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ACTEC COMMENTARIES ON THE MODEL RULES OF PROFESSIONAL CONDUCT

(a)     Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:

(1)    the representation of one client will be directly adverse to another client; or

(2)    there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.

(b)     Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:

(1)    the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;

(2)    the representation is not prohibited by law;

(3)    the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and

(4)    each affected client gives informed consent, confirmed in writing.

* * * * * * * * * * * * * * *
General Nonadversary Character of Estates and Trusts Practice; Representation of Multiple Clients. It is often appropriate for a lawyer to represent more than one member of the same family in connection with their estate plans, more than one beneficiary with common interests in an estate or trust administration matter, co-fiduciaries of an estate or trust, or more than one of the investors in a closely held business. See ACTEC Commentary on MRPC 1.6 (Confidentiality of Information). In some instances the clients may actually be better served by such a representation, which can result in more economical and better coordinated estate plans prepared by counsel who has a better overall understanding of all of the relevant family and property considerations. The fact that the estate planning goals of the clients are not entirely consistent does not necessarily preclude the lawyer from representing them: Advising related clients who have somewhat differing goals may be consistent with their interests and the lawyer's traditional role as the lawyer for the “family”. Multiple representation is also generally appropriate because the interests of the clients in cooperation, including obtaining cost effective representation and achieving common objectives, often clearly predominate over their limited inconsistent interests. Recognition should be given to the fact that estate planning is fundamentally nonadversarial in nature and estate administration is usually nonadversarial.
Disclosures to Multiple Clients. Before, or within a reasonable time after, commencing the representation, a lawyer who is consulted by multiple parties with related interests should discuss with them the implications of a joint representation (or a separate representation if the lawyer believes that mode of representation to be more appropriate and separate representation is permissible under the applicable local rules). See ACTEC Commentary on MRPC 1.6 (Confidentiality of Information). In particular, the prospective clients and the lawyer should discuss the extent to which material information imparted by either client would be shared with the other and the possibility that the lawyer would be required to withdraw if a conflict in their interests developed to the degree that the lawyer could not effectively represent each of them. The information may be best understood by the clients if it is discussed with them in person and also provided to them in written form, as in an engagement letter or brochure. As noted in the ACTEC Commentary on MRPC 1.2 (Scope of Representation and Allocation of Authority Between Client and Lawyer), a lawyer may represent co-fiduciaries whose interests do not conflict to an impermissible degree. A lawyer who represents co-fiduciaries may also represent one or both of them as beneficiaries so long as no disabling conflict arises.
Before accepting a representation involving multiple parties a lawyer may wish to consider meeting with the prospective clients separately, which may allow each of them to be more candid and, perhaps, reveal conflicts of interest.
Existing Client Asks Lawyer to Prepare Will or Trust for Another Person. A lawyer should exercise particular care if an existing client asks the lawyer to prepare for another person a will or trust that will benefit the existing client, particularly if the existing client will pay the cost of providing the estate planning services to the other person. If the representation of both the existing client and the new client would create a significant risk that the representation of one or both clients would be materially limited, the representation can only be undertaken as permitted by MRPC 1.7(b). In any case, the lawyer must comply with MRPC 1.8(f) and should consider cautioning both clients of the possibility that the existing client may be presumed to have exerted undue influence on the other client because the existing client was involved in the procurement of the document.
Joint or Separate Representation. As indicated in the ACTEC Commentary on MRPC 1.6 (Confidentiality of Information), a lawyer usually represents multiple clients jointly. However, some experienced estate planners regularly represent husbands and wives as separate clients. They also undertake to represent other related clients separately with respect to related matters. Such representations should only be undertaken with the informed consent of each client, confirmed in writing. See ACTEC Commentaries on MRPC 1.0 (e)) (defining “informed consent”) and MRPC 1.0 (b) (defining “confirmed in writing”). The writing may be contained in an engagement letter that covers other subjects as well.
Example 1.7-1. Lawyer (L) was asked to represent Husband (H) and Wife (W) in connection with estate planning matters. L had previously not represented either H or W. At the outset L should discuss with H and W the terms upon which L would represent them, including the extent to which confidentiality would be maintained with respect to communications made by each. Many lawyers believe that it is only appropriate to represent a husband and wife as joint clients, between whom the lawyer could not maintain the confidentiality of any information relevant to the representation. The representation of a husband and wife as joint clients does not ordinarily require the informed consent of either or both of them. However, some experienced estate planners believe that a lawyer may represent a husband and wife as separate clients between whom information communicated by one spouse will not be shared with the other spouse. In such a case, each spouse must give his or her informed consent confirmed in writing The same requirements apply to the representation of others as joint or separate multiple clients, such as the representation of other family members, business associates, etc.
Consider Possible Presence and Impact of Any Conflicts of Interest. A lawyer who is asked to represent multiple clients regarding related matters must consider at the outset whether the representation involves or may involve impermissible conflicts, including ones that affect the interests of third parties or the lawyer's own interests. The lawyer must also bear this concern in mind as the representation progresses: What was a tolerable conflict at the outset may develop into one that precludes the lawyer from continuing to represent one or more of the clients.
Example 1.7-2. Lawyer (L) represents Trustee (T) as trustee of a trust created by X. L may properly represent T in connection with other matters that do not involve a conflict of interest, such as the preparation of a will or other personal matters not related to the trust. L should not charge the trust for any personal services that are performed for T. Moreover, in order to avoid misunderstandings, L should charge T for any substantial personal services that L performs for T.
Example 1.7-3. Lawyer (L) represented Husband (H) and Wife (W) jointly with respect to estate planning matters. H died leaving a will that appointed Bank (B) as executor and as trustee of a trust for the benefit of W that meets the QTIP requirements under I.R.C. 2056(b)(7). L has agreed to represent B and knows that W looks to him as her lawyer. L may represent both B and W if the requirements of MRPC 1.7 are met. If a serious conflict arises between B and W, L may be required to withdraw as counsel for B or W or both. L may inform W of her elective share, support, homestead or other rights under the local law without violating MRPC 1.9 (Duties to Former Clients). However, without the informed consent of all affected parties confirmed in writing, L should not represent W in connection with an attempt to set aside H's will or to assert an elective share. See ACTEC Commentaries on MRPC 1.0(e) (defining “informed consent”) and MRPC 1.0(b) (defining “confirmed in writing”).
