LEO 1358

LEO: Estate Administration - Conflict LE Op. 1358

Estate Administration - Conflict of Interest - Fiduciary

Relationships - Solicitation of Employment: Attorney

Drafting an Instrument Which Names Himself

Either as Personal Representative or

Trustee or Which Directs Such Other

Designee to Employ Attorney.

October 1, 1990

You have requested the Committee to opine generally as to the

circumstances under which an attorney may draft an instrument which names

him either as personal representative or trustee, or which specifically

directs that other persons whom the testator/grantor/client designates as

personal representative or trustee consult the attorney/scrivener for

legal services. The five specific questions you have presented, directly

relevant to your general inquiry, will be restated and answered in the

order in which you presented them.

1. Pre-Existing Lawyer/Client Relationship

Must there be a pre-existing lawyer-client relationship in addition to

the relationship arising out of the preparation of the instrument for the

attorney to be named (as personal representative or trustee) and, if so,

what must be the nature and quality of that relationship?

The Committee believes that a significant concern precluding the

attorney's being named as executor, personal representative or trustee in

a document drafted by the attorney involves the avoidance of any potential

allegation that the attorney exercised undue influence over the

testator/grantor to secure such a nomination. Although the issue of

whether or not undue influence was exerted upon the testator by the lawyer

requires a factual determination, on a case-by-case basis, which is beyond

the purview of the Committee, the Committee is of the opinion that the

total lack of any pre-existing lawyer/client relationship greatly enhances

the potential for a finding of undue influence. The existence, duration,

and nature of any earlier relationship would obviously mitigate such a

finding since, clearly, a lawyer with knowledge of the testator's affairs,

values, and estate would be in a position to best serve the client's

needs. See H. Drinker, Legal Ethics 94 (1979) (cited in ABA Comm. on

Ethics and Professional Responsibility, Informal Dec. 602 (1963). See also

Estate of Weinstock, 386 N.Y.S.2d 1 (1976) (when evidence also indicates

overreaching, attorneys who named selves as executors and who also were

strangers to testator were removed as executors); Haynes v. First Nat'l

State Bank of New Jersey, 432 A. 2d 890 (N.J. 1981); Disciplinary Board v.

Amundson, 297 N.W.2d 433 (N.D. 1980); and Discipline of Theodosen, 303

N.W.2d 104 (S.D. 1981).

Furthermore, while the Virginia Code of Professional Responsibility does

not generally preclude in-person solicitation, DR:2-103(A) does, however,

prohibit it under certain circumstances, and requires that the lawyer take

into consideration the "physical, emotional or mental state of the person

to whom the [solicitation] communication is directed and the circumstances

in which the communication is made." Therefore, whether or not a pre-

existing lawyer/client relationship is involved, the lawyer must consider

carefully the testator's state of mind and body before accepting future

employment as personal representative, trustee, or executor, in order to

avoid any allegations of undue influence.

2. Disclosure of Fees

What disclosure, if any, must be made to the client by the attorney with

respect to fees that may be charged for the attorney's service as

contemplated by the instrument and, if disclosure is required, when must

the disclosure be made?

The Committee believes that applicable disciplinary rules to your second

question are DR:2-105(A), requiring, in pertinent part, that the

lawyer's fees be adequately explained to the client; DR:5-101(A)

requiring a client's consent, after full and adequate disclosure, to the

lawyer's financial interest when that interest may affect the exercise of

the lawyer's professional judgment on behalf of his client; and DR:6-101(

C) which requires a lawyer to keep a client reasonably informed about

matters in which the lawyer's services are being rendered.

It is the Committee's opinion that full disclosure of potential fees must

be made to the client, as required by each of the pertinent disciplinary

rules, prior to the execution of the instrument. (See Estate of Weinstock,

386, N.Y.S.2d 1) Furthermore, when the attorney/draftsman is being named

executor or trustee, the Committee believes that the lawyer has a duty to

provide information to the testator as to potential fees of alternative

persons or entities who might otherwise be named executor or trustee.

