{"id":3519,"date":"2017-02-20T07:00:59","date_gmt":"2017-02-20T12:00:59","guid":{"rendered":"https:\/\/nybankruptcy.net\/main\/?p=3519"},"modified":"2018-08-08T01:39:01","modified_gmt":"2018-08-08T01:39:01","slug":"attorney-client-privilege-whose-individual-new-york-bankruptcy","status":"publish","type":"post","link":"https:\/\/nybankruptcy.net\/main\/attorney-client-privilege-whose-individual-new-york-bankruptcy\/","title":{"rendered":"Attorney-Client Privilege: Whose Is It in an Individual New York Bankruptcy?"},"content":{"rendered":"

The short answer is: We don’t know\u2014according to a November 2016 article in New York Law Journal<\/i>. In discussing the topic, the authors could not find any court cases in the Second Circuit addressing which party controls the attorney-client privilege in a New York bankruptcy.<\/p>\n

Before explaining why this is an issue, it’s necessary to clarify what the attorney-client privilege (“ACP”, or “the privilege”) is.<\/p>\n

Most people are aware that lawyers must keep any information their clients give them in confidence, and no court, legislature, or other public entity can compel their lawyers to disclose it. ACP is one of the most important benefits lawyers provide their clients, and state law even requires it<\/a>. Lawyers’ subordinates, like paralegals or assistants, are also bound by ACP. Thus, individual debtors might be surprised to learn that a New York bankruptcy lawyer might not be able to serve them as other lawyers would (or at least that the issue is obscure). So why is there a problem?<\/p>\n

Partly it emerges from how bankruptcy treats ACP when the debtor is a corporate entity. A 1985 U.S. Supreme Court case, Commodity Futures Trading Commission v. Weintraub<\/i>, held that the trustee holds the privilege\u2014that is, the trustee is the party that can waive the privilege and disclose information the debtor told its bankruptcy lawyer. (The trustee here can be the debtor-in-possession in a chapter 11 case.) This may seem peculiar, but the trustee is responsible for managing the debtor’s assets, even if he or she is not a private fiduciary agent of the debtor. The Court emphasized that the ruling in Weintraub<\/i> only applied to corporate entities and not individual debtors, and it hasn’t heard a case on that issue, so the circuit courts of appeal have decided for themselves.<\/p>\n

Some circuits have extended the Court’s reasoning in Weintraub<\/i> to individual debtors: Bankruptcy trustees manage individual debtors’ assets, so they hold the privilege. Other circuits have taken the opposite position, reasoning that individual debtors expect more privacy in their personal affairs than a corporation does, and they believe they are entitled to the same ACP that other clients receive. Finally some courts are trying to find a balance between the two poles.<\/p>\n

Thankfully, the reason the question of who holds the privilege in an individual bankruptcy has not come up is that so little of what debtors tell their lawyers ultimately falls within the scope of the privilege. Nearly everything important that debtors tell their bankruptcy lawyers will be publicly disclosed in bankruptcy filings anyway. Discussions of strategy, while protected by ACP, aren’t going to be challenged by a party because they aren’t relevant. Moreover, if the bankruptcy strategy includes fraudulent activities, ACP wouldn’t apply anyway.<\/p>\n

The New York Law Journal<\/i> article is here<\/a>.<\/p>\n

Debtors should know that state law does protect their communications with their clients, and nothing in the Bankruptcy Code or court rulings changes that. However, they should also be aware that very little of what they communicate with their lawyers actually needs such protection. There might be some exceptions, like debtors whose bankruptcy lawyers also handle their civil litigation matters, but again those situations have not come up. If you are encountering financial difficulties, don’t let concerns about attorney-client privilege trip you up from consulting with an experienced New York bankruptcy lawyer<\/a>.<\/p>\n

For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney<\/a> Bruce Weiner for a free initial consultation.<\/p>\n","protected":false},"excerpt":{"rendered":"

The short answer is: We don’t know\u2014according to a November 2016 article in New York Law Journal. In discussing the topic, the authors could not find any court cases in the Second Circuit addressing which party controls the attorney-client privilege in a New York bankruptcy. Before explaining why this is an issue, it’s necessary to …<\/p>\n

Attorney-Client Privilege: Whose Is It in an Individual New York Bankruptcy?<\/span> Read More \u00bb<\/a><\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-global-header-display":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":""},"categories":[16,36],"tags":[2,51,52,37],"acf":[],"yoast_head":"\nAttorney-Client Privilege: Whose Is It in an Individual NY Bankruptcy?<\/title>\n<meta name=\"description\" content=\"The short answer is: We don't know\u2014according to a November 2016 article in New York Law Journal. 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