Conflicts of Interest May Preclude Multiple Representation. Some conflicts of interest are so serious that the informed consent of the parties is insufficient to allow the lawyer to undertake or continue the representation (a “non-waivable” conflict). Thus, a lawyer may not represent clients whose interests actually conflict to such a degree that the lawyer cannot adequately represent their individual interests. A lawyer may never represent opposing parties in the same litigation. A lawyer is almost always precluded from representing both parties to a pre-nuptial agreement or other matter with respect to which their interests directly conflict to a substantial degree. Thus, a lawyer who represents the personal representative of a decedent's estate (or the trustee of a trust) should not also represent a creditor in connection with a claim against the estate (or trust). This prohibition applies whether the creditor is the fiduciary individually or another party. On the other hand, if the actual or potential conflicts between competent, independent parties are not substantial, their common interests predominate, and it otherwise appears appropriate to do so, the lawyer and the parties may agree that the lawyer will represent them jointly subject to MRPC 1.7 (Conflict of Interest: General Rule) or act as an intermediary pursuant to former MRPC 2.2 (Intermediary).
A lawyer who is asked to represent a corporate fiduciary in connection with a fiduciary estate should consider discussing with the fiduciary the extent to which the representation might preclude the lawyer from representing an adverse party in an unrelated matter. In the absence of a contrary agreement, a lawyer who represents a corporate fiduciary in connection with the administration of a fiduciary estate should not be treated as representing the fiduciary generally for purposes of applying MRPC 1.7 with regard to a wholly unrelated matter. In particular, the representation of a corporate fiduciary in a representative capacity should not preclude the lawyer from representing a party adverse to the corporate fiduciary in connection with a wholly unrelated matter, such as a real estate transaction, labor negotiation, or another estate or trust administration.
Prospective Waivers. A client who is adequately informed may waive some conflicts that might otherwise prevent the lawyer from representing another person in connection with the same or a related matter. These conflicts are said to be “waivable.” Thus, a surviving spouse who serves as the personal representative of her husband's estate may give her informed consent confirmed in writing to permit the lawyer who represents her as personal representative also to represent a child who is a beneficiary of the estate. The lawyer also would need an informed consent from the child that is confirmed in writing before undertaking such a dual representation. However, a conflict might arise between the personal representative and the beneficiary that would preclude the lawyer from continuing to represent both, or either, of them.
Overly broad waivers or waivers executed by an inadequately informed client are of little, if any, value. As noted in ABA Formal Op. 93-378 (1993):
[I]t would be unlikely that a prospective waiver which did not identify either the potential opposing party or at least a class of conflicting clients would survive scrutiny. Even that information might not be enough if the nature of the matter and its potential effect on the client were not also appreciated by the client at the time the prospective waiver was sought.
Selection of Fiduciaries. The lawyer advising a client regarding the selection and appointment of a fiduciary should make full disclosure to the client of any benefits that the lawyer may receive as a result of the appointment. In particular, the lawyer should inform the client of any policies or practices known to the lawyer that the fiduciaries under consideration may follow with respect to the employment of the scrivener of an estate planning document as counsel for the fiduciary. The lawyer may also point out that a fiduciary has the right to choose any counsel it wishes. If there is a significant risk that the lawyer's independent professional judgment in the selection of a fiduciary would be materially limited by the lawyer's self interest or any other factor, the lawyer must obtain the client's informed consent, confirmed in writing.
Appointment of Scrivener as Fiduciary. An individual is generally free to select and appoint whomever he or she wishes to a fiduciary office (e.g., trustee, executor, attorney-in-fact). None of the provisions of the MRPC deals explicitly with the propriety of a lawyer preparing for a client a will or other document that appoints the lawyer to a fiduciary office. As a general proposition lawyers should be permitted to assist adequately informed clients who wish to appoint their lawyers as fiduciaries. Accordingly, a lawyer should be free to prepare a document that appoints the lawyer to a fiduciary office so long as the client is properly informed, the appointment does not violate the conflict of interest rules of MRPC 1.7 (Conflict of Interest: General Rule), and the appointment is not the product of undue influence or improper solicitation by the lawyer.
The designation of the lawyer as fiduciary will implicate the conflict of interest provisions of MRPC 1.7 when there is a significant risk that the lawyer's interests in obtaining the appointment will materially limit the lawyer's independent professional judgment in advising the client concerning the choice of an executor or other fiduciary. See ACTEC Commentary to MRPC 1.8. (addressing transactions entered into by lawyers with clients).
For the purposes of this Commentary a client is properly informed if the client is provided with information regarding the role and duties of the fiduciary, the ability of a lay person to serve as fiduciary with legal and other professional assistance, and the comparative costs of appointing the lawyer or another person or institution as fiduciary. The client should also be informed of any significant lawyer-client relationship that exists between the lawyer or the lawyer's firm and a corporate fiduciary under consideration for appointment.
Designation of Scrivener as Attorney for Fiduciary. The ethical propriety of a lawyer drawing a document that directs a fiduciary to retain the lawyer as his or her counsel involves essentially the same issues as does the appointment of the scrivener as fiduciary. However, although the appointment of a named fiduciary is generally necessary and desirable, it is usually unnecessary to designate any particular lawyer to serve as counsel to the fiduciary or to direct the fiduciary to retain a particular lawyer. Before drawing a document in which a fiduciary is directed to retain the scrivener or a member of his firm (see MRPC 1.8(k)) as counsel, the scrivener should advise the client that it is neither necessary nor customary to include such a direction in a will or trust. A client who wishes to include such a direction in a document should be advised as to whether or not such a direction is binding on the fiduciary under the governing law. In most states such a direction is usually not binding on a fiduciary, who is generally free to select and retain counsel of his or her own choice without regard to such a direction.
