Local law firm to arrive at the U.S. Supreme Court - as the client
by Barbara L. Jones Associate Editor
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The Statute
A debt relief agency shall not … advise an assisted person or prospective assisted person to incur more debt in contemplation of such person filing a case under this title or to pay an attorney or bankruptcy petition preparer …
11 U.S.C. sec. 526 (a)(4)
A debt relief agency shall … clearly and conspicuously use the following statement in [any advertisement of bankruptcy assistance services or of the benefits of bankruptcy directed to the general public]: ‘We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.’ or a substantially similar statement. 11 U.S.C. sec. 528 (a)(4)
When the U.S. Supreme Court grants your petition for certiorari, lawyers come looking for you. That’s what happened to Edina lawyer Robert Milavetz when he, his law firm (Milavetz Gallop & Milavetz) and fellow firm lawyer Barbara Nevin took their case challenging the constitutionality of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 to the U.S. Supreme Court. After a successful cert petition, and also a successful cert petition by the United States seeking to have the act upheld, lawyers began to contact the firm seeking a seat at the counsel table when the case is argued on Dec. 1. A debt relief agency shall not … advise an assisted person or prospective assisted person to incur more debt in contemplation of such person filing a case under this title or to pay an attorney or bankruptcy petition preparer …
11 U.S.C. sec. 526 (a)(4)
A debt relief agency shall … clearly and conspicuously use the following statement in [any advertisement of bankruptcy assistance services or of the benefits of bankruptcy directed to the general public]: ‘We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.’ or a substantially similar statement. 11 U.S.C. sec. 528 (a)(4)
The 2005 BAPCPA offended attorneys from the get-go by requiring that debt relief agencies, which has been defined broadly to include lawyers, so label themselves in their advertising. It also prohibited advising “assisted persons” to incur debt in contemplation of bankruptcy.
Milavetz, whose practice includes advising clients considering bankruptcy, was among those who were angry. To him, the only question was, “should we bring a suit to declare it unconstitutional and enjoin its enforcement or should we get out of the bankruptcy practice? There was no way we were going to continue handling bankruptcies with that statute out there. You simply can’t practice ethically and honestly if you can’t give advice.”
Milavetz chose the former and prevailed in front of U.S. District Court Judge James Rosenbaum. Milavetz and son Alan, also an attorney at the firm, both thought from the outset that the case had U.S. Supreme Court potential.
“You don’t lightly go in to federal District Court to challenge an act of Congress,” Alan Milavetz said.
The firm had a partial victory at the 8th U.S. Circuit Court of Appeals, which is why both sides sought, and were granted, cert.
It was not an easy decision to turn the case over to another lawyer, Alan Milavetz said. However, when well-known bankruptcy lawyer G. Eric Brunstad of Hartford, Conn., expressed a willingness to represent them in the case, the firm and its lawyers put their egos aside and let him take over the case. Brunstad has argued eight other cases to the U.S. Supreme Court and has a stellar reputation.
Brunstad was “amiable, affable and available,” and came to Minnesota to demonstrate he was a good “match” with the petitioners, according to Alan Milavetz.
Alan Milavetz and Schulze, along with Walter Hodynsky, remain on the brief as co-counsel and were active in the drafting. All the lawyers, including Robert Milavetz and Nevin, have been reading and researching all the different directions the law can take them in to get ready for whatever the government or the justices might toss at them.
“It’s important to be able to react to anything. We have to prepare for any contingency that might happen,” Alan Milavetz told Minnesota Lawyer.
Brunstad will visit Minnesota later this month for a moot argument, one of several he has planned, according to Nevin.
Carnegie Hall of Justice?
St. Paul attorney Ben Butler, who argued before the court in 2008, said that going to the court is like getting to Carnegie Hall: “Practice, practice, practice.” He had about six formal moot arguments and countless informal sessions where he would argue and answer practice questions.
It’s important to get other perspectives because you can get wrapped up in your own arguments, he said. There’s no way to predict what questions the justices will ask so you need to hear different points of view. “Just because you’ve done one or two or eight, you don’t know how the next one is going to go,” Butler said.
Kirk Kolbo, who argued two cases back to back in 2003, prepared by arguing the case in about four moots, listening to Solicitor General Ted Olsen — who shared his time — moot his case, and by listening to oral arguments.
Of course, he spent a lot of time informally “arguing” with colleagues, but it’s very hard to be prepared for the reality of the Supreme Court experience, he said. First of all, the podium is very close to the chief justice. And, although he had anticipated the content of the questions, he hadn’t anticipated the intensity and rapidity of the questioning. “I was surprised at how difficult it was to finish an answer.”
Constitution and statutory construction
The argument promises to be an interesting combination of First Amendment law and construction of bankruptcy statutes. The 8th Circuit agreed with Rosenbaum that “debt relief agencies” could not be prohibited from advising clients to incur more debt, but also found that lawyers advising debtors qualified as “debt relief agencies.”
The 8th Circuit said that the provision in section 526(a)(4) forbidding lawyers from advising clients to incur more debt is substantially overbroad. However, the court saved the part of the law that requires attorneys who provide bankruptcy services to disclose that fact or make a “substantially similar” statement in all advertising. (In footnote 12 to its opinion, the 8th Circuit stated that whether “substantially similar” statements will pass muster under the statute will require a case-by-case determination.)
The 8th Circuit’s opinion did not satisfy either side.
The plaintiffs challenged the rulings that attorneys are debt relief agencies and also challenged the advertising restriction’s “similar statement” language as vague and an unconstitutional restraint on speech.
The government has asked the high court to save section 526(a) (4) by construing it narrowly to prohibit advice to take on debt that would abuse the bankruptcy system.
Thus the case lends itself both to a classic First Amendment attack — that it is a broad and chilling assault on attorney speech and client’s right to receive information — as well as a piece-by-piece construction of the statute that adds up to proof that it is unconstitutional.
Brunstad chose the latter strategy, and the brief picks apart both statutes and suggests that they can by saved only by concluding that they do not apply to attorneys. That may be the proper strategy with the current make-up of the court, but Robert Milavetz would like to see the First Amendment come first.
But he knows “you have to do both” and said Brunstad is a brilliant lawyer. “I’m just not used to letting a lawyer control strategy. It’s hard for me and it’s very hard for the lawyer. I want to direct the organization of the brief. I think the emphasis should be on the First Amendment, that’s my background, his is statutory construction,” Milavetz said.
Milavetz was admitted to practice in 1963 and has handled more than 100 First Amendment cases. “It’s very difficult [not to be in the driver’s seat]. It’s very difficult to represent me. I don’t stop talking and I know a lot of cases,” said Milavetz.
