Richards Layton & Finger

Reliance on Client's Automated Information System May Support Rule 9011 Liability

November 14, 2011

A recent decision of the Third Circuit, In re Taylor, 2011 WL 3692440 (3d Cir. Aug. 24, 2011), a personal bankruptcy case, suggests that, in certain circumstances, counsel’s reliance on a client lender’s information systems can lead to the imposition of sanctions against not only the client, but also against counsel. The decision underscores the need for bankruptcy litigators to take steps to verify the accuracy of information provided to them by their client and, in particular, to speak to their clients to ensure that the information that they are putting before the court is not obviously erroneous.

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