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11th Cir. Bails Out Bankruptcy Firm, Reverses Suspensions

By William Peacock, Esq. on September 10, 2013 | Last updated on March 21, 2019

Ethics note: When one prepares a legal document for a client, even pursuant to an unbundled services agreement, your state likely requires a "prepared by counsel" note and signature. Failure to do so can lead to allegations of fraud on the court and ghostwriting, along with disciplinary proceedings.

Unless that document you prepped only required you to be a scrivener.

John Hood Jr. was the not-client. He filed a pro se Chapter 13 bankruptcy petition, possibly in bad faith to stall a foreclosure. When his customers expressed worries about whether they could continue to do business with someone entering bankruptcy, he claimed ignorance and told the court that he'd never filed the petition. The court didn't buy it, calling it a case of "buyer's remorse," as Hood's signature was all over the forms, in close proximity to the word "bankruptcy," which was used many times throughout the standardized forms.

Hood, through counsel, filed an order to show cause against the Torrens Law Firm, which filled out his pro se bankruptcy forms, and the firm's attorneys, Luis A. Torrens and Adrian Reyes.

While the bankruptcy court didn't do much for Hood, it did do much to Torrens and Reyes, finding that they violated 11 U.S.C. §§ 527 and 528(a)(1), Florida Rules of Professional Conduct 4-3.3(a)(1) and 4-8.4(c), and "appear[ed]to have violated 18 U.S.C. § 157(3)."

In English, that's a failure to provide an advisement to the client not to lie or defraud the court during the bankruptcy proceeding, failure to have a written agreement specifying services covered and fees, making a false statement of fact to a tribunal, engaging in dishonest or fraudulent conduct, and committing bankruptcy fraud, all done by the act of ghostwriting a standardized form.

The firm, meanwhile, argued that the lawyers didn't provide or prepare anything -- their secretary did, and she merely acted as a scrivener, typing down responses provided by the client onto the form.

The bankruptcy court's response was to suspend Torrens from the court for six months, and to bar Reyes from being admitted to the bankruptcy court until after 2012. The firm was also barred from filing bankruptcy papers during their suspensions, and the firm and any associated businesses or entities were barred from preparing bankruptcy petitions or acting as a "debt relief" agency.

Oh, and the court referred the matter to the United States Attorney's office for possible criminal prosecution and the Florida State Bar for disciplinary proceedings.

The firm's attorneys appealed the ghostwriting allegations, and on review, the Eleventh Circuit just, quite correctly, bailed them out. While Florida does require the "prepared by counsel" disclosure, the opinion notes that the lower court filed to cite the "ghostwriting" rule (4-1.2(c)), which states "draft," which per Black's Law Dictionary, means "[t]o write or compose."

Composition requires a bit more than fill-in-the-blanks. "Hood could have personally completed the petition at issue in the exact same manner and likely obtained the same result."

Suspensions reversed. Discipline reversed. Everything, in Florida, is once again sunny.

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