Client With Diminished Capacity. As provided by MRPC 1.14, a lawyer may take reasonable steps to protect the interests of a client the lawyer reasonably believes to be suffering from diminished capacity, including the initiation of protective proceedings. Doing so does not constitute an impermissible conflict of interest between the lawyer and the client. See ACTEC Commentary on MRPC 1.14 (Client With Diminished Capacity). A lawyer who is retained on behalf of the client to resist the institution of a protective action may not take positions that are contrary to the client's position or make disclosures contrary to MRPC 1.6 (Confidentiality of Information).
Rebates, Discounts, Commissions and Referral Fees. As indicated in the ACTEC Commentary on MRPC 1.5 (Fees), a lawyer should not accept a rebate, discount, commission or referral fee from a nonlawyer in connection with the representation of a client. The receipt by the lawyer of such a payment involves a conflict of interest with respect to the client. It is improper for a lawyer, who is subject to the strict obligations of a fiduciary, to benefit personally from such a representation. The client is generally entitled to the benefit of any economies achieved by the lawyer.
Confidentiality Agreements. A lawyer generally should not sign a confidentiality agreement that bars the lawyer from disclosing to the lawyer's other current and future clients the details of an estate planning strategy developed by a third party for the benefit of the lawyer's client. As stated in Ill. Op. 00-01, a lawyer who signs such a confidentiality agreement creates an impermissible conflict with the other clients who might benefit from the information learned in the course of representing this client. “In the case at hand, the Lawyer's own interests in honoring the Confidentiality Agreement would 'materially limit' [the Lawyer's] responsibilities to Clients B, C and D because Lawyer would be prohibited from providing beneficial tax information to Clients B, C and D.”
ANNOTATIONS
See Caveat to Annotations
(Limiting the Scope and Purpose of the Annotations)
Conflicts of Interest
Cases
See also cases cited in the Annotations following the ACTEC Commentary on MRPC 1.5 regarding rebates, discounts, commissions and referral fees.
Arizona:
In re Estate of Shano, 869 P.2d 1203 (Ariz. Ct. App. 1993). This decision involves a lawyer who represented a friend of the decedent who was one of the primary beneficiaries of a holographic will executed by the decedent two days prior to his death. The lawyer obtained the friend's appointment as special administrator. The lawyer also later undertook to represent an independent third-party who was appointed as administrator, whose legal positions included opposition to claims made against the estate by the decedent's surviving spouse. This decision upholds an order disqualifying the lawyer from representing the administrator because of the conflict of interest between his duties to the decedent's friend and to the administrator and, derivatively, to the persons entitled to receive the decedent's estate. The decision follows Fickett v. Superior Court (discussed in the Annotations following the ACTEC Commentary on MRPC 1.14), stating that:
We conclude that at least where the surviving spouse is concerned, similar considerations apply to an attorney employed to represent the personal representative of an estate. First, “the lawyer is being compensated from the estate or trust, not by the fiduciary personally. His duty of loyalty and competence thus runs beyond the fiduciary to those whose property is being managed by the fiduciary.” . . . As discussed above, the surviving spouse is one whose interest in the community property is managed by the personal representative. Second, in Fickett, although the guardian and not the attorney controlled the affairs of the guardianship, we held that the attorney for the guardianship owed a fiduciary duty to the ward. A stronger case exists for imposing a similar duty on the personal representative's attorney, who generally has some control over the administration of the decedent's estate. Because of his superior knowledge and position of trust, the attorney for the personal representative is in an excellent position to exert a positive influence on the personal representative to properly discharge the latter's fiduciary duty to the surviving spouse. The attorney representing the personal representative is more likely to exert such influence if the attorney's duty to the surviving spouse is congruent with that of his employer, the personal representative.
...
We turn now to the question of whether [Lawyer] represented conflicting interests. We begin with the principle that the attorney for the personal representative of an estate must be neutral and should not favor the interests of any claimant to the estate. . . . Thus, [Lawyer] owed the same duty of fairness and impartiality to [Surviving Spouse] as he owed to all the beneficiaries of decedent's holographic will, including [the Friend]. But, because [Lawyer] also represented [Administrator] in probating the holographic will, he owed to her as a client a duty of undeviating and single allegiance. . Consequently, when [Lawyer] undertook the representation of Fiduciary [the Administrator], and with such representation the corresponding duty of fairness and impartiality, he undertook the representation of conflicting interests. 869 P.2d at 1208-1209.
Arkansas:
Craig v. Carrigo, 12 S.W.3d 229 (Ark. 2000). An attorney should not represent a client if the representation will be directly adverse to another client. It is not necessarily a conflict of interest for an attorney to represent both the estate and the only devisee in the will. The core issue is whether the existence of a parallel legal position held by the personal representative for the estate, and one of the potential heirs of the estate, has been shown to be prejudicial to the other potential heirs. Actions taken by the attorney throughout the proceeding reflect conscientious legal services consistent with the duties of counsel for a personal representative in an ancillary probate. His obligations as estate counsel do not include advocacy for any individual heirs; however, his obligations do not prevent the estate from having positions that are consistent with the interests of some individual heirs.
Purtle v. McAdams, 879 S.W.2d 401 (Ark. 1994). A lawyer could not reasonably believe that representing his niece by marriage would not adversely affect his representation of her former husband, a person with diminished capacity. Such a conflict cannot be permitted despite the consent of both parties.
California:
Estate of Auen, 35 Cal. Rptr. 2d 557 (Ct. App. 1994). This decision upholds the invalidation of certain inter vivos gifts and a will that made gifts to testator's lawyer and her family because of the presumption that the lawyer exercised undue influence over the client. “The relation between attorney and client is a fiduciary relation of the very highest character.. Transactions between attorneys and their clients are subject to the strictest scrutiny.. These general principles applicable to the attorney-client relationship support the trial court's reasoning that, when an attorney is acting as an attorney, any benefit other than compensation for legal services performed would be 'undue.'” 35 Cal. Rptr. 2d at 562-563.
Estate of Rohde, 323 P.2d 490 (Ct. App. 1958). This case upheld the revocation of the probate of a will benefiting the scrivener and appointing him executor because of a presumption of undue influence.
Potter v. Moran, 49 Cal. Rptr. 229 (Ct. App. 1966). A decree settling the accounts of a trustee was not binding on the beneficiaries because the lawyers had failed to inform the court that they represented both the trustee and the guardian for the beneficiaries.
Colorado:
In re Cohen, 8 P.3d 429 (Colo. 1999). Attorney should not have accepted employment or continued employment when a conflict existed between the multiple clients (father and son) and attorney's exercise of independent judgment was in conflict with attorney's financial interests.
Florida:
Chase v. Bowen, 711 So.2d 1181 (Fla. Ct. App. 2000). This case holds that no conflict of interest exists when a lawyer revises a will to disinherit a beneficiary whom the lawyer represents on an unrelated matter.
Georgia:
Estate of Peterson, 465 S.E.2d 524 (Ga. Ct. App. 2002). Attorney who drafted will under which he was named as executor was disqualified from acting because, although he had informed testator orally of potential conflict of interest, he failed to either obtain client's consent in writing or to give client written notice as required by applicable Georgia ethics opinion.
Illinois:
In re Estate of Marks, 569 N.E.2d 1342 (Ill. App. 1991), modified and aff 'd after remand, 595 N.E. 2d 717 (Ill. App. 1992). This decision sets aside a receipt and approval of funding of marital bequest that the decedent's surviving spouse signed at the request of her two adult sons who, with her, served as co-executors of the decedent's will. According to the court the widow received “incomplete and unsatisfactory information” and was not independently advised. In particular, the court said that the sons, who were the “dominant” and self-interested executors, breached their fiduciary duties to their mother who “was left to fend for herself without independent counsel, armed only with incomplete and unsatisfactory information...” 569 N.E.2d at 1352.
Kansas:
In re Estate of Koch, 849 P.2d 977 (Kan. Ct. App. 1993). In this action two respected commentators on ethics testified on behalf of opposing parties. The court upheld a will that was drafted for the testator by a lawyer who also represented the testator and two of her sons in litigation involving a charitable foundation brought by her other two sons. Her will, which left the bulk of her estate to her four sons, included a no-contest clause and a provision that conditioned the gifts on the dismissal by a beneficiary of any litigation that was pending against her within 60 days following her death. The lawyer did not discuss the testator's will with her sons, including the two sons who were clients of the firm in the litigation. The sons were all unaware of the terms of their mother's will, which was prepared “without any evidence of extraneous considerations.” Id. at 997. The court continued that: The scrivener's representation of clients who may become beneficiaries of a will does not by itself result in a conflict of interest in the preparation of the will. Legal services must be available to the public in an economical, practical way, and looking for conflicts where none exist is not of benefit to the public or the bar. 849 P.2d at 998. The court distinguished the instant case from Haynes v. Nat'l State Bank, discussed below, in which the lawyer who represented one of the testator's children drew a new will for the child's mother that drastically changed the disposition of her estate to favor that child over the descendants of a deceased child.
Louisiana:
In re Hoffman, 883 So.2d 425 (La. 2004). An attorney represented three siblings in a will contest. The court held that the attorney had violated Rule 1.7(b) by failing to obtain the informed consent of each client to the representation. The attorney relied upon the daughter of one of his clients to prepare an affidavit of representation, which in turn the attorney's other clients signed without having the benefit of the advice of counsel. More importantly, the attorney's failure to appreciate the potential conflict between his clients led him to directly violate Rule 1.8(g) in the course of settling their claims. Instead of giving all three clients the opportunity to exercise their absolute right to control the settlement decision, the attorney, after obtaining only one client's consent, accepted a settlement proposal on behalf of all of his clients. The attorney then compounded his misconduct by distributing the settlement proceeds in accordance with the wishes of only one client and over the objection of another client.
Succession of Lawless, 573 So. 2d 1230 (La. Ct. App. 1991). This case involved removal of the lawyer who was designated in the decedent's will as lawyer for the executor. The court found that just cause existed for the lawyer's removal because of (1) a conflict under MRPC 1.7 concerning a gift of $50,000 to the lawyer that was included in a holographic codicil that the executor wished to challenge; and (2) a conflict arising in connection with a real estate listing agreement under which the lawyer's wife, who was a real estate agent, was to receive a percentage of the listing agent's fee. With respect to the latter, the court said that the lawyer had “acquired a pecuniary interest in the estate property requiring adherence to MRPC 1.8(a).”
Succession of Wallace, 574 So. 2d 348 (La. 1991). This case is discussed in the Annotations following the ACTEC Commentary on MRPC 1.2.
Minnesota:
Fiedler v. Adams, 466 N.W.2d 39 (Minn. Ct. App. 1991). Summary judgment in a malpractice action against a lawyer was reversed on appeal. The lawyer failed to inform the clients of multiple conflicts of interest, “arising from his duty as trustee [of employee benefit plan], his duty as [the Plaintiffs'] attorney, his personal interests in the real estate partnership and his interests as shareholder, director and attorney for [Trustee Bank]. [The lawyer] did not advise [the Plaintiffs] of alternative methods to deal with their financial difficulties, nor did he advise them to seek independent counsel.” 466 N.W.2d at 41. In re Trust Created by Boss, 487 N.W.2d 256 (Minn. Ct. App. 1992). This case is discussed in the Annotations following the ACTEC Commentary on MRPC 1.8.
Matter of Trust Created by Louis W. Hill, 499 N.W.2d 475 (Minn. Ct. App. 1993). This decision upheld a trial court's determination that the law firm that represented the trustee no longer represented the beneficiary at the time the litigation arose. Hence, the propriety of the law firm's action was not subject to MRPC 1.7. For a more detailed summary, see the Annotations following the ACTEC Commentary on MRPC 1.9.
Mississippi:
Blissard v. White, 515 So. 2d 1196 (Miss. 1987). The court here held that a lawyer was “competent to render independent legal advice despite the fact that he had done legal work for [the testator's brother and primary beneficiary under the will drafted by the lawyer] (preparing a deed and two wills).” 515 So. 2d at 1200. The court continued that, “we are not concerned with [the lawyer's] independence so much as with [the testator's], of which there is evidence in abundance.” Id. As in Estate of Koch, cited above, the court was concerned with the effect that a contrary rule would have: “Indeed, if we were to disqualify [the lawyer's] advice, we would create a trap which would void bona fide gifts and bequests among family members in small towns and rural areas all over this state.” 515 So. 2d at 1200.
New Jersey:
Baldasarre v. Butler, 625 A.2d 458 (N.J. 1993). The Supreme Court of New Jersey observed:
This case graphically demonstrates the conflicts that arise when an attorney, even with both clients' consent, undertakes the representation of the buyer and the seller in a complex commercial real estate transaction. The disastrous consequences of [Lawyer's] dual representation convinces us that a new bright-line rule prohibiting dual representation is necessary in commercial real estate transactions where large sums of money are at stake, where contracts contain complex contingencies, or where options are numerous. The potential for conflict in that type of complex real estate transaction is too great to permit even consensual dual representation of buyer and seller. Therefore, we hold that an attorney may not represent both the buyer and seller in a complex commercial real estate transaction even if both give their informed consent. 625 A.2d at 466.
Greate Bay Hotel & Casino, Inc. v. Atlantic City, 624 A.2d 102 (N.J. Super. Ct. Law Div. 1993). A law firm that represents a business trust does not represent the individual members of the trust. Accordingly, MRPC 1.7 does not preclude the law firm from representing an adverse party in litigation with a member of the trust with whom the law firm has no other connection.
Haynes v. First Nat'l State Bank, 432 A.2d 890 (N.J. 1981). At the behest of the testator's daughter, who had been a client for some time, the lawyer drew a will and trust for the testator, who was a new client, which drastically changed the disposition of the testator's estate in favor of the daughter who procured the will. “[T]here must be imposed a significant burden of proof upon the advocates of a will where a presumption of undue influence has arisen because the testator's attorney has placed himself in a conflict of interest and professional loyalty between the testator and the beneficiary.” 432 A.2d at 900.
New York:
In re Estate of Clarke, 188 N.E.2d 128 (N.Y. 1962). A lawyer who received part of a commission that was paid to a real estate broker in connection with the sale of property belonging to a corporation controlled by the executors and trustees was not entitled to any compensation for services to the personal representative and trustee because of the conflict of interest. The court observed, “[a]n attorney for a fiduciary has the same duty of undivided loyalty to the cestui as the fiduciary himself. [Citation omitted.]” 188 N.E.2d at 130.
In re Estate of Lowenstein, 600 N.Y.S.2d 997 (Surr. Ct. 1993). In a suit brought by a lawyer to enforce a contract under which he was to be named as executor the court found the contract unenforceable and attorney had no claim for damages in amount of lost commissions. “[A] contract provision requiring the nomination of the attorney draftsman as fiduciary of the testator's estate is unenforceable unless it is clearly demonstrated to the satisfaction of the court that special circumstances required the services of the attorney draftsman and that the nomination was not the product of overreaching.” 600 N.Y.S.2d at 998-999.
In re Matter of Ryan, 594 N.Y.S.2d 168 (App. Div. 1993). A lawyer was censured for exercising undue influence over client in drafting instruments that appointed lawyer's unqualified wife as fiduciary.
Matter of Birnbaum, 460 N.Y.S.2d 706 (Surr. Ct. 1983). The court denied a motion to disqualify the firm that represented one of the co-executors in her representative and individual capacities. In the opinion the court stated that, “It is well settled that the common practice of having one attorney or one law firm represent an executor as fiduciary as well as a beneficiary of an estate does not create a conflict of interest for the attorneys.. On the other hand, where the attorney represents his client in both capacities, he may not act to advance the personal interests of a fiduciary in such a way as to harm his other client, the estate.” 460 N.Y.S.2d at 707.
North Carolina:
Ingle v. Allen, 321 S.E.2d 588 (N.C. Ct. App. 1984), review denied, 329 S.E.2d 593 (N.C. 1985). In this case a summary judgment in favor of the lawyer for a co-trustee was affirmed. Plaintiff, the other cotrustee, was independently represented in connection with the administration of the fiduciary estate. It was not a conflict of interest for the lawyer to represent the first co-trustee in an ejectment action against the other co-trustee.
Ohio:
Allison v. Allison, 238 N.E.2d 768 (Ohio 1968). If the executors-plaintiffs, as individuals, have a financial interest in the outcome of the will contest adverse to the financial interests of other parties in interest, and the powers of the executors, as such, may be used to their advantage as individuals and to the disadvantage of other parties in interest, in a trial of said contest, the executors may continue in that capacity, providing the will contest is dismissed and the estate distributed according to the terms and provisions of the will, or if the executors, as individuals, wish to continue the contest they may do so if they resign and impartial fiduciaries are appointed for the estate. 238 N.E.2d at 771. The opinion notes that the same law firm represented the plaintiffs both as individuals in the will contest and as executors of the decedent's will. Although the court did not comment on the propriety of the law firm serving in this dual capacity, the decision at least implies that doing so was improper.
South Carolina:
In re James, 229 S.E.2d 594 (S.C. 1976). A lawyer for an estate who caused the estate to engage in unnecessary litigation with respect to which he received a substantial fee and deceitfully concealed his dual capacity as executor and attorney for the executor was indefinitely suspended.
South Dakota:
Gold Pan Partners, Inc. v. Madsen, 469 N.W.2d 387 (S.D. 1991). An order affirming sale of real property of estate was vacated because of defects in proceedings, including “confused legal advice given the executrix and the decedent's sons.” The court observed: “Counsel may have become involved in representing conflicting interests by advising the executrix in her personal capacity and advising the sons. We recognize estate attorneys often find themselves being 'peacemakers.' Nevertheless, they should exercise caution to avoid being compromised in the representation of conflicting interests.” 469 N.W.2d at 390, n. 4.
West Virginia:
State ex rel. DeFrances v. Bedell, 446 S.E.2d 906 (W.Va. 1994). This case (also discussed in the Annotations following the ACTEC Commentary on MRPC 3.7) concludes that a lawyer who had held one estate planning meeting with the now deceased testator, during which the testator did not divulge any confidential information and was not interested in retaining the firm's services, was not disqualified from later representing persons who contested the decedent's will.
Wisconsin:
Estate of Devroy, 325 N.W.2d 345 (Wis. 1982). This opinion recognized the general rule that the personal representative is free to employ the counsel of his or her own selection but upheld a will provision conditioning the appointment of an executor upon the executor's employment of the scrivener of the will as the executor's lawyer.
Ethics Opinions
ABA:
ABA Formal Opinion 05-436 (2005). This opinion is discussed in the text of the Commentary.
California:
San Diego Op. 1990-3 (1990). This opinion discusses the position of a lawyer who is asked by a son or daughter to prepare a new will for the child's parent. The opinion concludes that the person who is to sign the instrument is the client of the lawyer:
As stated above, in our view the person who will be signing the document is clearly a client of the attorney, and must be treated as such. However, unless it is agreed upon in advance the Son or Daughter may also be considered clients of the attorney. If so, the provisions of Rule 3-310 apply. The attorney must disclose the potential conflicts of interest to the clients in writing, and obtain their informed written consent to the representation in order to proceed. Depending upon the specific facts, the conflicts of interest may be so great that the attorney would be well advised not to represent both even if the clients were willing to give their consent.
Connecticut:
Conn. 89-18 (1989). Because of the conflicts of interest the same lawyer may not represent three clients, of whom two are heirs and one is a claimant against the estate if the estate does not have sufficient assets to satisfy all claims.
Delaware:
Board Case No. 102 (1998). A lawyer was privately admonished by the Preliminary Review Committee of the Board on Professional Responsibility for preparing a new will for a wife that excluded her husband as beneficiary after the lawyer had represented both husband and wife in several legal matters and the husband had filed for divorce. The lawyer was also criticized for permitting the wife to name the lawyer as a fiduciary of her estate without the lawyer having disclosed his personal financial interest in serving as a fiduciary.
Del. Op. 80-6 (1980). With full disclosure to a competent and knowledgeable beneficiary the lawyer for the personal representative of a decedent's estate could, after distribution to a beneficiary, purchase from the beneficiary shares in a country club at their established price. The opinion relies in part on ABA Informal Opinion 677 (1963), which allowed a lawyer to purchase property from an estate prior to distribution if the purchase was approved by the court.
Illinois:
Op. 00-01 (2000). This opinion is discussed in the text of the Commentary.
Maryland:
Op. 2003-08 (2003). A lawyer who chairs his church's committee that promotes legacy giving from its parishioners may not prepare wills for parishioners who want to bequeath property to the church. The panel ruled that the lawyer's responsibility for furthering the church's financial interests would conflict with his representation of the parishioners and contravene MRPC 1.7(b). If the church is also the lawyer's client, then MRPC 1.7(a) may be violated.
Montana:
Eth. Op. 960731 (1996). This opinion concludes that, absent an existing conflict or evidence that the lawyer's independent professional judgment is likely to be adversely affected by the joint representation of a married couple who have retained the lawyer for estate planning services, the lawyer need not communicate the potential for conflicts of interest under MRPC 1.7 nor obtain a written conflict waiver from the married couple. However, although a written conflict waiver is not required, the opinion observes, “we believe that for the lawyer's purpose it is wise practice to obtain a written waiver.”
New York:
Nassau County Op. 90-11 (1990). The lawyer who represented a decedent's former wife in advancing a claim against the decedent's estate may not later undertake to represent the decedent's personal representative. “Because the interests of the former wife are different from the interests of the estate, inquiring counsel must not undertake to represent the estate. (See Disciplinary Rule 5-105).”
Nassau County Op. 81-3 (1981). A lawyer may not represent both the residuary legatee of a decedent's estate and a party against whom the personal representative is asserting a claim on behalf of the estate.
North Carolina:
2000 Formal Ethics Opinion 9 (2001). Lawyer who is also a CPA may provide legal services and accounting services from the same office if he discloses his self-interest. Lawyer may offer legal services to existing client of accounting practice because this is a prior professional relationship with a prospective client.
N.C. Op. 28 (1987). A lawyer may, with informed consent, represent the estates of a husband and wife both of whom were killed in the crash of an airplane piloted by the husband if the lawyer is convinced that the husband was not negligent in any way. In such a case it would be frivolous for an action to be brought by the wife's estate.
N.C. Op. 22 (1987). A lawyer may not represent an administrator in individual and official capacities if the individual interests of the administrator conflict with those of the estate.
Ohio:
Op. 2001-4 (2001). It is improper for a lawyer, who is also a licensed insurance agent, to sell annuities through the law firm to estate planning clients of the lawyer. A lawyer's interest in selling an annuity and a client's interest in receiving independent professional legal counsel free of compromise are differing interests. Even if full disclosure and meaningful consent may be obtained, there exists an appearance of impropriety. Also, a lawyer's sale of annuities through a law firm may jeopardize the preservation of client confidences or secrets, for the records of a licensed insurance agent are subject to inspection by the state superintendent of insurance.
Oregon:
Or. Op. 1991-119 (1991). A lawyer may represent a widow individually and as personal representative of her deceased husband's estate; she is really only one client. The lawyer may not disclose the widow's breach of fiduciary duties but may not assist her in wrongdoing and may request that she remedy the wrongs; lawyer could disclose her intention to commit future crimes.
Or. Op. 525 (1989). A lawyer who is on the board of a charity and also represents it may not represent both the charity and a donor in a unitrust transaction. However, the lawyer may draft the donor's will in which the charity is designated as a beneficiary if the lawyer discloses his representation of the charity to the donor.
Pennsylvania:
Op. 2003-16 (2003). This opinion is discussed in the Annotations following the ACTEC Commentary on MRPC 1.5.
Op. 2001-300 (2001). A lawyer's retention of a will at the client's request does not constitute a violation of the Rules of Professional Conduct.
South Carolina:
Op. 93-34 (1993). This opinion is discussed in the Annotations following the ACTEC Commentary on MRPC 2.3.
Op. 90-16 (1990). With full disclosure to its clients of all relevant factors, a law firm may refer estate planning clients to an insurance agency in which the law firm owns a 50% or greater interest. A similar arrangement regarding title insurance had previously been approved.
Utah:
Op. No. 99-07 (1999). This opinion is discussed in the Annotations following the ACTEC Commentary on MRPC 1.5.
Op. No. 97-09 (1997). This opinion is discussed in the Annotations following the ACTEC Commentary on MRPC 1.2.
Joint Representation: Disclosures
Cases
Louisiana:
In re Hoffman, 883 So. 2d 425 (La. 2004). An attorney represented three siblings in a will contest. The court held that the attorney violated MRPC 1.7(b) by failing to obtain the informed consent of each client to the representation. The attorney relied upon the daughter of one of his clients to prepare an affidavit of representation, which in turn the attorney's other clients signed without having the benefit of the advice of counsel. More importantly, according to the court, the attorney's failure to appreciate the potential conflict between his clients led directly to his violation of MRPC 1.8(g) in the course of settling their claims. Instead of giving all three clients the opportunity to exercise their absolute right to control the settlement decision, the attorney, after obtaining only one client's consent, accepted a settlement proposal on behalf of all of his clients. The attorney then compounded his misconduct by distributing the settlement proceeds in accordance with the wishes of only one client and over the objection of another client.
Ethics Opinions
Florida:
Eth. Op. 95-4 (1997). This opinion discusses whether a lawyer engaged in estate planning has an ethical duty to counsel a husband and wife concerning any separate confidences which either the husband or wife might wish the lawyer to withhold from the other. It holds that until such time in a joint representation that an objective indication arises that the interests of the husband and wife have diverged or it objectively appears to the lawyer that a divergence of interests is likely to arise, a conflict of interest does not exist and, thus, the disclosure and consent requirements under the Florida Rules are not triggered.
Indiana:
Op. 2-2001 (2001). This opinion is discussed in the Annotations following the ACTEC Commentary on MRPC 1.2.
New York:
N.Y. Op. 555 (1984). A lawyer retained by A and B to form a partnership, who received communication from B indicating that B was violating the partnership agreement, may not disclose the information to A although it would not be within the lawyer-client evidentiary privilege. The lawyer must withdraw from representing the partners with respect to partnership affairs. A minority of the Ethics Committee dissented on the ground that “the attorney must at least have the discretion, if not the duty in the circumstances presented, to disclose to one partner the facts imparted to him by the other partner, that gave rise to the conflict of interests necessitating the lawyer's withdrawal as attorney for the partnership.”
North Carolina:
Eth. Op. RPC 229 (1996). This opinion holds that a lawyer who jointly represents a husband and wife in the preparation and execution of estate planning documents may not prepare a codicil to the will of one spouse without the knowledge of the other spouse if the codicil will adversely affect the interests of the other spouse or each spouse has agreed not to change the estate plan without informing the other.
Virginia:
Op. 1778 (2003). This opinion is discussed in the Annotations following the ACTEC Commentary on MRPC 1.2.
Washington:
Op. No. 00-00204 (2000). A lawyer who represented the personal representative of an estate in her fiduciary capacity and personally as claimant to the proceeds of a bank account that stood in names of herself and her father with rights of survivorship, which was contested by her two siblings, was reprimanded for doing so without complying with MRPC 1.7. The reprimand concluded that “[lawyer's] conduct in acting as the lawyer for both the estate and beneficiary, without consultation and full disclosure of all material facts regarding the conflict between the estate's interests and beneficiary's interests and/or without obtaining either clients' [sic] written consent to the conflict violated MRPC 1.7(a).”
Joint Representation: Co-Fiduciaries
Cases
New York:
In re Flasterstein's Estate, 210 N.Y.S.2d 307 (Surr. Ct. 1960). In this case the surrogate court denied a motion to disqualify a law firm that represented the executors, who were also residuary beneficiaries, because of an alleged inherent conflict of interest. The court observed:
It is axiomatic that executors and fiduciaries generally are entitled to representation by attorneys of their own choosing. The fact that the executors are financially interested in the estate as residuary legatees and may profit individually through the services of their attorneys is immaterial and does not lead to a conflict of interest. In instances where an executor may assert a personal claim against the testator or the estate it may be claimed that an attorney representing the executor in his representative capacity and individually appears for conflicting interests as the allowance of such a claim may reduce the shares of others beneficially interested in the estate. 210 N.Y.S.2d at 308.
Ethics Opinions
District of Columbia:
Ethics Opinion 259 (1995). Attorney for three conservators of an incapacitated person's estate improperly provided opinion letter to two conservators about the propriety of fees that were being paid to the third conservator in his capacity as trustee of a trust benefiting the incapacitated person's estate. The attorney had argued that her client was the estate. The committee concluded that the lawyer represents the conservators rather than the estate.
Virginia:
Va. Op. 1769 (2003). This opinion is discussed in the Annotations following the ACTEC Commentary on MRPC 1.14.
Va. Op. 1473 (1992). A lawyer who was retained “to represent the interests of the estate” is treated as having represented the co-executors (each of whom had separate counsel) and not “the estate.” The same lawyer may represent two of the executors in their capacity as trustees of a testamentary trust only with the consent of the third co-executor.
Va. Op. 1387 (1990). A law firm of which a co-fiduciary is a member may be retained to represent the fiduciaries with the consent of all fiduciaries. However, “the committee urges that the co-fiduciaries rather than the fiduciary/partner maintain the necessary communications with the firm throughout the administration of the estate.”
Appointment of Scrivener as Fiduciary
Statutes
California:
California has adopted detailed legislation restricting the methods by which a client may appoint the client's lawyer as a fiduciary. Any individual who has a fiduciary relationship to the transferor who drafts, transcribes or causes to be drafted or transcribed any instrument of transfer (i.e., will, trust, deed, etc.) (including relatives, cohabitants and partners and employees of such individuals) is defined as a “disqualified person.” Such an individual who is named as a sole trustee may be removed unless the court finds that it is fair, just and equitable that the trustee continue to serve as such. “Disqualified” status may be avoided if the otherwise disqualified person is related by blood or marriage to or is a cohabitant with the transferor or if an independent attorney certifies (on a statutorily prescribed form) that the transfer was not the product of fraud, menace, duress or undue influence. The legislation also places limits on dual compensation for an attorney who is also acting as a fiduciary. Cal.Prob.C. §§10804, 15642(b)(6).
Cases
New York:
In re Estate of Weinstock, 351 N.E.2d 647 (N.Y. 1971). The appointment of a father and son team of lawyers as fiduciaries was struck down for overreaching of the 82-year-old client in obtaining the appointment.
Tennessee:
Petty v. Privette, 818 S.W.2d 743 (Tenn. Ct. App. 1989). The court held that the scrivener of a will that appointed him as executor could be protected by the terms of an exculpatory clause that exonerated him from liability for any act of negligence that did not amount to bad faith, if the scrivener rebuts the presumption that the inclusion of the exculpatory clause in the will resulted from undue influence exerted by the scrivener.
Washington:
Fred Hutchinson Cancer Research Center v. Holman, 732 P.2d 974 (Wash. 1987). In this case excessive compensation was recovered from the scrivener of a will who was subsequently appointed cotrustee of a large testamentary trust. The court held that an exoneration clause did not protect the scrivener against liability: “As the attorney engaged to write the decedent's will, [defendant] is precluded from reliance on the clause to limit his own liability when the testator did not receive independent advice as to its meaning and effect.” 732 P.2d at 980.
In re Estate of Shaughnessy, 702 P.2d 132 (Wash. 1985). In this case the court allowed the payment of fees to a lawyer-scrivener for services as executor and as counsel to the executor although the lawyer was the beneficiary of a $5,000 bequest and was a residuary beneficiary. The court expressed general disapproval of a lawyer drawing a will which names the lawyer as fiduciary or beneficiary.
Wisconsin:
State v. Gulbankian, 196 N.W.2d 733 (Wis. 1972). In a disciplinary action the court condemned the lawyer's consistent practice of drafting wills that named the lawyer or relatives of the lawyer as fiduciaries or as counsel for the fiduciary.
Ethics Opinions
California:
Op. 1993-130 (1993). An attorney who serves as both attorney for and executor of an estate may not receive compensation for legal services rendered to the estate. However, the attorney is not precluded from performing and receiving compensation for specific work that is properly the responsibility of the executor.
Georgia:
Ga. Op. 91-1 (1991). A lawyer who neither promotes his or her appointment nor exercises undue influence on the client may draft an instrument appointing the lawyer as fiduciary if the lawyer makes full disclosure to the client, obtains the client's written consent, and charges a reasonable fee.
Illinois:
Op. 99-08, 2000 WL 1597066 (2000). Lawyer engaged to prepare a trust for a client may, at the client's direction, include a provision directing the trustee administering the trust to retain the lawyer for legal services, so long as (i) adequate disclosure (including disclosing that the trustee also would have the right to discharge the lawyer as its lawyer) is made, (ii) the client consents to the representation, and (iii) the lawyer concludes that his representation of the client will not be adversely affected by including such a provision.
Michigan:
Eth. Op. RI 291 (1997). A lawyer who is drafting a will for a client may not suggest that he be named as personal representative or as trustee to serve without bond for a reasonable fee. However, the lawyer may accept the nomination if asked independently by the client.
Montana:
Eth. Op. 951231 (1995). This opinion holds that neither MRPC 1.8(c) nor any applicable Comment admits of a broader prohibition than the prohibition against a lawyer preparing an instrument giving the lawyer or a person related to the lawyer any substantial gift, although it does observe that EC 5-6 (contained in the Model Code of Professional Responsibility) cautions attorneys to avoid “consciously influence[ing] a client to name him as executor, trustee, or lawyer in an instrument.” The opinion therefore concludes “it is appropriate for an attorney, upon the client's request, to draft a will in which the attorney is named personal representative or trustee.”
New Jersey:
Eth. Op. 683 (1996) This opinion holds that, subject to the applicable statutory and substantive case law, as a matter of professional ethics, a scrivener may properly prepare a will naming himself as a fiduciary and may properly be paid for services in both capacities. In doing so, counsel should be aware of the disclosure and consultation requirements set forth in MRPC 1.7(b)(2).
New York:
N.Y. Op. 610 (1990). This opinion states that, “[e]xcept in limited and extraordinary circumstances, an attorney should not serve as draftsman of a will that names the lawyer as an executor and as a legatee.” The opinion refers to Surrogate's Court Rules in Suffolk County that require that a will appointing an attorney as fiduciary be accompanied by an affidavit of the testator setting forth the following:
(1) that the testator was advised that the nominated attorney may be entitled to a legal fee, as well as to the fiduciary commissions authorized by statute;
(2) where the attorney is nominated to serve as a co-fiduciary that the testator was apprised of the fact that multiple commissions may be due and payable out of the funds of the estate; and
(3) the testator's reason for nominating the attorney as fiduciary.
  N.Y. Op. 481 (1977). A lawyer may prepare a will in which the lawyer is appointed to a fiduciary office if the testator is competent, there has been a longstanding relationship between the lawyer and client and the suggestion that the lawyer serve as fiduciary originates with the client. A lawyer should not draft a document that contains a gift to the lawyer. A will or trust that contains a gift to a lawyer should be prepared by independent counsel.
South Carolina:
S.C. Op. 91-07 (1991). It is not unethical for a lawyer to prepare a will at the direction of a client that names the lawyer as personal representative and trustee except under the circumstances proscribed under MRPC 1.8(c).
Virginia:
Va. Op. 1391 (1991). A lawyer who drafted a will and advised the beneficiaries may serve as successor trustee and foreclose on a deed of trust. However, in connection with the foreclosure, the lawyer must obtain consent of the beneficiaries if the lawyer had advised them with respect to the note or deed of trust.
Va. Op. 1358 (1990). A lawyer may draft a will naming the lawyer as personal representative or trustee or in which the fiduciary is directed to retain the lawyer as attorney if the client consents after being informed of alternate representatives, all fees involved, and of the lawyer's own financial interest. A lawyer's suggestion of himself as fiduciary may constitute improper solicitation.
Washington:
Wash. Inf. Op. 86-1 (1986). A lawyer may draft a document for an unrelated client that appoints the lawyer as fiduciary if the client is fully informed regarding the alternatives and costs and is advised that he or she is free to consult independent counsel.
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