Michigan AG joins Detroit bankruptcy case, again

Michigan Attorney General Bill Schuette stands behind Gov. Rick Snyder as he addresses the media.
Michigan Attorney General Bill Schuette stands behind Gov. Rick Snyder as he addresses the media.

Michigan Attorney General Bill Schuette—who is already representing Gov. Rick Snyder in Detroit's historic bankruptcy—filed papers Monday to represent Detroit municipal workers and retirees who oppose a Snyder-backed proposal to reduce pension benefits as part of Detroit's reorganization.

The move puts the attorney general in the position of representing competing interests in the case. Schuette and Snyder are both Republicans.

In a statement, he cited a provision in the state constitution that pension obligations may not be "diminished or impaired."

(Read more: If Detroit cuts pensions, will your city be next?)

"As attorney general, I will defend the rights of Michigan citizens and defend the constitution of the state of Michigan," Schuette said.

Just last week, Schuette appeared to take the opposite side, filing an emergency appeal in state court on behalf of the governor after a state judge ruled the bankruptcy unconstitutional because of the potential impact on the pensions.

(Read more: Michigan Appeals Court halts challenges to Detroit's bankruptcy filing)

In the statement, Schuette said he will continue to "aggressively" represent Snyder in the bankruptcy case, while also serving as the "people's attorney" on behalf of the pensioners.

The statement does not explain how Schuette will navigate the apparent conflict between his representation of the governor on the one hand and the pensioners on the other, and Schuette's office has not responded to CNBC's request for a comment.

Last week, two attorneys for Detroit law firm Dickinson Wright filed appearances in U.S. Bankruptcy Court on behalf of Schuette in connection with his representation of the governor. Monday's filing, in connection with Schuette's representation of the pensioners, lists several top officials in Schuette's office representing the Attorney General.

—By CNBC's Scott Cohn. Follow him on Twitter @ScottCohnCNBC.