The Court of Appeals for the Eighth Circuit, in a case of first impression, struck down a provision of the 2005 bankruptcy reform law that prohibits attorneys from advising their clients to incur more debt in contemplation of filing for bankruptcy. At the same time, the court upheld a provision of the Bankruptcy Code that compels attorneys to include a specified disclosure within their bankruptcy-related advertisements. The court's rationale for striking down the Code's restriction on attorney advice was that its broad application restricted attorneys from rendering advice that in some situations would be entirely lawful and beneficial to their clients. This decision protects an attorney's First Amendment right to free speech and rightfully allows consumer debtors the opportunity to be represented by counsel who may freely advise them of all their legal alternatives. On the other hand, the court reasoned that the Code's advertising disclosure requirement does not constitutionally infringe on attorneys' rights. Because it only mandates that attorneys include an additional two lines of factual information in their bankruptcy-related advertising materials, it does not overly burden attorneys' interests and may help prevent deception on the part of the consumer. Whether this requirement truly provides beneficial information to consumers, or alternatively lends confusion, is questionable, and attorneys bound by this ruling are likely to face ongoing frustrations.
Bethany R. Findley,
Eighth Circuit Loosens the Grip of the Bankruptcy Gag Rule, but Holds Attorneys to Advertising Disclosure Requirement, The,
74 Mo. L. Rev.
Available at: https://scholarship.law.missouri.edu/mlr/vol74/iss3/20