The Virginia Supreme Court has underscored the right of a
defendant to seek bankruptcy protection amid civil litigation.
In McNally v. Rey, No. 070522, (Va. April 18, 2008),
Virginia's highest court considered whether a trial lawyer was
subject to sanctions for continuing to comply with pre-trial
obligations and preparing a matter for trial when the litigator
also was counseling the defendant concerning the possibility of
filing for bankruptcy protection. When the defendant filed for
bankruptcy on the eve of trial, the plaintiffs sought to hold the
defendant's lawyer responsible for all pretrial expenses
incurred.
The facts in this case are not unlike many litigations when a
defendant suffers financial stress. The defendant was defending an
action pending in state court, which was litigated through the
pre-trial stage to the eve of trial. The defendant engaged in
discovery and its trial counsel complied with all necessary
pre-trial matters, including presenting
