Due Process and Attorney Discipline

Attorneys facing court sanctions or bar discipline often express surprise at what is perceived to be an absence of due process when it comes to the process, including complaints regarding lack of notice and the inability to conduct certain discovery. Yet, the constitutional protections afforded counsel are deemed proportionate to the interests in play, including the proper regulation of the courts and protection of the public. The proceedings—civil in nature—are not designed to punish the attorney even as the outcome has the effect of doing so.

In United States Trustee v. Delafield, et al., 57 F.4th 414 (4th Cir. 2023), the Court of Appeals considered the adequacy of due process afforded an attorney, who was sanctioned by the bankruptcy court. Following a four-day trial, the bankruptcy court entered an order (1) prohibiting the attorney from practicing before the court for one year, and (2) imposing a $5,000 fine. The order was affirmed by the district court and, on appeal to the Fourth Circuit, affirmed.

The attorney argued that the bankruptcy court imposed sanctions “for which no advance notice was given, and for which an incomplete hearing was held.” While proceedings against attorneys may face a more relaxed standard in the imposition of discipline, an attorney is still entitled to “Notice and an opportunity to prepare a defense.” Nell v. United States, 450 F.2d 1090 (4th Cir. 1971). A reading of the Court of Appeals’ decision indicate that the attorney had an ample opportunity to defend himself throughout the process, which culminated in a four-day trial.

The trustee’s complaint sought sanctions arising out of the attorney’s representation of clients of UpRight LLC, a bankruptcy legal services company, with whom the attorney had entered into a partnership agreement. Contrary to the attorney’s objection regarding the absence of notice, the complaint alleged that the attorney’s knowledge of and involvement with a “New Car Custody Program” constituted unethical and illegal conduct and recited the provisions of the bankruptcy code that the attorney allegedly violated. Simplistically, the program involved the client’s surrendering to a third-party a vehicle in which the client had no equity and there was a value greater than $5,000. The third-party would then pay the filing costs and attorney’s fees for the client’s Chapter 7 filing.

While the complaint did not cite to specific provisions of the Virginia Rules of Professional Conduct, the bankruptcy court concluded that the attorney violated Rule 5.1(c)(1) (addressing ratification of improper conduct) and Rule 5.3(a) (regarding a lawyer having a supervisory duty to undertake reasonable efforts to ensure that subordinates are engaging in proper conduct).

The Court of Appeals confirmed that the trustee’s “complaint provided detailed and specific allegation of misconduct against [the attorney], this law firm and his fellow partners related to the” new car custody program. Further, the attorney “received an opportunity to prepare and present a defense,” which included the opportunity to conduct discovery before trial and to present evidence, cross-examine witnesses, and offer argument at trial.

Attorneys, as occurred here, face significant difficulty in demonstrating an absence of due process in disciplinary matters. In Baumann v. Virginia State Bar, 299 Va. 80, 845 S.E.2d 528 (2020), the Virginia Supreme Court rejected the claim that the lack of availability of private discipline at certain stages of the disciplinary process violates an attorney’s constitutional rights to due process, i.e., that attorneys are coerced into foregoing a hearing on the merits in order to receive a private reprimand (and to, thus, avoid the potential for public discipline). Instead, “[a] proceeding to discipline an attorney is a civil proceeding,” with the “primary purpose . . . to protect the public, not punish the attorney.” As such, an attorney is entitled to notice of the charges and an opportunity to defend himself. He does not “have any further constitutional due process rights that entitled him to receive private discipline.”

Understanding the nature and purpose of a sanctions or disciplinary proceeding is critical. It is about not only insuring protection of the public, but also maintaining confidence in the judicial system. And yes, it is also an inherently “personal” proceeding in which the lawyer’s reputation, ethics, and livelihood are directly at issue.