ENGAGEMENT LETTERS: A GUIDE FOR PRACTITIONERS
I. SPOUSAL REPRESENTATION
INTRODUCTION
These forms illustrate issues that should be addressed in discussing potential problems regarding confidences and conflicts of interest while representing spouses in an estate planning context and the manner in which these potential problems may be resolved.
There are two forms of letter reflecting fundamentally different approaches to the representation. The first form suggests a joint arrangement in which the lawyer is free to share all information in his or her possession with both spouses unless and until an event occurs that affects that representation, in which case the form sets out several different options for dealing with that event and its effect on the representation. Practitioners and their clients usually choose this method of representation.
The second form contemplates concurrent separate representation, which is tantamount to separate and independent representation of each spouse. In this mode, each client instructs the lawyer to hold all information he or she receives from either spouse in confidence so that the situation approximates as closely as possible that which would obtain if the spouses were represented by independent counsel. There is significant controversy as to whether this approach is viable in this context and others, although there are noted and respected practitioners who use it. In any event, it is recommended that, if this approach is attempted, the practitioner be aware of the potential pitfalls and proceed with caution.
References to the ACTEC Commentaries (3d Edition):
(Note that the page numbers shown below refer to the printed version of the ACTEC Commentaries)
General Principles (re Scope of Representation), pp. 50-51
Encouraging Communication; Discretion Regarding Content, p. 91
Communications During Active Phase of Representation, p. 92
Termination of Representation, pp. 94-95
Basis of Fees for Trusts and Estates Purposes, p. 104
Joint and Separate Clients, pp. 118-119
Joint Representation Presumed, p. 119
Multiple Separate Clients, pp. 119-120
Confidences Imparted by One Joint Client, pp. 120-122
ABA Special Probate and Trust Division Study Committee on Professional Responsibility: Comments and Recommendations on the Lawyer's Duties in Representing Husband and Wife, pp. 130-132
General Nonadversary Character of Estates and Trusts Practice; Representation of Multiple Clients, pp. 149-150
Disclosures to Multiple Clients, pp. 150-151
Joint or Separate Representation, pp. 151-152
Declining or Terminating Representation, pp. 233-236SPOUSAL REPRESENTATION
CHECKLIST
I. Who is the client?
A. Options 1. One Spouse
2. Both Spouses
a. Joint representation with full disclosure between lawyer and both spouses (see Joint Spousal Representation Letter)
b. Separate representation of each spouse with no disclosure by lawyer to other spouse (see Concurrent Separate Spousal Representation Letter)
B. Issues the lawyer should consider before accepting the representation
1. Having the scope of representation precisely defined.
2. Determining what relationship existed previously or exists presently between the spouses and the lawyer and/or his or her firm.
a. Is there any prior or existing client or adversary relationship between the lawyer or the firm and either spouse? If so, does the lawyer have any conflict in representing either of the spouses? If the lawyer or his or her firm has represented either of the spouses before, in what capacity (e.g., individually, as a corporate officer or director, as a fiduciary)?
b. How well does the lawyer know the spouses or either of them?
c. Other than the marital relationship, do the spouses have relationships with each other (e.g., are they shareholders in a family corporation, partners in a family partnership, fiduciaries or beneficiaries of a family trust, etc.)?
3. Determining what duties, if any, the spouses owe to each other, and how these duties would affect the lawyer's representation and ability to carry out instructions (e.g., pre or post-marital agreements, contracts to make wills, rights under pension plans).
4. Determining what duties, if any, either spouse owes to third parties regarding financial or property arrangements (e.g., child support, parental support, obligations or rights to or from prior spouse and others by agreements, prior divorce decrees, or arising under compensation or retirement plans).
5. Determining what conflicts of interest exist or may exist between the two spouses, and how would they affect the representation (e.g., knowledge that the plan of one spouse might defeat the plan or adversely affect the interests of the other; knowledge that possible future actions by one spouse might defeat the plan or adversely affect the interests of the other; or knowledge that one's spouse's expectations or understanding of the other's intentions are not correct).
6. Determining how will fees be fixed and billed, and who will pay.
II. The lawyer's continuing role
A. Options
1. As counsel for both spouses in joint representation setting continuing indefinitely;
2. No continuing role following completion of initial task as spelled out either in engagement letter or termination letter;
3. Continued representation of only one spouse under appropriate circumstances.
B. Issues for consideration
1. In the joint representation setting, what disclosures do the spouses expect or consent to be made?
a. Do the spouses consent to the disclosure of all confidences between them, do they prefer that all confidences be maintained, or are they willing to allow the lawyer to disclose to the other spouse only those confidences which the lawyer believes are relevant and material to the other spouse's planning (answers to these questions may lead to conclusion that representation really is separate and concurrent rather than joint)?
b. Do the spouses agree to share documents or only information?
c. If they have agreed to share documents, does this include existing documents, new documents, or both?
d. How will the confidential information be used? How will disclosure, or lack of disclosure, affect each client?
2. Do the spouses authorize disclosure of privileged and/or confidential information to third parties, accountants, insurance advisors, etc.?
III. Resolution of future actual conflicts: Options
A. Withdrawal from representation of both clients
B. Retention of option to represent one client or the other as attorney decides (based on past relationship or other basis)
C. Commitment to represent one client or the other (based on past relationship or other basis)
IV. Documenting the representation
A. Is an engagement letter sent to the spouses prior to the first conference, or does the lawyer send out an engagement letter to the spouses after the first conference?
B. Does the lawyer review these issues with the spouses at the first conference following a checklist or memorandum filled in during the first conference?
C. Does the lawyer require that both spouses sign the engagement letter or memorandum or otherwise acknowledge the terms of the multiple representation?
