I came across an article in Forbes a while back by Stephen J. Dunn, an anti-bankruptcy zealot who is primarily a tax attorney. Mr. Dunn is convinced that no one should file bankruptcy because he believes it is simple to negotiate a settlement with creditors. I suppose it is simple if you have the money to pay. But if you don’t, what happens then? Well, I assume they don’t go to Mr. Dunn because they can’t afford his hourly rate.
While he points out what can go wrong if the petition is improperly prepared, the same could be said for a tax return filing. If a professional does a professional job, however, there is no reason for anything to go wrong. Also, it is a lot easier to deal with a bankruptcy trustee than it is to deal with the IRS bureaucracy.
I do take offense at his main contention that the only person benefiting from a consumer bankruptcy is the debtor’s attorney. Debtor attorneys make much, much less money than creditor attorneys. If we were greedy, we’d represent creditors instead of debtors. That’s where the real money is to be made. The bankruptcy court limits debtor attorney fees far more than it limits creditor attorney fees. He claims that “It is a fact that consumer bankruptcies have a high rate of legal malpractice. ” This is an overgeneralization because my malpractice insurance isn’t very high compared to really risky specialties like personal injury, securities law, banking, and real estate. Would Mr. Dunn claim that you shouldn’t go to a real estate attorney or securities law attorney and just do it yourself? Of course, those professions aren’t his competition.
The bottom line is that Mr. Dunn strongly implies that all bankruptcy attorneys are scoundrels and crooks, painting us all, good or bad, with the same tar brush. Besides being an overgeneralization, I wonder if it might also be a violation of the ethics rules on advertising, which don’t allow an attorney to advertise he can produce a better result than another attorney unless he can factually substantiate it? While there can be a gray area and question as to whether a news article may actually be an advertisement in disguise (being a columnist in some circumstances could be conceived as marketing), his vehemence and tone may also cross the line of journalistic integrity. His glibness and overgeneralization about my profession, however, just ticks me off, as it was intended to do. But do we really want attorneys to imitate Rush Limbaugh? I don’t think it helps our profession.
Even Dave Ramsey, who used to hate bankruptcy, has moderated his opinion about bankruptcy over time, and usually sponsors a booth at one of our conventions. He tries to find ways to help his clients avoid bankruptcy (which I agree with – so do we), but he understands that sometimes it is necessary – and that is the key. People don’t file because they want to file, or they’ve been conned into filing – they file because it’s the only choice left that works. Bankruptcy works.
For my part, I am reasonably certain that Mr. Dunn is a fine tax and trust and estates lawyer. I might even use him, if I could afford him – but being a consumer bankruptcy attorney, I probably can’t. Neither could most of my clients, which I suspect is why they come to me and not to him. They too have learned from experience – now they know that the myth of friendly creditors ready to work out and compromise debts in a reasonable fashion usually does not stand up to cold, hard reality.