However, the Committee is of the view that, in all cases, the drafting

attorney is required to provide only general information about potential

compensation methods or commissions rather than specific dollar or

percentage figures.

3. Attorney/Fiduciary Retaining Own Law Firm as Attorney For Trust/Estate

May an attorney/fiduciary (personal representative or trustee) retain his

law firm as attorney for a trust or estate for which he is serving as

fiduciary? If it is proper to retain the fiduciary's own law firm, what

limitations exist as to compensation for each? Should this matter be

disclosed to the testator/grantor/client in the course of the preparation

of the instrument?

The role of an attorney who serves as fiduciary to a trust or estate and

additionally engages his law firm as attorney for the same entity presents

a personal conflict as described by DR:5-101(A). In such a situation,

the attorney's own financial, business, or personal interest may

potentially affect the exercise of his professional judgment on behalf of

the trust or estate. Clearly, in order to obviate the conflict, full and

adequate disclosure must be made to the testator/grantor/client in the

course of the preparation of the instrument and the client must consent in

order for the attorney to proceed.

The Committee believes that LE Op. 1353 is dispositive of the question

you raise. That opinion found that it would not be improper for a lawyer

who is employed both as Assistant General Counsel to a corporation and as "

of counsel" to a law firm to retain the outside law firm to provide legal

services to the same corporate client. The Committee did opine, however,

that full disclosure of the conflict must be made, consent from the

corporate client must be received, the lawyer must not provide direct

representation to the corporate client through the law firm, the lawyer

must not share in any of the fees received by the firm from the corporate

client, and communication between the outside law firm and the corporation

must be maintained with other directors or employees of the corporation.

4. Fiduciary Competence

Do minimum standards of competence apply to Virginia attorneys serving as

fiduciaries?

Although the Committee believes that standards for competence of Virginia

attorneys serving as fiduciaries are governed by provisions in the Code of

Virginia and thus present a legal question beyond the purview of the

Committee, the Committee does direct your attention to LE Op. 1325 which

adopted the conclusions reached in ABA Formal Opinion No. 336 and found

that

when an attorney assumes the responsibility of acting as a fiduciary and

violates his or her duty in a manner that would justify disciplinary

action had the relationship been that of attorney/client, the attorney may

be properly disciplined pursuant to the [Virginia] Code of Professional

Responsibility.

5. Suggestions for Fiduciaries

May Virginia attorneys initiate the conversation with their clients as to

who might be an appropriate fiduciary for the client's estate or trust and,

further, may the attorney suggest his/her willingness to serve as such?

Are there limitations on an attorney's ability to solicit his/her

designation as a fiduciary?

The Committee is of the belief that DR:2-103(A), regarding a lawyer's

solicitation of professional employment, is applicable to the question you

raise. In addition, Ethical Consideration 5-6 [ EC:5-6] provides further

guidance, in that it instructs that

A lawyer should not consciously influence a client to name him as

executor, trustee, or lawyer in an instrument. In those cases where a

client wishes to name his lawyer as such, care should be taken by the

lawyer to avoid even the appearance of impropriety.

The Committee is of the opinion that, although conversation with the

testator/grantor as to the suitability of specific persons or entities to

serve as fiduciaries is clearly in the nature of appropriate legal advice

to a client, the attorney's suggestion of his own willingness to serve in

that capacity may constitute solicitation for future employment. Although

the Virginia Code of Professional Responsibility does not generally

preclude in-person solicitation, DR:2-103(A) does, however, prohibit it

if the communication has a substantial potential for, or involves the use

of overpersuasion or overreaching, and requires that the lawyer take into

consideration the "sophistication regarding legal matters, [and] the

physical, emotional or mental state of the person to whom the

[solicitation] communication is directed and the circumstances in which

the communication is made." Therefore, the lawyer must consider carefully

the testator's state of mind and body before soliciting future employment

as personal representative, trustee, or executor, in order to avoid any

improper conduct.

Committee Opinion October 1, 1990

CROSS REFERENCES