PROGRAM SUMMARY 2-21-2026

CDCBAA Holds Second Meeting and MCLE Program of 2026:
"Ethical Landmines in Bankruptcy and Avoiding Conflicts of Interest”

On February 21, 2026, the CDCBAA held its second members meeting and MCLE program of the year. The meeting and program were conducted as a live webinar via Zoom video.  The program topic was Ethical Landmines in Bankruptcy and Avoiding Conflicts of Interest. Our distinguished speakers were the Hon. Charles D. Novack | Bankruptcy Judge, Northern District of California, Oakland Division; Misty Perry Isaacson, Esq. | Salvato Boufadel, LLP; Mike Nicastro, Esq. | Nicastro & Associates; and Robert Sall, Esq. | Sall Spencer Callas & Kreuger.  Board President M. Jonathan Hayes moderated. What follows are some highlights.

After introductions, Mr. Sall led off the seminar by discussing early red flags that all counsel should be alter to prior to taking on any representation of joint clients, such as the potential clients’ seeming veracity, whether they have been previously turned down by other attorneys for similar representation, and whether the potential clients seem to be getting along. 

In drafting retainer agreements and written disclosures to potential joint clients, counsel should address the following: (1) consider the requirements of Business & Professions Code sections 6148; (2) use care in laying out the precise scope of representation and any necessary disclosures; (3) point out any “reasonably foreseeable” possible adverse consequences; (4) include warnings of things that could happen that might materially affect the representation and outcome; (5) consider the possible applicability of Bartenwerfer v. Buckley, 598 U.S. 69, 143 S. Ct. 665 (2023)(possible imputation of fraud liability to an otherwise partner under 11 U.S.C. 523(a)(2)(A)); (6) make married clients aware of the community property discharge (11 U.S.C. § 524) and of the fact that anything communicated by one spouse may be available to the other, especially in subsequent proceedings.

Mr. Sall pointed out that pre-representation informed consent requires the attorney to present the “relevant circumstances” that mandate the need for such consent. Mr. Sall also reminded counsel that Evidence Code section 962 may permit a former client to compel disclosure of attorney-client communications between an attorney and a formerly joint client on a matter of common interest.

Mr. Sall stated that California’s Rules of Professional Conduct (RPC) apply equally to counsel in both state and federal courts within California. He emphasized the need for counsel to familiarize themselves again with Rules 1.7 and 1.9 of the RPC in particular at the outset of representation.

There was an extended discussion regarding the importance of making certain that individuals receive adequate disclosure from counsel concerning the differences between Chapters 7 and 13 prior to filing a bankruptcy case. 

Mr. Sall also discussed the attorney trust account requirements for prepaid/unearned client fees. California law generally does not recognize “earned upon receipt” retainers. Mr. Nicastro emphasized the unique importance of this requirement in bankruptcy cases where an estate is created the moment a case is filed and any unearned fees become property of the newly-created bankruptcy estate.

The discussion then turned to the issue of who owns the attorney-client privilege upon the filing of a bankruptcy case. In a Chapter 11 debtor-in-possession case, corporate management retains control of privilege unless a trustee is appointed. However, in a Chapter 7 corporate liquidation bankruptcy, the debtor’s attorney-client privilege automatically becomes property of the estate that a trustee holds and has the ability to assert or waive. See CFTC v. Weintraub, 471 U.S. 373 (1985). For individual debtors, the privilege remains with the individual. See HLC Properties v. Superior Court, 35 Cal. 4th 54 (2005). The attorney-client privilege belongs only to the client. Upon death, the privilege transfers to the personal representative, but upon closure of the estate, there is no longer any privilege holder statutorily authorized to assert it.

The panel concluded the seminar by taking questions from attendees. A lengthy handout containing further detailed discussion of issues and citations was also provided to all attendees.

The next CDCBAA members meeting and Zoom MCLE program will be held on March 21, 2026, and the topic will be TIL DEBT DO US PART: HOW DIVORCE, SUPPORT, AND COMMUNITY PROPERTY COMPLICATE CONSUMER BANKRUPTCY CASES. Our speakers will be the Hon. Victoria Kaufman | Bankruptcy Judge, Central District of California, San Fernando Valley Division; D. Edward Hays, Esq. | Marshack Hays LLP; and Richard G. Heston, Esq. | Heston & Heston.  1.5 hours of CLE credit will be provided. We hope you will join us.