In the Matter of Opinion No. 17-2012 of the Advisory Committee on Professional Ethics
107 A.3d 666
N.J.2014Background
- VLJ created a bankruptcy clinic to assist low-income debtors with no assets in Chapter 7 proceedings and engaged lawyers from Lowenstein Sandler, a firm that also represents creditors in unrelated matters.
- VLJ screens debtors to ensure they have no assets to distribute and requires conflicts checks; debtors with assets or higher income are turned away or referred elsewhere.
- Volunteers may represent debtors if the firm has not represented the debtor’s creditors in related matters; otherwise, conflicts are avoided.
- ACPE issued an opinion suggesting volunteer lawyers need to inform both clients and obtain consent due to potential material limitations under RPC 1.7(a)(2).
- The New Jersey Supreme Court granted VLJ’s petition for review and ultimately held that VLJ’s no-asset Chapter 7 program does not create a conflict of interest under RPC 1.7, with safeguards, and the final action of ACPE was reversed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether VLJ's program creates a conflict under RPC 1.7(a)(2). | VLJ argues no significant risk of material limitation; safeguards and no-asset context reduce risk. | ACPE and state respond that there exists a significant risk of material limitation to the lawyer's duties due to unrelated creditor representation. | No significant risk; program compliant with RPC 1.7 with safeguards. |
Key Cases Cited
- Marrama v. Citizens Bank of Mass., 549 U.S. 365 (2007) (fresh start purpose and Chapter 7 framework context)
- In re Patronek, 121 B.R. 728 (Bankr. E.D. Pa. 1990) (non-adversarial Chapter 7 context and court stance on representation)
- In re LiVolsi, 85 N.J. 576 (1981) (procedural regulation authority over ethical opinions)
- Borteck v. Riker, Danzig, Scherer, Hyland & Perretti, LLP, 179 N.J. 246 (2004) (RPCs enacted with public interest considerations)
- In the Matter of Opinion No. 17-2012 of the Advisory Committee on Professional Ethics, 216 N.J. 12 (2013) (ACPE opinion on volunteer bankruptcy representation)
- Berliner v. Pappalardo (In re Puffer), 674 F.3d 78 (1st Cir. 2012) (non-adversarial nature of Chapter 7 and minimizing conflicts)