INITIAL STEPS TO TAKE
deadline to respond to the complaint.
At the office appointment with the client
it is important to cover many topics
and provide the client with information.
Provide the client with another copy of
the summons, complaint and exhibits.
Advise the client of the deadline to
respond and the consequences if no
response is filed. This is a good practice
even though the client has probably
received two other copies (one from
you and the Plaintiff) so you are both
discussing the same document.
Review the statutory basis for each
count or claim of non-dischargeability
and what must be proven by the
Plaintiff. Most adversary proceedings
involve allegations of fraud, breach of
fiduciary duty or intentional tort. See
11 U.S.C. §§ 523(a)(2), (4) and (6).
Explain the Plaintiff’s burden of proof.
See F.R.Bankr.P. 4005.
Review the facts alleged in the
complaint.
This may take some
additional time. You need to identify
which facts are in dispute and why.
Take very good notes. You will probably
use this information if you need to draft
an answer to the complaint.
Determine whether defenses to the
allegations are based in law and/or
fact. Issues of law can be settled by
motion and issues of fact are usually
determined at trial. Take good notes of
your conclusions and discuss with the
client.
Determine whether hiring the firm will
be financially worthwhile for the client.
Some adversary complaints are to
determine the dischargeability of lesser
amounts of debt. Compare this to the
potential attorney’s fees and costs.
Keep in mind that the bankruptcy
judge will probably examine the
reasonableness of your fees in part on
this basis.
Estimate the amount of time spent if
your firm is retained to take the matter
through a trial. Consider the time
necessary to familiarize yourself with
the facts underlying the complaint. For
example, if the client owns a business
with a lot of cash and credit transactions,
it will take a significant amount of time
to review them. Consider the time
required to investigate the law and
the facts when drafting an answer or
motion to dismiss. If there are issues of
fact, you may need to submit or answer
written discovery. Depositions may
be necessary for parties or other fact
witnesses.
Evaluate the amount of
time necessary for trial preparation and
the time spent in court. There may be
multiple pretrial hearings before the trial
is conducted. A good measurement is
that for each hour of trial there is about
three hours of preparation.
are received. Otherwise your firm may
have legal and ethical obligations to
provide representation without any
retainer. In particular advise the client
that the source of the retainer fees
cannot stem from the bankruptcy estate
without permission from the bankruptcy
court. It is also prudent that payment
be made in cash or by certified check.
If you take a check which is returned
for non-sufficient funds, you are still
responsible for representing the client.
Inquire about the source of the funds.
Set a deadline for your client to decide
to hire the firm, pay the retainer
and sign the contract. It is effective
to immediately schedule another
appointment before your client leaves
the office. Warn the client that if the
“It is prudent to sign the retainer
agreement only after the retainer
funds are received.”
Calculate your possible total attorney’s
fee and increase it by at least 50%.
Take your hourly rate by the number
of possible hours spent on the case.
It is always good to have some
leeway to cover additional issues that
invariably come up during discovery so
increase the estimate by 50 percent.
Many practitioners double their initial
estimate.
Calculate the retainer amount to be
paid by the client. Consider that this
retainer may be all the fees you recover
in your representation of the client.
Discuss with the client how the client
can retain the firm. A contract for
representation must be signed and
the retainer fee paid. Review the
contract and retainer amount with the
client. It is prudent to sign the retainer
agreement only after the retainer funds
National Association of Consumer Bankruptcy Attorneys
Spring 2018
firm is not hired by that deadline that the
firm will not be representing the client in
that action. Insure your deadline gives
the firm adequate time to draft up the
response to the complaint. You don’t
want the client to pay and retain the firm
at 5 p.m. on the date of the deadline to
respond.
If the client does not meet the
deadline, immediately send the client
a disengagement/nonrepresentation
letter. Follow the ethical rules when
sending this letter including a reminder
of the deadline and consequences for
failure to respond.
The overarching goal is that your
client is informed of the action and
their options. It is also important to
protect yourself and your firm. These
suggestions will hopefully help you
achieve these goals.
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