ENGAGEMENT LETTERS: A GUIDE FOR PRACTITIONERS
II. REPRESENTATION OF MULTIPLE GENERATIONS OF THE SAME FAMILY
INTRODUCTION
This form illustrates issues that should be addressed in discussing potential problems regarding confidences and conflicts of interest while representing multiple generations of the same family in an estate planning context and the manner in which these potential problems may be resolved.
The letter does not propose to deal with issues regarding the style of representation within any one family unit, such as whether the husband and wife of any one generation are to be to represented, as between themselves, jointly or separately and concurrently (for example, it may be possible for the attorney represent the husband and wife of each generation jointly as to each other but concurrently and separately as between the separate family units) or whether all of the assets of the parties are to be considered as a part of this engagement (for example, whether the disposition of the wife's property received from her former husband should be considered as a part of this engagement). It is suggested that those matters be dealt with in a separate letter to each separate family unit.
It is also important that the engagement letter define (and limit, as appropriate) the scope of the multiple-representation engagement. For example, the lawyer might be representing members of the first generation jointly as to each other in connection with the disposition of the family business, but concurrently and separately as to each other in connection with other estate planning matters, such as the disposition of the wife's ancestral property to the children of her first marriage.
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
Fee Paid by Person Other than Client, pp. 104-105, 189-190
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
Separate Representation of Related Clients in Unrelated Matters, pp. 122-123
General Nonadversary Character of Estates and Trusts Practice; Representation of Multiple Clients, pp. 149-150
Disclosures to Multiple Clients, pp. 151-152
Existing Client Asks Lawyer to Prepare Will or Trust for Another Person, pp. 151-152
Joint or Separate Representation, pp. 152-153
Consider Possible Presence and Impact of Any Conflicts of Interest, pp. 153-154
Conflicts of Interest May Preclude Multiple Representation, pp. 154-155
Declining or Terminating Representation, pp. 233-236
REPRESENTATION OF MULTIPLE GENERATIONS OF THE SAME FAMILY
CHECKLISTI. Who is the Client?
A. Options
1. Husband and/or Wife--first generation
2. Husband and/or Wife--second generation
3. All spouses--both generations
4. OtherB. Issues the lawyer should consider before accepting the representation
1. Is there any prior or existing client or adversary relationship between the lawyer (or his or her firm) and any of the parties? If so, does the lawyer have any conflict in representing any of the parties? If the lawyer (or firm) has represented any of the parties before, in what capacity (e.g., individually, as a corporate officer or director, as a fiduciary, as a general partner of the family limited partnership, etc.)?
2. How well does the lawyer know the parties?
3. Other than the family relationship, what common connections do the parties have 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.)?
4. What do the clients expect the "style" of the representation to be (e.g., do they want combined meetings of all parties or separate meetings of the various family groups; do they intend for each family group's finances, estate plans, and documents to be shared with the other family groups; do they intend that family confidences will be preserved or shared among all of the family groups, etc.)?
II. What will be the lawyer's relationship to the various parties?
A. Who will be paying the fee, and what will the fee arrangement be? (Note: If someone other than the client is paying the fee, the requirements of MRPC Rule 1.8(f) must be observed.)
B. In which of the parties' capacities will the lawyer provide representation (e.g., individually, as a corporate officer or director, as a fiduciary, as general partner of the family partnership, etc.)? How many "hats" does each party wear, and in how many of those roles does the lawyer expect to represent each party?
C. What duties, if any, does each party owe to other family members, and how does that affect the lawyer's ability to represent each party and carry out each party's instructions (e.g., if a party is the general partner of a family limited partnership and tells the lawyer that the client doesn't want the lawyer to tell the other parties about proposed changes in the assets of the partnership, and the other parties are limited partners in the partnership)?
D. Based on the answers to the foregoing questions, what is the apparent "character" of the multiple representation (e.g., joint representation of father and mother and separate joint representation of child and child's spouse; joint representation of all parties; separate representation of one family group, etc.)?
