Trusts and Estates Symposium 2015 ¢  Trusts and Estates Symposium 2015 People Behaving Badly: Ethical

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  • Trusts and Estates Section TRUSTS AND ESTATES SECTION

    Friday, September 25, 2015 12:45 - 4:30 PM The Los Angeles County Bar Association Los Angeles, CA

    Trusts and Estates

    Symposium 2015

    People Behaving Badly:

    Ethical Considerations for the Probate

    Bar and Trust Contest Strategies

    3.0 hours CLE credit, including 2.0 hours Ethics Credit, and 3.0 hours

    Estate Planning, Trust & Probate Law

    Provider #36

    The Los Angeles County Bar Association is a State Bar of California approve MCLE provider. The Los ngeles County Bar Association

    certifies that this activity has been approved for MCLE credit by the State Bar of California.

  • Trusts and Estates Section TRUSTS AND ESTATES SECTION

    Panel 1:

    Who Am I Representing? A Slippery

    Slope with Significant Risks

    Speakers:

    Marshal A. Oldman, Oldman, Cooley, Sallus, Gold, Birnberg, & Coleman, LLP

    James Ham, Pansky, Markle, Ham, LLP

    Daniel B. Herbert, Manning & Kass, Ellrod, Ramirez, Trester, LLP

  • LACBA Trusts and Estates Symposium

    Who Am I Representing? A Slippery Slope with Significant Risks

    Who is the client? All serious discussions of professional responsibility begin with this

    question. E.g., Guide to the California Rules of Professional Conduct for Estate Planning,

    Trusts, and Probate Counsel, State Bar of California, Trusts & Estates Section (3d ed.,

    2013), page 12; California Trust and Probate Litigation (CEB 2015), §3.3; Ethics: Tales of

    Brave Attorneys (Los Angeles County Bar Association, Trusts & Estates Symposium (2011),

    page 2.

    There is often little doubt in other practice areas, where there is usually either one client at

    a time, or multiple clients with more-clearly aligned or defined interests.

    In trusts and estates, however, attorneys commonly represent, or are expected to represent,

    several parties at once, such as husbands and wives, domestic partners, and other family

    members, often of differing generations or relatedness. Considering the varying capacities

    of any one client - fiduciary, beneficiary - and the varying persons holding a given capacity -

    successor fiduciaries, contingent beneficiaries - further complicates the question. Add to that

    the rule that “client” includes anyone who reasonably believes they are a client (Butler v.

    State Bar, 42 Cal.3d 323, 329 (1986), and the situation becomes downright murky. And it

    does not help the situation for attorneys representing fiduciaries to say or believe they are

    representing a trust or estate (they are not), because, among other reasons, unsophisticated

    beneficiaries often assume these attorneys will be protecting their interests as well.

    Given the confusion and potential repercussions, it is important to answer this question right

    away, ideally no later than the initial client interview. Important duties including loyalty,

    confidentiality, and avoiding adverse interests, are implicated at the outset, and may be

    inadvertently or carelessly breached when the attorney-client relationship is not clearly

    defined and understood.

    I represent the family? It was once more common to hear estate attorneys say they

    represent “the family,” and in fact there were and are legitimate reasons for representing

    multiple parties in many estate planning circumstances. Indeed, multiple representation has

    been practically encouraged by leading authorities. As eloquently stated by the American

    College of Trust and Estate Counsel (ACTEC) a few years ago:

    "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, 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 non-adversarial in nature and estate administration is usually non-

    adversarial."

    ACTEC, Commentaries on the Model Rules of Professional Conduct: Commentary on

    MRPC Rule 1.7 (4 ed., 2006).th

    Nonetheless, while it is often appropriate to represent a husband and wife, parents and

    children, siblings, or other members of the family (with full disclosure and waiver of

    potential conflicts of interest), it is rarely if ever accurate to say we represent the family in

    modern times.

    Representing trusts and estates. Trusts and estates are not legal entities; they have no legal

    capacity; they cannot, for example, sue or be sued. Weil & Brown, Cal. Practice Guide, Civ.

    Pro. Before Trial (TRG 2015), §2:126. The trusts and estates lawyer must represent a person

    (including entities, though not commonly) instead, such as an executor, administrator, or

    trustee.

  •      

    LACBA Trusts and Estates Symposium

    James I. Ham, Speaker

    Summary of Rules and Cases

     Client Identity is a Paramount Issue

    Butler v. State Bar, (1986) 42 Cal.3d 323, 329: “The attorney’s duty to communicate with a client includes the duty to communicate to persons who reasonably believe they are clients to the attorney’s knowledge at least to the extent of advising them that they are not clients.”

     Conflict Waivers Must Be Obtained Whenever Attorney Represents Multiple Clients

     Rule 3-310

    Rule 3-310 Avoiding the Representation of Adverse Interests (A) For purposes of this rule:

    (1) "Disclosure" means informing the client or former client of the relevant circumstances and of the actual and reasonably foreseeable adverse consequences to the client or former client; (2) "Informed written consent" means the client's or former client's written agreement to the representation following written disclosure; (3) "Written" means any writing as defined in Evidence Code section 250.

    (B) A member shall not accept or continue representation of a client without providing written disclosure to the client where:

    (1) The member has a legal, business, financial, professional, or personal relationship with a party or witness in the same matter; or (2) The member knows or reasonably should know that:

    (a) the member previously had a legal, business, financial, professional, or personal relationship with a party or witness in the same matter; and (b) the previous relationship would substantially affect the member's representation; or

    (3) The member has or had a legal, business, financial, professional, or personal relationship with another person or entity the member knows or reasonably should know would be affected substantially by resolution of the matter; or (4) The member has or had a legal, business, financial, or professional interest in the subject matter of the representation.

    (C) A member shall not, without the informed written consent of each client: (1) Accept representation of more than one client in a matter in which the interests of the clients potentially conflict; or (2) Accept or continue representation of more than one client in a matter in which the interests of the clients actually conflict; or

  •      

    (3) Represent a client in a matter and at the same time in a separate matter accept as a client a person or entity whose interest in the first matter is adverse to the client in the first matter.

    (D) A member who represents two or more clients shall not enter into an aggregate settlement of the claims of or against the clients without the informed written consent of each client. (E) A member shall not, without the informed written consent of the client or former client, accept employment adverse to the client or former client where, by reason of the representation of the client or former client, the member has obtained confidential information material to the employment. (F) A member shall not accept compensation for representing a client from one other than the client unless:

    (1) There is no interference with the member's independence of professional judgment or with the client-lawyer relationship; and (2) Information relating to representation of the client is protected as required by Business and Professions Code section 6068, subdivision (e); and (3) The member obtains the client's informed written consent, provided that no disclosure or consent is required if: