Tag: Ethics

Bankr. W.D.N.C.: In re Pace – Disallowance of Lien against Personal Property Securing Attorney’s Fees


In order to provide for attorney’s fees and allow for filing of a Chapter 7, Mr. Pace’s attorney took a voluntary lien against Mr. Pace’s motorcycle and boat for pre- and post-petition services.

The court reviewed this arrangement, finding that taking a lien for pre-petition services is not expressly prohibited, but strongly discouraged by the Bankruptcy Code and subject to “heightened scrutiny of the propriety of this type of fee agreement.” Under North Carolina Rule of Professional Conduct 1.8, a lien is permitted if the following safeguards are provided:

(1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client;
(2) the client is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel on the transaction; and
(3) the client gives informed consent, in a writing signed by the client, to the essential terms of the transaction and the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.… Read More

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W.D.N.C.: In re Meabon- Frivolous Appeal; Failure to Disclose Assets


Prior to filing bankruptcy, the Meabons first consulted with an attorney who informed them that they would need to disclose, as an asset in his bankruptcy schedules, Richard Meabon’s interest in a trust. As a result of the first attorney’s advice, the Meabons chose to file with another attorney, to whom they did not disclose the existence of the trust. After filing Chapter 7 without disclosure of the trust either in their petition or at the §341 Meeting of Creditors, the deadline to object to discharge passed on June 1, 2010. On June 2nd or 3rd, the first attorney notified the second, who, over the objection of the Meabons, alerted the Chapter 7 Trustee, who ultimately obtained the revocation of their discharge.… Read More

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North Carolina Proposed 2013 Formal Ethics Opinion 4- Representation in Purchase of Foreclosed Property

Proposed opinion examines the ethical duties of a lawyer representing both the buyer and the seller on the purchase of a foreclosure property and the lawyer’s duties when the representation is limited to the seller.

Editor’s note: This opinion supplements and clarifies 2006 FEO 3.

Inquiry #1:

Bank A foreclosed its deed of trust on real property and was the highest bidder at the sale. Bank A listed the property. Seller entered into a contract to purchase the property.

An addendum to the Offer to Purchase and Contract (“Contract”) signed by the parties states that the closing shall be held in Seller’s lawyer’s office by a date certain and that Seller, Bank A, “shall only pay those closing costs and fees associated with the transfer of the Property that local custom or practice clearly allocates to Seller … and the Buyer shall pay all remaining fees and costs.” Bank B is providing financing for the transaction.… Read More

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North Carolina Proposed 2013 Formal Ethics Opinion 5- Disclosure of Confidential Information to Lawyer Serving as Foreclosure Trustee

Proposed opinion rules that a lawyer/trustee must explain his role in a foreclosure proceeding to any unrepresented party that is an unsophisticated consumer of legal services; if he fails to do so and that party discloses material confidential information, the lawyer may not represent the other party in a subsequent, related adversarial proceeding unless there is informed consent.


Lender requests that Lawyer’s Firm serve as the substitute trustee under a note and deed of trust to commence foreclosure proceedings based on an alleged event of default. Borrower under the note and deed of trust is a limited liability company. While Firm is acting as substitute trustee, Borrower’s member-manager meets with Lawyer and explains to Lawyer why he believes Borrower is not in default.… Read More

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