Practice Points with Mark Scruggs: Conflicts and Confidentiality – the Bane of an Estates Lawyer

Avoiding conflicts of interest and protecting the client’s confidences is a concern for all lawyers, but probably for none more so than a lawyer with an estates practice. Preparing an estate plan for a husband and wife, writing a Power of Attorney agreement for a principal naming a son or daughter as attorney-in-fact, representing an estate by and through a personal representative, all of these relationships can create ethical pitfalls that can be avoided with some forethought and planning.

One must first answer the question: Who is my client (or clients)?

When preparing an estate plan for a husband and wife, “mirror wills” to use a simple example, the lawyer has two clients. What are the implications of joint representation? What should a lawyer do to prevent an ethical dilemma?

There is no duty of confidentiality as between joint clients.

At the outset of joint representation, a lawyer should advise the clients that she represents both of them; that there is no duty of confidentiality as between them, and neither of them should tell the lawyer anything that he or she does not want the other to know. I call this the “Miranda Warning” of joint representation. If the lawyer has not given this warning to both clients, what happens when the husband calls you a day or two later and says he would like for you to change his will to leave a little something to someone else? The lawyer obviously cannot change the husband’s will and probably needs to communicate the husband’s request to the wife.

 A joint representation can give rise to a conflict of interest.

In the previous example, both husband and wife were current clients and the issue was confidentiality. Let us change the facts and look at them through the lens of conflict of interest. The husband and wife ask the lawyer to draft mirror wills, except for a small trust that would be established at the husband’s death for the benefit of the couple’s minor children. (Husband expects to be the first to die because he has a terminal illness.) The trust would be funded before the distribution of the residuary estate to his wife.

Sometime after the wills were drafted and signed, the husband calls the attorney and says his wife has dementia, and he is concerned about her ability to manage her funds. He asks the lawyer to draft a codicil to his will increasing the amount put in trust for the minor children, thereby decreasing the residuary bequest to his wife.

Does the lawyer have a conflict of interest in preparing the codicil? If we consider the wife a former client, then under Rule 1.9: DUTIES TO FORMER CLIENTS – the lawyer cannot draft the codicil without the knowledge (and I would say consent, confirmed in writing) of the wife, if the codicil will adversely affect the interests of the wife. Clearly, this is the same or a substantially related matter. On the face of it, the codicil would adversely affect the interests of the wife because her residuary bequest will decrease. But if she has dementia, maybe the codicil is consistent with her interests. Whether or not consistent with her interests, if when the lawyer drafted the estate plan as part of the joint representation, the parties agreed not to change their estate plan without informing the other spouse, the lawyer still cannot prepare the codicil without informing the wife. RPC 229.

Representing fiduciaries – duty of confidentiality 

A lawyer must use caution not to breach the confidences of the fiduciary in her dealings with beneficiaries. When a lawyer represents an estate by and through the personal representative of the estate, the lawyer represents the estate and the fiduciary in his official capacity. The fiduciary owes duties to the beneficiaries, but that does not make the beneficiaries the lawyer’s clients. Nor does it change the duty of confidentiality the lawyer owes to the fiduciary. When a beneficiary in the client’s will calls to discuss the will, the lawyer must decline to talk to the beneficiary, unless, of course, the personal representative authorizes the lawyer to do so. Beneficiaries should be viewed as any other third party. Rule 1.6 – CONFIDENTIALITY OF INFORMATION prohibits the lawyer from disclosing confidential information except under certain conditions, one of which is the specific authorization of the client.

Representing fiduciaries – conflict of interest

A lawyer represents the estate and the fiduciary in the fiduciary’s official capacity. The lawyer’s job is to see that the estate is properly administered and to assist the fiduciary in carrying out her responsibilities. A lawyer must be on the lookout for a divergence of interest between the fiduciary and the estate. If divergence is spotted, the lawyer must make it clear that she does not represent the fiduciary in her personal capacity and cannot do so where the fiduciary’s interests conflict with the interests of the estate absent consent of the heirs. RPC 22. The lawyer may seek the removal of the fiduciary if the fiduciary breaches her fiduciary duties to the estate. 2002 Formal Ethics Opinion 3.

The duty of confidentiality continues after the client dies.

The lawyer owes a duty of confidentiality to a client even after the client has died. However, the lawyer may disclose confidential information to the personal representative of the estate as long as the disclosure would not be clearly contrary to the goals of the original representation or contrary to the express instructions given by the client before his death. The basis for this rule is the client has impliedly authorized the lawyer to divulge confidential information necessary to carry out the client’s wishes and facilitate the proper administration of his estate.

Heirs or beneficiaries are not the lawyer’s clients. The lawyer cannot reveal confidential information of the deceased client to the heirs of beneficiaries unless specifically authorized to do so by the personal representative of the estate and such disclosure would not be clearly contrary to the goals of the original representation or contrary to the express instructions given by the client before death. RPC 206.

A lawyer may disclose confidential information of the deceased client in a caveat proceeding under certain circumstances.

If the personal representative calls the drafting lawyer as a witness, the lawyer may testify because the personal representative has consented to the disclosure. Otherwise, the lawyer cannot divulge confidential information unless she determines the attorney-client privilege does not apply as a matter of law, or the Court orders the lawyer to testify. It is probably prudent for the lawyer to insist on a subpoena from any party other than the PR and then to file an objection or motion to quash the subpoena so the judge can decide what testimony the lawyer must give.

An estates practice can give rise to a number of ethical issues involving conflicts of interest and confidentiality not found in other areas of practice. The key to resolving many of these issues is for the lawyer to keep in mind who the client is and who the client is not. This will help the lawyer determine to whom he can divulge confidential information and to whom he cannot. It is also important for the lawyer to keep in mind in what capacity she represents the client and in what capacity she does not. This will help the lawyer avoid a conflict of interest.   At Lawyers Mutual, we stand ready to help our insureds navigate their way through ethical issues like these. Give us a call.