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Limited Scope Representation: An Issue of Access to the Bankruptcy System

posted by Lois R. Lupica & Nancy Rapoport

The problem of the high cost of consumer bankruptcy representation is well documented. The recent Consumer Bankruptcy Fee Study revealed a 24% increase in attorney fees post-BAPCPA for chapter 13 cases, with mean fees in some jurisdictions approaching $5,000. For no-asset cases filed under chapter 7, mean attorney fees have increased 48%—as high as $1,500 at the mean in some jurisdictions. 

For many chapter 13 filers, only a portion of the fee is paid to the attorney up front, with the fee balance to be paid through the plan. In a chapter 7, attorney fees must be paid up-front and in full leading many consumers in financial distress to simply conclude that they do not have the money to pay an attorney and to file their petition pro se. The Fee Study found that 5.8% of all chapter 7 cases are filed pro se. This statistic is reflective of a national random sample of cases filed post-BAPCPA. The incidence of pro se filings, however, is considerably higher in many jurisdictions. In the ten courts with the greatest number of pro se cases, 9.5% to 27.1% of all cases are filed without attorney representation.

The problem of pro se representation is compelling. Consumers typically lack the knowledge, judgment and skill needed to present their case, raise valid defenses and to make informed decisions. Moreover, creditors may have an interest in an expedited settlement of the matter, but an unrepresented and confused debtor may thwart such efforts.  In the name of pragmatism, judges may attempt to guide unsophisticated debtors through the process, but such interventions run the risk of compromising the essence of the adversarial system: judicial neutrality.

The burden that pro se debtors place on the court system has been widely recognized. Judges, trustees, and court staff have detailed the extra time and system resources eaten up by aiding pro se debtors who are attempting to navigate the bankruptcy process. Uninformed and misinformed self-representation unnecessarily increases the complexity of cases and the time needed to resolve them. Moreover, the likelihood that a judge will receive the full information needed to reach fair decisions is reduced. The high volume of pro se cases filed in some jurisdiction starkly reveals a disconnect between the idealized version of the bankruptcy system and the way it currently operates. After carefully considering problem of pro se debtors and their access to justice, the Task Force developed a proposal for “best practices” for Limited Scope Representation (“LSR”). 

LSR on behalf of a consumer debtor typically consists of the provision by an attorney of a subset of legal services in connection with the filing of a consumer bankruptcy case. In contrast to the plenary representation of a debtor, where the lawyer is paid a full fee to represent a debtor with respect to all aspects of his bankruptcy case—from pre-filing counseling to post-discharge proceedings, LSR is undertaken to achieve a lower overall cost, and typically in lieu of filing pro se or filing with the assistance of a petition preparer.  This arrangement allows for legal representation by an attorney with costs contained.

The Task Force recommended a detailed framework for LSR representation in chapter 7 consumer cases only because of chapter 13’s complexity and the difficulty of distinguishing between “basic” and the “full service” elements in chapter 13s. 

The linchpin of the LSR best practices proposal is the client’s informed consent. Informed consent requires that the client knows of and understands the risks and benefits of the limited representation: the reasonableness of a representation cannot be evaluated without the client's informed consent. For a debtor to provide valid, fully informed consent to limited services representation, the lawyer must not only describe the services that will be provided, but must also fully explain the services that are omitted from the representation, including the materiality of these services and the potential ramifications of their omission. The Task Force drafted a model informed consent agreement, laying out, in detail the specific information needed to understand what services are being provided for what fee.

We know that this proposal is controversial – but we also know that pro se debtors compromise the utility of the consumer bankruptcy system. We welcome your reactions.


Informed consent is a joke: "Just sign here." Almost anybody who isn't a lawyer does just that--probably without reading, and certainly without much understanding. Even some lawyers feel pretty helpless in a doctor's office.

But informed consent keeps the deontologists happy, and doesn't cause much consequential harm. If it helps people file with some guidance, it is better than helping them file with no guidance, or discouraging them from filing.

Access and meaningful access are two different things. It's one thing to unbundle adversary proceedings and contested matters and quite another to unbundle the 341 meeting. At a certain point, the distinction between represented and pro se breaks down.

I'm seeing a whole subset of clients who filed with a discount attorney and who now need to hire a new attorney at a premium to fix their first attorney's mistakes.

A $700 chapter 7 sounds great to a desperate person, until they find out that they have to pay an additional fee for representation at the 341. Or, even better, they find out that their attorney screwed up the exemptions, the trustee wants their car, and their attorney has stopped returning their phone calls.

Most attorneys could fix the problems caused by low quality unbundled representations in about 2 hours, but it doesn't make sense for an attorney to take a case that will only provide 2 hours of billing. The debtor either has to fix it on their own or pay a premium to retain a new attorney. In the end, their unbundled "simple" case ends up costing them more than my above median filers pay for a market rate chapter 7.

The obvious answer is to fix the problem of attorneys being required to collect all fees up front. If the code were revised to state that any fee or charge related to the case was not dischargeable, we would quickly see a cottage industry of financing becoming available to debtors for filing ch 7 cases. The interest rates would be high, but debtors would be able to file promptly, and spread the cost of filing out over time, with a payment they could afford. The financial distress would be addressed, and the number of pro se filings would drop.

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