1. What relationship does the lawyer find acceptable, and what relationship will the parties accept?
2. What confidences are to be maintained, and what confidences are to be disclosed?
3. How are actual or potential conflicts of interest to be resolved?
4. What consents must be obtained and from whom?
E. What conflicts of interest exist or may exist among the multiple clients, and how do they affect the multiple representation? In answering this question the following considerations may be helpful:
1. Are there any past, present, or likely future events that might suggest, create, or constitute a conflict of interest between or among the parties (e.g., prior marriages, divorces, premarital agreements, property settlements, different domiciles, children from prior marriages, adoptions, children or other significant relationships outside of marriage, special needs of children or other family members, different plans for the distribution of the assets, different charitable motives, etc.)?
2. How do the parties want the lawyer to respond if the lawyer acquires knowledge that the plan of one client would defeat the plan or adversely affect the interests of another client; knowledge that possible future actions by one client would defeat the plan or adversely affect the interests of another client (e.g., the father's plans to sell the family business rather than pass it on to the child); or knowledge that one client's expectations or understanding of another client's intentions are not correct?
F. In general, what disclosures do the clients expect or consent to be made?
1. Do the clients consent to the disclosure of all confidences among all family members, or do the clients prefer that all confidences be maintained between the various groups, or are the clients willing to allow the firm to disclose to other family groups only those confidences which the lawyer believes are relevant and material to another family group's planning? Do the clients agree to share documents or only information? Do the clients authorize disclosures to persons who are not clients, such as accountants, insurance advisors, etc.? If they have agreed to share documents, does this include existing documents, new documents, or both? It is advisable to obtain a detailed list of the information and/or documents to be shared, if any.
2. Consideration must be given as to how the confidential information is to be used. How will disclosure, or lack of disclosure, affect the other clients?
III. Resolution of future actual conflicts
A. If the multiple representation breaks apart for any reason, which, if any, of the multiple clients may the lawyer (and/or the lawyer's firm) continue to represent? E.g., Does the lawyer, on the basis of a long-standing relationship with the father, intend to continue to represent the father and mother in their estate planning even if he or she no longer represents the child, or will the lawyer (or the firm) continue to represent one of the multiple clients only if all other clients consent, or will the lawyer (and firm) withdraw from representing any of the clients?
B. Will withdrawal from further representation of one party be an "implied" disclosure to another party?
IV. Documenting the representation
A. Does the lawyer send out an engagement letter to all of the multiple clients prior to the first conference?
B. Does the lawyer review these issues with the clients at the first conference following a check-list or memorandum filled-in during the first conference?
C. Does the lawyer require that some or all of the multiple clients sign the engagement letter or memorandum or otherwise acknowledge the terms of the multiple representation?
D. Describe the scope of representation in the engagement letter.
REPRESENTATION OF MULTIPLE GENERATIONS OF THE SAME FAMILY
ENGAGEMENT LETTER
(date)
(Husband and Wife - First Generation)
(Address)
(City, State, ZIP)(Husband and Wife - Second Generation)
(Address)
(City, State, ZIP)Reference: Estate Planning
Dear (Husband and Wife - First Generation), (Husband and Wife - Second Generation):
Thank you for selecting me to assist you in your estate planning. 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., and which party, if not all of them, will be responsible for payment]. If I am asked to perform tasks not described in this letter, an additional engagement letter may be required.
[CHOOSE ALTERNATE A-1 OR ALTERNATE B-1]
A-1 [To be used when the lawyer (or his or her firm) has previously represented the First Generation]
Previous Representation
(Husband and Wife - Second Generation) have asked me to represent them in the development of their estate plan, and in preparing their estate planning documents. I am happy to do this; however, it is important that all of you understand and consent to the considerations involved in that representation.
As all of you know, I have previously represented and continue to represent (Husband and Wife - First Generation) in connection with their estate planning and other matters. I have also represented (Family Business), (Family Corporation), (Family Limited Partnership), and (Family Private Foundation). I have not previously represented (Husband and Wife - Second Generation).
In my previous representation of (Husband and Wife - First Generation), I have made certain not to disclose any details of their finances, estate plan, or estate planning documents to other members of the family. There is no reason why I cannot continue to represent (Husband and Wife - First Generation) and represent (Husband and Wife - Second Generation) at the same time, as long as everyone is aware of the potential problems regarding the preservation or sharing of confidential information and the resolution of conflicts of interest that arise when I undertake to represent more than one unit of the family.
