Supreme Court Preserves Full, Frank Lawyer-Client Conversation Pre Bankruptcy in Milavetz

The Supreme Court of the United States “took seriously” American Bar Association concerns about a threat to attorney-client privilege, and ruled narrowly March 8 in the case of Milavetz, Gallop and Milavetz v. United States, said ABA President Carolyn B. Lamm in a statement issued this week.

The Court “recognized the importance of lawyers having ‘full and frank’ discussions with their clients, and provided helpful guidance to consumer bankruptcy lawyers,” said Lamm.

“The Court held that the ‘debt relief agency’ provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 apply to lawyers providing bankruptcy assistance to consumer debtors,” Lamm acknowledged.  But she added that the justices “went to great pains to point out several times that the decision allows lawyers to speak candidly with their clients about the incurrence of debt, and that the law only prohibits professionals from improperly instructing or encouraging clients to load up on debt in bad faith prior to filing bankruptcy.”  Lamm’s statement is available here.

In its amicus curiae brief, the ABA had urged the Court to reverse the Eighth Circuit U.S. Court of Appeals, and rule that the BAPCPA does not apply to lawyers, because it creates new exceptions to the attorney-client privilege that would discourage full and frank communication between clients and their lawyers, contrary to lawyers’ goal to protect client interests.  Access the ABA brief here.

See video of the statement here.