Posted Sep 05, 2013 02:58 pm CDT
A federal appeals court has overturned sanctions imposed on lawyers after an employee at their law firm helped a client fill in the blanks of a bankruptcy petition without disclosing that assistance when the document was filed with the U.S. bankruptcy court.
Filling in the blanks didn’t amount to fraud under the federal bankruptcy statute or ghostwriting that is governed by a Florida ethics rule, according to the opinion (PDF) by the Atlanta-based 11th U.S. Circuit Court of Appeals. The Daily Report (reg. req.) covered the ruling.
A federal bankruptcy judge had ruled lawyers at the Torrens Law Firm in Miami Lakes, Fla., acted as ghostwriters, perpetrating a fraud at the court, when someone at the firm filled out the Chapter 13 petition for John Hood Jr. The petition was filed without any indication that the firm had helped prepare it.
The bankruptcy judge had suspended one of the firm’s lawyers from practice before the court for six months and barred another from applying for admission to the court for about six months. According to the judge, the lawyers had violated ethics rules prohibiting false statements to a court and prohibiting fraud and deceit, and appeared to have violated a federal criminal bankruptcy fraud statute.
But the lower court did not cite the Florida ethics rule requiring lawyers who assist pro se litigants by “drafting” documents submitted to a court to indicate the papers were “prepared with the assistance of counsel.” Citing that rule, the 11th Circuit said the Torrens lawyers are not subject to discipline because they didn’t “draft” a document for Hood. Nor was there evidence of fraudulent intent, the court said.
“A Chapter 13 petition is a publicly available form that is designed in a manner that lends itself to a pro se litigant,” the appeals court said. “Hood could have personally completed the petition at issue in the exact same manner and likely obtained the same result.”