B-1 [To be used when the lawyer has not previously represented either generation]
You have asked me to represent all of you in the development of your estate plans, and in preparing estate planning documents for all of you. I am happy to do this; however, it is important that all of you understand and consent to the considerations involved in such multiple representation.
[RESUME WITH STANDARD TEXT OF LETTER]
Duty of Confidentiality and Loyalty; Conflicts of Interest
As your attorney, I owe you a duty to preserve any confidential information you share with me unless you authorize me to disclose such information. Similarly, I owe you a duty to act solely in your best interests, without being influenced by the conflicting interests of other clients. If I represent two units of the same family, I have a potential conflict of interest resulting from my conflicting duties to the separate family units. For example, in advising you regarding your estate planning, I would ordinarily be obliged to make known to you any information that I believe might be important to you in making your estate planning decisions. This could include my knowledge of decisions affecting you made by other members of the family; however, because I am under a duty to preserve the confidential information made known to me by the other family members, I cannot disclose this information to you unless the other family members consent. Also, I could not advise you that actions planned by other family members might be adverse to your own personal interests unless the other family members consent.
Each of you may have differing and conflicting interests and estate planning objectives. You may have different views on how property should be distributed among various family members and other beneficiaries. In some situations it may be advisable to hold property in trust to take advantage of available tax benefits, which may result in a reduction of control or benefit for some of you. These are just a few general examples. Each situation is unique.
In separate letters to (Husband and Wife - First Generation) and (Husband and Wife - Second Generation), I have addressed how each separate family unit chooses to be represented as between themselves.
Necessity of Consent
[CHOOSE ALTERNATE A-2 OR ALTERNATE B-2]
A-2 [To be used when the lawyer has previously represented the First Generation]
Because I have previously represented (Husband and Wife - First Generation) and continue to represent them and other entities in which they have an interest, and because the interests of (Husband and Wife - Second Generation) could potentially be affected by the estate planning decisions of (Husband and Wife - First Generation), it will be necessary for both (Husband and Wife - First Generation) and (Husband and Wife - Second Generation) to consent to the form of my representation of (Husband and Wife - Second Generation). This representation could take one of several forms.
B-2 [To be used when the lawyer has not previously represented either generation]
Because the interests of (Husband and Wife - Second Generation) could potentially be affected by the estate planning decisions of (Husband and Wife - First Generation), or vice versa, it will be necessary for all of you to consent to the form of my representation of (Husband and Wife - First Generation) and (Husband and Wife - Second Generation). This representation could take one of several forms.
[RESUME WITH STANDARD TEXT OF LETTER]
Forms of Representation
With "joint representation," one lawyer represents both family units as a single client. In such a case the lawyer cannot be an advocate for any one family unit, but would serve only to assist the entire family in developing a coordinated estate plan and would encourage the resolution of differences in an equitable manner and in the best interests of the family as a whole. The lawyer normally would meet with all interested family members at the same time, and relevant and material information shared by one family unit with the lawyer, although confidential as to all those outside the family, could not be kept from the other family unit; however, the lawyer would generally not disclose to the other family unit information made known to the lawyer outside the joint meeting that the lawyer does not believe is relevant and material to the development of the coordinated estate plan.
Although the product of joint representation hopefully would be a coordinated estate plan agreeable to the entire family, it could also result in the disclosure of information that one family unit might prefer to remain confidential, and it could produce dissension if the family could not agree on a coordinated plan.
With "separate representation," each family unit may retain a separate lawyer, in which event each family unit would have an advocate for its interests and would receive totally independent advice. Each family unit would meet separately with its lawyer, and information given by one family unit to its lawyer would be confidential and could not be disclosed by the lawyer to the other family unit without consent.
Separate representation would ensure the preservation of each family unit's confidences and the elimination of any conflicts of interest between the separate family units and their lawyers; however, separate representation might also result in the development of separate estate plans that are inconsistent with or adverse to each other and a duplication of expenses in having separate lawyers.