D. Should the lawyer periodically review with the clients the engagement letter to confirm the clients' continuing assent to the terms of the joint representation during the term of the long term representation?
JOINT SPOUSAL REPRESENTATION ENGAGEMENT LETTER
(date)
Dear (clients):
You have asked me to [describe scope of representation]. I have agreed to do this work and will bill for it on the following basis: [Describe arrangements pertaining to fees, billing, etc.]. If I am asked to perform tasks not described in this letter, an additional engagement letter may be required for that work.
It is common for a husband and wife to employ the same lawyer to assist them in planning their estates. You have taken this approach by asking me to represent both of you in your planning. It is important that you understand that because I will be representing both of you, you are considered my client, collectively. Accordingly, matters that one of you might discuss with me may be disclosed to the other of you. Ethical considerations prohibit me from agreeing with either of you to withhold information from the other. In this representation, I will not give legal advice to either of you or make any changes in any of your estate planning documents without your mutual knowledge and consent. Of course, anything either of you discusses with me is privileged from disclosure to third parties.
[CHOOSE ONE OF THE FOLLOWING]
#1 If a conflict of interest arises between you during the course of your planning or if the two of you have a difference of opinion, I can point out the pros and cons of your respective positions or differing opinions. However, ethical considerations prohibit me, as the lawyer for both of you, from advocating one of your positions over the other. Furthermore, I would not be able to advocate one of your positions versus the other if there is a dispute at any time as to your respective property rights or interests or as to other legal issues between you. If actual conflicts of interest do arise between you of such a nature that in my judgment it is impossible for me to perform my ethical obligations to both of you, it would become necessary for me to withdraw as your joint lawyer.
#2 If a conflict of interest arises between you during the course of your planning or if the two of you have a difference of opinion concerning the proposed plan for disposition of your property or on any other subject, I can point out the pros and cons of your respective positions or differing opinions. However, ethical considerations prohibit me, as the lawyer for both of you, from advocating one of your positions over the other. Furthermore, I would not be able to advocate one of your positions versus the other if there is a dispute at any time as to your respective property rights or interests or as to other legal issues between you.
If actual conflicts of interest do arise between you of such a nature that in my judgment it is impossible for me to perform my ethical obligations to both of you, it would become necessary for me to cease acting as your joint attorney. Since [Bob] is a client of long standing, I may elect to/would continue to represent him and in that event [Mary] would have to retain another lawyer to represent her. However, I would not be able to continue to represent [Bob] if prior to my undertaking separate representation I learn that [Bob] has breached any understanding with [Mary] or has advised me that he intends to do so (such as changing his estate plan to her detriment) unless [Mary] is fully informed of the breach or the intended breach and fully understands your current circumstances. By signing her consent to this letter, [Mary] agrees to my continued representation of [Bob] should a conflict arise between you, subject to the conditions set forth in this letter.
[OPTIONAL]
Once documentation is executed to put into place the planning that you have hired me to implement, my engagement will be concluded and our attorney-client relationship will terminate. If you need my services in the future, please feel free to contact me and renew our relationship. In the meantime, I will not take any further action with reference to your affairs unless and until I hear otherwise from you.
After considering the foregoing, if you consent to my representing both of you jointly, I request that you sign and return the enclosed copy of this letter. If you have any questions about anything discussed in this letter, please let me know. In addition, you should feel free to consult with another lawyer about the effect of signing this letter.
Very truly yours,
CONSENT
We have read the foregoing letter and understand its contents. We consent to having you represent both of us on the terms and conditions set forth. We agree that you may, in your discretion, share with both of us any information regarding the representation that you receive from either of us or any other source.
Dated:____________________ ______________________________
[Spouse]
Dated:____________________ ______________________________
[Spouse]
CONCURRENT SEPARATE SPOUSAL REPRESENTATION ENGAGEMENT LETTER
Conflicts of interest and confidentiality are of paramount concern if a lawyer undertakes concurrent separate representation of spouses. Such representation should only be undertaken after careful consideration of all possible conflicts of interest.
(date)
Dear (clients):
It is common for a husband and wife to employ the same lawyer to assist them in planning their estates. You have taken this approach by asking me to represent both of you [describe scope of representation]. However, each of you wants to maintain your right to confidentiality and the ability to meet separately with me. I have agreed to do this work on this basis and will bill for it on the following basis: [Describe arrangements pertaining to fees, billing, and which of the parties, if not both, will be responsible for payment]. If I am asked to perform tasks not described in this letter, an additional engagement letter may be required.
I will represent each of you separately and will not discuss with either one of you what your spouse has disclosed to me. Each of you releases me from the obligation to reveal to you any information I may have received from the other that is material and adverse to your interests. Furthermore, I will not use any information I obtain from one of you in preparing the other's plan, even if the result is that the two plans are incompatible or one plan is detrimental to the interests of the other spouse. In short, the representation will be structured so that each of you will have the same relationship with me as if each of you had gone to a separate lawyer for assistance in your planning.
While I have agreed to undertake this representation on a separate and confidential basis, you should be aware that there might be disputes between you now or in the future as to your respective property rights and interests, or as to other issues which may arise between you. Should this occur, I would not be able to represent either of you in resolving any such dispute, and each of you would have to obtain your own representation.
After considering the foregoing, if you consent to my representation of each of you separately, I request that you sign and return the enclosed copy of this letter. If you have any questions about anything discussed in this letter, please let me know. In addition, you should feel free to consult with another lawyer about the effect of signing this letter.
Very truly yours,
CONSENT
We have read the foregoing letter and understand its contents. We consent to having you represent each of us on the terms and conditions set forth.
Dated:____________________ ______________________________
[Spouse]
Dated:____________________ ______________________________
[Spouse]
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