Local Rule RULE 9029-4B: ATTORNEY DISCIPLINARY PROCEEDINGS — Bankr. N.D. Ill.

RULE 9029-4B ATTORNEY DISCIPLINARY PROCEEDINGS A. Disciplinary Proceedings Generally

(1) Definitions In this Rule, these definitions apply:

(a) "Misconduct" means any act or omission by an attorney who violates the district court's rules of professional conduct. The act or omission constitutes misconduct regardless of whether:

1. the attorney committed the act or omission individually or in concert with any other person; or 2. the act or omission occurred during an attorney-client relationship.

(b) "Discipline" includes temporary or permanent suspension from practice before the bankruptcy court, reprimand, censure, or any other disciplinary action that the circumstances warrant, such as restitution of funds, satisfactory completion of educational programs, compliance with treatment programs, and community service.

(2) Attorneys Subject to Discipline By appearing in the bankruptcy court, an attorney, whether or not a member of the bar of the district court, submits to the disciplinary authority of the bankruptcy court.

(3) Confidentiality

(a) Before a disciplinary proceeding is assigned to a judge under section (B)(10) of this Rule, the proceeding is confidential, except that the bankruptcy court may, on terms it finds appropriate, authorize the clerk to disclose information about the proceeding.

(b) After a disciplinary proceeding is assigned to a judge under section (B)(10) of this Rule, the record and hearings in the proceeding are public, and all materials submitted to the chief judge before the disciplinary proceeding was assigned must be filed with the clerk of the court, unless for good cause the judge to whom the disciplinary proceeding is assigned orders otherwise.

B. Discipline of Attorneys for Misconduct

(1) Complaint of Misconduct A disciplinary proceeding is commenced by submitting a complaint of misconduct to the chief judge of the bankruptcy court. The complaint may be in the form of a letter. The complaint must state in detail the nature of the alleged misconduct and must identify the rule of professional conduct violated. The chief judge must refer the complaint of misconduct to the bankruptcy court for consideration and appropriate action.

(2) Request for a Response to a Complaint of Misconduct On receiving a complaint of misconduct, the bankruptcy court may forward a copy to the attorney and ask for a response within a set time. Any response must be submitted to the chief judge.

(3) Action by the Bankruptcy Court on a Complaint of Misconduct On the basis of the complaint of misconduct and any response, the bankruptcy court may, by a majority vote:

(a) determine that the complaint merits no further action and give notice of the determination to the complainant and the attorney;

(b) direct the commencement of formal disciplinary proceedings; or

(4) Statement of Charges If the bankruptcy court determines, based on the complaint and any response, that formal disciplinary proceedings should be commenced, the bankruptcy court must issue a statement of charges against the attorney. The statement of charges must describe the alleged misconduct, state the proposed discipline, and require the attorney to show cause, within 28 days after service, why the attorney should not be disciplined.

(5) Method of Service The clerk must mail two copies of the statement of charges to the attorney's last known address. One copy must be sent by certified mail restricted to addressee only, return receipt requested. The other copy must be mailed by first class mail. If the statement of charges is returned as undeliverable, the clerk must notify the chief judge. The bankruptcy court may direct further attempts at service.

(6) Date of Service In this Rule, the date of service is:

(a) the date of mailing, if service is by mail; or

(b) the date of delivery, if service is personal.

(7) Answer to Statement of Charges Within 28 days after service, the charged attorney must submit to the chief judge an answer to the statement of charges showing cause why the attorney should not be disciplined. The answer must take the form of an answer to a complaint in an adversary proceeding and must comply with Rules 7008 and 7010 of the Federal Rules of Bankruptcy Procedure and Rule 5005-3(A) of these rules.

(8) Failure to Answer If the charged attorney fails to answer the statement of charges, the allegations will be treated as admitted. The chief judge will then enter an order imposing either the discipline proposed in the statement or lesser discipline, as the chief judge determines.

(9) Appointment of the United States Trustee The bankruptcy court may appoint the United States Trustee for this region to investigate a complaint of misconduct and prosecute a statement of charges. The United States Trustee may decline the appointment and must notify the chief judge of that decision within 30 days. The bankruptcy court may then elect either to dismiss the proceeding or ask a member of the bar to investigate the complaint of misconduct and prosecute the statement of charges.

(10) Assignment to Judge for Hearing If, after the charged attorney has answered the statement of charges, the bankruptcy court determines by a majority vote that an evidentiary hearing is warranted, the chief judge must assign the disciplinary proceeding to a judge for hearing.

(11) Discovery The United States Trustee or any other investigating or prosecuting attorney and the charged attorney may take discovery under Rules 7030 through 7037 and 9016 of the Federal Rules of Bankruptcy Procedure.

(12) Hearing The Federal Rules of Evidence apply in a hearing on a statement of charges. The party prosecuting the complaint has the burden of proving by a preponderance of the evidence that the attorney charged has committed misconduct.