With "concurrent separate representation," one lawyer represents both family units, but the representation would be structured so that each family unit would have the same relationship with the lawyer as if each family unit were represented by separate counsel. In such a case each family unit would receive totally independent advice. The lawyer would meet separately with each family unit and would not discuss with one family unit what the other family unit has disclosed unless the disclosure were authorized in advance. Unless authorized to do so, the lawyer would not use any information obtained from one family unit in advising the other family unit in the development of its estate plan, even if the result is that the two plans are incompatible or the plan of one family unit is detrimental to the interests of the other family unit.
I can represent both (Husband and Wife - First Generation) and (Husband and Wife - Second Generation) jointly or concurrently and separately, or I can represent either (Husband and Wife - First Generation) or (Husband and Wife - Second Generation) separately; however, before I begin, each of you must consider all of the factors and consent to the form of representation. After you have considered this decision carefully, I ask that you sign the statement which follows this letter to indicate your election of joint or concurrent separate representation.
Choice of Separate Counsel
[CHOOSE ALTERNATE A-3 OR ALTERNATE B-3]
A-3 [To be used when the lawyer has previously represented the First Generation]
If I begin with representation of all of you jointly or separately and concurrently, any one of you is completely free to change your mind and have separate counsel at any time. If (Husband and Wife - Second Generation) choose to seek separate counsel, I will continue to represent (Husband and Wife - First Generation). If (Husband and Wife - First Generation) choose to seek separate counsel, I will withdraw from representing (Husband and Wife - Second Generation) unless (Husband and Wife - First Generation) consent to my continued representation of (Husband and Wife - Second Generation).
B-3 [To be used when the lawyer has not previously represented either generation]
[CHOOSE ALTERNATE B-3-1 OR ALTERNATE B-3-2]
B-3-1 If I begin with representation of all of you jointly or concurrently and separately, any one of you is completely free to change your mind and have separate counsel at any time. In such case I will withdraw from representing any of you unless all of you consent to my continued representation of one or more of you.
B-3-2 If I begin with representation of all of you jointly or concurrently and separately, any family unit is completely free to change its mind and have separate counsel at any time. In such case I will continue to represent the other family unit.
[RESUME WITH STANDARD TEXT OF LETTER]
Because any change in legal representation after I begin will result in an increase in the time and expense needed to complete the estate plan and related documentation, I urge you to give careful consideration to the structure of the representation before we begin.
If Conflicts Develop
[CHOOSE ALTERNATE A-4 OR ALTERNATE B-4]
A-4 [To be used when the lawyer has previously represented the First Generation]
[CHOOSE ALTERNATE A-4-1 OR ALTERNATE A-4-2]
A-4-1 If I begin with representation of all of you jointly or concurrently and separately, and an actual conflict of interest arises between you so that in our judgment it would be improper for me to continue to represent all of you, I will continue to represent (Husband and Wife - First Generation).
A-4-2 If I begin with representation of all of you jointly or concurrently and separately, and an actual conflict of interest arises between you so that in my judgment it would be improper for me to continue to represent all of you, I will withdraw from representing any of you unless all of you consent to my continued representation of one or more of you.
B-4 [To be used when the lawyer has not previously represented either generation]
If I begin with representation of all of you jointly and an actual conflict of interest arises between you so that in my judgment it would be improper for me to continue to represent all of you, I will withdraw from representing any of you unless all of you consent to my continued representation of one or more of you.
[RESUME WITH STANDARD TEXT OF LETTER]
I am enclosing a return-address envelope for your convenience in returning a signed copy of this letter electing joint or concurrent separate representation. I have enclosed an extra copy of this letter for your records.
Consulting Independent Counsel
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,
(ATTORNEY)
atty/secy
Enclosures
cc:Election of "Joint" or "Concurrent Separate" Representation
We have each reviewed the foregoing letter concerning our choice of "joint," or "concurrent separate" representation, and we elect to have (LAWYER) represent [CHECK ONLY ONE]:
______ all of us jointly in connection with our family estate planning and related matters, as described above.
or
______ (Husband and Wife - First Generation) and (Husband and Wife - Second Generation) concurrently and separately as to each other in connection with their estate planning and related matters, as described above.
Dated: ____________________ _______________________________
(Husband - First Generation)
_______________________________
(Wife - First Generation)
Dated: _____________________ _______________________________
(Husband - Second Generation)
_______________________________
(Wife - Second Generation)
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