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In re ROSE MARIE WEAVER, Debtor(s).

Memorandum re Scope of § 329

ALAN JAROSLOVSKY, Bankruptcy Judge

From his response to the court's order to show cause, it is apparent that attorney Elias is interpreting the word "representing" in § 329(a) of the Bankruptcy Code narrowly, as meaning "appearing for." However, the purpose of the attorney disclosure requirement is twofold: to insure that estate assets are not secreted with the help of an attorney in the guise of fees, and to make sure debtors are not gouged. See In re Merriam, 250 B.R. 724, 731 (Bkrtcy.D. Colo. 2000), and cases therein cited. Allowing an attorney to remain anonymous in the wings would defeat the purpose of the statute, which is to be broadly interpreted. Thus, fees paid to an attorney in relation to a bankruptcy are subject to the provisions of § 329 even when the attorney is not the attorney of record. Hale v. U.S. Trustee, 509 F.3d 1139, 1147 (9th Cir. 2007).

Moreover, Rule 2016(b) of the Federal Rules of Bankruptcy Procedure, promulgated to give effect to § 329, applies to "[e]very attorney for a debtor." Under state bar rules of professional conduct, an attorney-client relationship is created by any sort of consultation or advice, even if given for no fee at all. Beery v. State Bar, 43 Cal.3d 802, 811 (1987).

The court interprets "representing" in § 329(a) as meaning "providing any services, including advice," and is prepared to issue an order to that effect if Elias wishes to obtain appellate review. However, Elias may obtain expungement of the order to show cause with no appearance necessary if he consents to an order that he disclose any fees paid to him for any services, including advice, in connection with a bankruptcy case which has been filed or is contemplated. If the case has already been filed, Elias shall file the disclosure himself; if it has yet to be filed, he shall give the debtor the disclosure with instructions to file it if a bankruptcy is filed. The form proposed by Elias is acceptable.

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IN RE WEAVER
(Dec 7, 2009)