By: Rebecca Leaf
St. John’s Law Student
American Bankruptcy Institute Law Review Staff
The court rejected the view that had been adopted in an earlier Florida bankruptcy case, that the debtor’s attorney-client privilege automatically passes, as a matter of law, from debtor to trustee in a chapter 7 bankruptcy proceeding.
In this case, the trustee wanted the power to waive the debtor's privilege and direct the law firm representing the debtor to turn over all files that it kept in connection with its representation of the debtor in a wrongful death action brought against the debtor.
In allowing the records to be turned over to the trustee, the court weighed the harm to the debtor against the benefits to the bankruptcy estate; rather than applying a blanket rule that all attorney client-privileged materials pass from debtor to trustee.
In Bazemore, the court balanced the harm to the debtor as a result of waiving attorney-client privilege, against the benefit to the bankruptcy estate, in deciding whether the trustee could waive the debtor's privilege.
Thus, in the case of the individual debtor, the lower courts have adopted three different approaches to deciding if the trustee has the power to waive attorney-client privilege: (1) trustees, as a matter of law, can waive attorney-client privilege; (2) trustees can never waive attorney-client privilege on the debtor's behalf; and (3) the trustee's power to waive the attorney-client privilege turns on balancing the harm to the debtor against the benefit to the estate.
Id. at 521 ("The Court would like to note . . . that it disagrees with the assertion that the attorney-client privilege always passes as a matter of law from the debtor to the trustee.").
Id. at 1024 ("The inquiry requires balancing the interests of a full and frank discussion in the attorney-client relationship . . . the harm to the debtor . . . with the trustee's duty to maximize the value of the debtor's estate . . . ").
11 U.S.C. § 542(e) ("[T]he court may order an attorney, accountant, or other person that holds recorded information . . . relating to debtor's property or financial affairs, to turn over or disclose such recorded information to the trustee.").
Id. at 356 ("But our holding today has no bearing on the problem of individual bankruptcy . . . "). See Ralph McCullough Et Al., Trustees: The Ability to Waive the Debtor's Attorney-Client Privilege, 106 Comm. L.J. 1, 4 (2001).
 In re Courtney, 521 (positing most practical approach is striking balance between harm to debtor and benefit to estate). See McCullough, supra note 14, at 5.
See Julianna M. Thomas, Note, Fifteen Years After Weintraub: Who Controls the Individual's Attorney-Client Privilege in Bankruptcy?, 80 B.U. L. Rev. 635, 667 (2000) (noting that case-by-case balancing test makes predictability impossible); cf. Upjohn Co. v. United States, 449 U.S. 383, 393 (1981) ("An uncertain privilege, or one which . . . results in widely varying applicants by the courts, is little better than no privilege at all.").
See McCullough, supra note 14, at 10 (noting waiver of privilege "[R]isks hindering attorney-client communications").