Knowledge Center

Wednesday, March 05, 2014

Take Caution: Attorney's Signature on Proof of Claim Might Waive Privilege

It is a circumstance that arises often but is rarely given much thought: should the creditor or the creditor's attorney sign a proof of claim?  More care should be devoted to that decision now, as a result of a recent unpublished decision by a Texas bankruptcy court.

In In re Rodriguez, 2013 WL 2450925, at *6 (Bankr. S.D. Tex. June 5, 2013), the bankruptcy court required the attorney for several creditors who signed the creditors' proofs of claim to sit for a deposition on the facts alleged in the proofs of claim. This decision is striking because this information ordinarily would be considered privileged and not discoverable. The court seemed to conclude, however, that by signing the creditor-clients' proofs of claim, the attorney was asserting personal knowledge of the facts alleged in the proofs of claim, and therefore he became a fact witness as to the facts set forth in the claims. Importantly, both the attorney-client privilege and the work product privilege can only be waived by the client. To that point, the court ruled that by consenting to their attorney filing a proof of claim, the creditors waived both privileges.  The waiver of those privileges thus allowed the creditors' attorney to be questioned as to all facts contained in the proofs of claim.

The waiver of privilege in the context of a proof of claim can be detrimental to a creditor where, for instance, the creditor and its attorney discussed the strategy behind the methodology used for calculating the proof of claim, other alternative methodologies, and why one methodology might be better than another. A creditor should strive to ensure that these types of communications with its counsel are appropriately protected by the attorney-client and work product privileges.

While this decision is unpublished and its ruling has not been applied universally in bankruptcy courts across the country, it represents a cautionary tale that creditors should heed.  Attorneys commonly sign proofs of claim on behalf of their creditor clients. In light of the Rodriguez ruling, however, it is advisable that the creditor sign a proof of claim rather than the creditor's attorney to avoid unnecessarily waiving privilege.

For more information, please contact Jason Torf, Rick Rein  or your primary attorney with the firm.

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