if enacted, will have disastrous, if unintended, consequences for the entire bankruptcy court system. These provisions will discourage many attorneys from agreeing to represent debtors at all, while dramatically increasing the fees and expenses of individual debtors who are able to obtain legal representation. In addition, because the new liability standards involving certification of schedules apply to all individual debtors' attorneys, whether or not they charge a fee, these provisions will virtually eliminate pro bono representation of debtors.

Although these new attorney liability standards and "debt relief agency" regulations may appear to favor creditors on their face, we believe that the practical effect of these provisions will be to harm all parties to the bankruptcy, including creditors and creditors' attorneys. By dramatically increasing the cost and risk of representing individual debtors in bankruptcy, these provisions are likely to drive many debtor lawyers from the practice altogether, creating a flood of pro se debtors in the courts. As a result, even simple bankruptcy cases will take much longer to move through the bankruptcy courts, resulting in substantial delays and higher legal expenses for all parties, including creditors.

For all of these reasons, we urge you to remove the three attorney liability-related provisions outlined above from the final conference report for H.R. 333.

Thank you for your consideration, and if you have any questions regarding our views on this matter, please contact the ABA's legislative counsel for bankruptcy issues, Larson Frisby, at (202) 662-1760.

Sincerely,

Harold S. Barron
Chair-Elect
ABA Section of Business Law

107th Congress Letters Home

AMERICAN BAR ASSOCIATION
Section of Business Law
750 North Lake Shore Drive
Chicago, Illinois 60611
(312) 988-5588
FAX: (312) 988-5578
e-mail: businesslaw@abanet.org
website: www.abanet.org/buslaw

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