U.S. Supreme Court
Supreme Court to Consider Bankruptcy Law Restriction on Legal Advice
Posted Jun 8, 2009, 09:21 am CST
By Debra Cassens Weiss
The U.S. Supreme Court has agreed to consider a challenge to a federal bankruptcy law that limits what lawyers can tell clients.
The U.S. Supreme Court granted cert today in United States v. Milavetz, Gallop & Milavetz, SCOTUSblog reports. The U.S. Justice Department is seeking to overturn a federal appeals court ruling striking down the law as unconstitutional, Reuters reports.
The bankruptcy reform law bars “debt relief agencies”—a provision that includes lawyers—from advising clients to “incur more debt in contemplation” of filing bankruptcy.
The St. Louis-based 8th U.S. Circuit Court of Appeals had ruled the provision violates the First Amendment because it “prevents attorneys from fulfilling their duty to clients to give them appropriate and beneficial advice,” the ABA Journal reported in January.
Citing an example, the appeals court said the law could bar a beneficial recommendation that a client refinance a home to lower mortgage payments.