Agent
of Corporate Debtor Preparing Proposed
Orders
in Bankruptcy Proceeding.
Subject: Agent of corporate debtor preparing proposed orders
in bankruptcy proceeding.
Inquiry: In proceedings in the United States Bankruptcy Courts
in Virginia, may an employee of a corporate debtor
who is not an attorney prepare on behalf of the
corporate debtor a proposed order to be entered
in the bankruptcy proceeding?
Opinion: Preemption.
By virtue of the supremacy clause of the United
States Constitution, a state may not regulate
the practice of law before a federal tribunal
if federal law prescribes the qualifications for
practicing before the tribunal. Sperry v. Florida, 373 U.S. 379 (1963). Therefore the Unauthorized Practice of Law Rules do not apply
to practice before a tribunal “to the extent
that the regulation of practice before such tribunal
has been preempted by federal law.” Rules for Integration of Virginia State
Bar, Part Six, Section IV, Paragraph 10, Rule
6.1-1, following UPC 1-1, as amended September
9, 1983, 225 Va.‚ (1983). It is therefore necessary first to determine whether federal
law determines the extent to which nonlawyers
may practice before the bankruptcy courts.
No provision of the Bankruptcy Code (11
U.S.C.) itself addresses the question of qualification
to practice before the Bankruptcy Courts. However, by Title 28, § 2075 of the
United States Code, Congress delegated to the
Supreme Court “the power to prescribe by
general rules, the forms of process, writs, pleadings
and motions, and the practice and procedure under
title 11.” Pursuant to this delegation of authority the Court promulgated
the Rules of Practice and Procedure in Bankruptcy,
which became effective August 1, 1983. Rule
9010 of the Bankruptcy Rules provides in pertinent
part as follows:
Rule 9010. Representation and Appearances;
Powers of Attorney
(a)
AUTHORITY TO ACT PERSONALLY OR BY ATTORNEY.
A debtor, creditor, equity security holder,
indenture trustee, committee or other party may
(1) appear
in a case under the Code and act either in his
or its own behalf or by an attorney authorized
to practice in the court, and (2) perform any
act not constituting the practice of law, by an
authorized agent, attorney in fact, or proxy.
Rule
9010, by providing that parties to a bankruptcy
proceeding may “perform any act not constituting
the practice of law” by agents, attorneys
in fact, or proxies, itself recognizes that certain
acts and functions constitute the practice of
law and may not be performed by nonlawyers. This reading is supported by the Advisory Committee Note to
Rule 9010, which states that the rule “is
substantially the same as former Bankruptcy Rule
910 and does not purport to change prior holdings
prohibiting a corporation from appearing pro
se. See In
Re Colinas Development Corp.,
585 F.2d 7 (1st Cir. 1978).”
Finally,
the committee has examined the local rules of
the Bankruptcy Courts for the Eastern District
and the Western District of Virginia and finds
that the local rules prescribe qualifications
for attorneys who practice before the court, but
do not address the question of the extent, if
any, to which nonlawyers may practice before the
court. Since
neither Congress by statute nor the bankruptcy
courts by rules have attempted to regulate the
activities of nonlawyers in bankruptcy courts,
state law is not preempted in this area.
Virginia Law. UPC 103, 221 Va. 381 (1980)
provides as follows:
A
corporation (other than a duly registered law
corporation) does not have the same right of appearance
before a tribunal as an individual and may not
be represented before a tribunal by its officers,
employees or agents who are not duly authorized
or licensed to practice law in Virginia. A corporation can be represented only
by a lawyer before a tribunal with respect to
matters involving legal conclusions, examination
of witnesses or preparation of briefs or pleadings.
A nonlawyer employee of a corporation may
represent his employer before a tribunal, including
bankruptcy court, so long as his activities before
the tribunal are limited to the presentation of
facts, figures or factual conclusions, as distinguished
from legal conclusions. He may not engage in activities involving the examination of
witnesses, the preparation and filing of briefs
or pleadings, or the presenting of legal conclusions.
In the opinion of the committee the preparing
of proposed orders, like the preparation of pleadings,
requires the exercise of legal skill and judgment.
The committee is therefore of the opinion
that it would constitute the unauthorized practice
of law for a nonlawyer employee of a corporation
to prepare on behalf of the corporation proposed
orders to be entered in proceedings in the bankruptcy
courts in Virginia.
Approved
by the Supreme Court
Of Virginia, May 1, 1984
Effective July 1, 1984.
