Can An Attorney Be Sanctioned For “Unbundling” Their Services?

Yes.

Affirming In re Seare, 493 B.R. 158 (Bankr. D. Nev. April 9, 2013), the Ninth Circuit Bankruptcy Appellate Panel held that the bankruptcy court did not abuse its discretion in sanctioning an attorney who, in representing a married couple that filed a Chapter 7 petition, entered into a retainer agreement with the debtors that excluded representation in adversary proceedings, when, had the attorney conducted an adequate initial consultation, he would have known that the filing of a fraud-based nondischargeability complaint against the debtor husband was a near certainty.

The bankruptcy court concluded that the attorney’s decision to unbundle his services was unreasonable and violated the Nevada Rules of Professional Conduct, and the court (1) ordered disgorgement of all fees received in the case and publication of the court’s opinion, (2) required that the attorney take continuing legal education classes, and (3) further required that, for the next two years, the attorney provide a copy of the court’s opinion to every client who was sued in an adversary proceeding in which the attorney declined to represent the client for any reason. In re Seare, — B.R. —-, 2014 WL 4186483 (B.A.P. 9th Cir. Aug. 25, 2014) (case no. 13-1196).

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