(13) Decision On completing the hearing, the assigned judge must issue a written decision making findings of fact and conclusions of law, determining whether the attorney charged has committed misconduct, and if so, imposing appropriate discipline. A separate order imposing discipline must be entered consistent with the decision.

(14) Appeal An order under section (B)(13) of this Rule is a final order, appealable as of right to the Executive Committee of the district court. Part VIII of the Federal Rules of Bankruptcy Procedure governs all appeals from disciplinary orders of the bankruptcy court, except that Rule 8006 does not apply.

C. Emergency Interim Suspension If the chief judge determines that the misconduct charged poses a genuine risk of serious harm, the chief judge may, after notice to the attorney and an opportunity for a hearing, enter an order immediately suspending the attorney from practice before the bankruptcy court until the charges are resolved. An interim order suspending an attorney is appealable under (B)(14).

D. Suspension on Consent

(1) Stipulation of Facts and Declaration Whether or not a complaint of misconduct has been submitted or a statement of charges issued, an attorney may consent to suspension from practice before the bankruptcy court by delivering to the chief judge a signed stipulation. The stipulation must

(a) state the facts warranting the attorney's suspension;

(b) declare that the attorney consents to suspension;

(d) propose a period of suspension.

The period of suspension may be indefinite or a defined time.

(2) Order

(a) On receiving the stipulation, the chief judge must enter an order suspending the attorney for the proposed period, unless the chief judge decides the order is unreasonable.

(b) If the chief judge decides that the order is unreasonable, the matter must be referred to the bankruptcy court for decision by majority vote. The bankruptcy court must then decide whether suspension is warranted, and if so, whether the proposed period of suspension is reasonable.

(i) If the bankruptcy court decides that suspension is unwarranted, no order suspending the attorney will be entered.

(ii) If the bankruptcy court decides that suspension is warranted but the proposed period of suspension is unreasonable, the bankruptcy court must determine a reasonable period. The chief judge must enter an order consistent with the court's decision.

E. Reinstatement

(1) Reinstatement when Suspension is 90 Days or Fewer An attorney suspended for 90 days or fewer is automatically reinstated at the end of the period of suspension.

(2) Reinstatement when Suspension is More than 90 Days An attorney suspended for more than 90 days may not practice in the bankruptcy court until reinstated by order of the bankruptcy court in response to a petition for reinstatement. The attorney may petition for reinstatement any time after the period of suspension.

(3) Reinstatement when Suspension is for an Indefinite Period An attorney who is suspended indefinitely may not practice in the bankruptcy court until the bankruptcy court by order reinstates the attorney in response to a petition for reinstatement. The attorney may petition for reinstatement after five years from the effective date of the suspension.

(4) Presentation of Petition A petition for reinstatement must be filed with the clerk. The clerk must present the petition to the bankruptcy court which, by a majority vote, must either

(a) grant or deny the petition without an evidentiary hearing; or

(b) decide that the matter requires an evidentiary hearing before a judge assigned by the chief judge.

(5) Appointment of the United States Trustee The bankruptcy court may appoint the United States Trustee for this region to investigate a petition for reinstatement and support or oppose reinstatement. The United States Trustee may decline the appointment and must notify the chief judge of that decision within 30 days. The bankruptcy court may then ask a member of the bar to investigate the petition and oppose or support reinstatement.

(6) Hearing The Federal Rules of Evidence apply in a hearing on a petition for reinstatement. The petitioning attorney has the burden of proving by clear and convincing evidence that

(a) the attorney has the character and fitness necessary to practice in the bankruptcy court; and

(b) the attorney's practicing in the bankruptcy court will not be detrimental to the administration of justice.

(7) Decision by Assigned Judge On completing the hearing, the assigned judge must issue a written decision making findings of fact and conclusions of law and deciding whether the petitioner should be reinstated. A separate order consistent with the decision must be entered.

(8) Grant or Denial of Petition If the petitioning attorney fails to prove fitness to practice in the bankruptcy court, the petition for reinstatement must be denied. If the petitioner is found fit to practice, the petition must be granted and the petitioning attorney reinstated, but reinstatement may be subject to conditions, including partial or complete restitution to parties harmed by the conduct that led to the suspension.

(9) Appeal An order granting or denying a petition for reinstatement is a final order, appealable as of right to the Executive Committee of the district court. Part VIII of the Federal Rules of Bankruptcy Procedure governs all appeals from disciplinary orders of the bankruptcy court, except that Rule 8006 does not apply.

(10) Successive Petitions for Reinstatement If a suspended attorney's petition for reinstatement is denied, the attorney may not file another petition for reinstatement for one year from the date of the order denying the petition.

F. Notice to Executive Committee and ARDC After an order has been entered under section (B)(13) of this Rule imposing discipline, section (D)(2) of this Rule suspending an attorney on consent, or section (E)(7) of this Rule granting or denying a petition for reinstatement, and after all appellate rights have been exhausted, the clerk must transmit a copy of the order to the Executive Committee of the district court and to the Illinois Attorney Registration and Disciplinary Commission.

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