The duty of loyalty and the duty of confidentiality are the cornerstones of the attorney-client relationship. The duty of loyalty allows the client to trust that the attorney is acting in the client’s best interests. “Loyalty and independent judgment are essential elements in the lawyer’s relationship to a client.” The duty of confidentiality encourages a client to speak candidly with his or her attorney without the fear that confidences will be disclosed to a third party.
The existence of a conflict of interest during the course of a representation can adversely affect the duties of loyalty and confidentiality. Conflict of interest issues present themselves when an elder and special needs law attorney represents a married couple for estate planning. Although various facts relevant to the specific clients determine the complexity of the estate planning being done, the attorney is generally confronted with one of three possible situations regarding conflict of interest.
First, representation of the married couple takes place without any conflict of interest being present. Second, representation of the married couple presents a conflict of interest, but the conflict is consentable by the affected clients. Third, representation of the married couple presents a nonconsentable conflict of interest and the attorney cannot represent the affected clients or, if representation has commenced, the attorney must withdraw from the representation.
This article examines how NAELA’s newly revised Aspirational Standards assist the attorney in managing his or her ethical duties and encouraging conduct that rises above and beyond the minimum threshold that the ABA Model Rules of Professional Conduct set forth. Section II discusses the ABA Model Rule and the NAELA Aspirational Standard (Standard D, Conflict of Interest) that apply to estate planning for married couples. Section III addresses three conflict of interest scenarios and how these scenarios can be addressed by applying Standard D. Section IV provides a checklist for dealing with conflicts of interest that arise when conducting estate planning for married couples.
II. ABA Model Rule 1.7 and NAELA Aspirational Standard D — Requirements Versus Aspirations
Estate planning and administration matters are usually nonadversarial, allowing the attorney to ethically represent more than one family member at a time. In fact, clients can be better served by having one attorney represent more than one family member, because that attorney will be familiar with the relevant facts and family dynamics, allowing for a more cohesive and cost-effective estate plan. “Considerable efficiency is gained through having one lawyer or firm manage the legal affairs of all family members. The firm learns about family businesses, assets, documents, and personalities and thus is able to provide quality representation requiring less time.” The fact that multiple family members do not have identical estate planning goals does not necessarily preclude the attorney from representing multiple family members. Even if family members have slightly different estate planning goals, their desire to have one attorney represent them all usually is more important to them regardless of the different estate planning goals they have.
A. ABA Model Rule 1.7
Model Rule 1.7, Conflict of Interest, provides a basic framework for the attorney to assess conflict of interest issues with concurrent clients and how to proceed ethically when a conflict of interest arises. Rule 1.7 provides a certain amount of guidance regarding this type of representation, provided the lawyer does not represent a client if the representation involves a concurrent conflict of interest, unless an exception in Model Rule 1.7(b) exists. A concurrent conflict of interest exists if the representation of one client will be directly adverse to another client or there is a significant risk that the representation will be materially limited by the lawyer’s responsibilities to another client, a former client, or a third party or by a personal interest of the lawyer.
Model Rule 1.7(b) provides that the attorney may represent a client in a concurrent conflict of interest 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.
The body of Model Rule 1.7 does not define “directly adverse,” “material limitation,” and “significant risk,” all of which are key phrases in understanding the attorney’s ethical duties regarding a conflict of interest. Rule 1.7’s Comments, however, provide limited guidance in defining these key phrases.
1. Directly Adverse
Model Rule 1.7, Comment 6, states that to avoid a directly adverse conflict of interest, the attorney “may not act as an advocate in one matter against a person the lawyer represents in some other matter” and that a directly adverse conflict may arise if the attorney is required to “cross-examine a client who appears as a witness in a lawsuit involving another client.” Comment 7 recognizes that a directly adverse conflict can arise in transactional matters, but the example given involves an attorney attempting to represent a seller of a business in negotiations with a buyer represented by the attorney in an unrelated matter.
2. Material Limitation
Model Rule 1.7, Comment 26, discusses the relevant factors to determine “whether there is significant potential for material limitation,” stating that these factors are often ones of “proximity and degree” and include the duration and intimacy of the attorney’s relationship with the client(s), the functions the attorney is performing, the likelihood that disagreements will arise, and the likelihood the conflict will prejudice the client. For example, a conflict of interest can occur in the estate planning context, such as when an attorney prepares wills for a married couple. The circumstances determine whether such a conflict is consentable.
The example given in Comment 8 considers whether a material limitation exists when an attorney is asked to represent several individuals in a joint venture and notes that the attorney’s ability to advocate for each client is likely to be materially limited because of the duty of loyalty owed to each client. The mere possibility of a conflict of interest does not preclude the representation, but such a conflict might limit the attorney in recommending all courses of action available to each client. Even though the Comment does not make this analogy, the representation of more than one individual in a joint venture is similar to the elder and special needs law attorney representing a married couple for estate planning purposes. Although the possibility that a conflict of interest in representing both spouses does not preclude the representation, the attorney is potentially limited in recommending all courses of action to them.
3. Significant Risk
To determine whether a significant risk exists that a representation will be materially limited under Model Rule 1.7, the attorney must determine the likelihood that a conflict of interest will occur and to what extent such a conflict will materially interfere with his or her independent judgment needed to consider all alternatives and courses of action available to the clients.
B. Is the Conflict Consentable?
If the attorney determines that a conflict of interest exists between the spouses or that there is a significant risk that a conflict of interest will arise, the attorney must determine whether the conflict is consentable. Model Rule 1.7 sets forth three factors to determine whether a conflict is consentable.
First, the attorney must believe that he or she can provide competent and diligent representation despite the conflict of interest. A conflict of interest is consentable if the clients’ interests, despite the existence of the conflict, can be reasonably and adequately protected if the clients give informed consent for the representation to occur or continue. The standard is what a reasonable attorney would do. At least one state bar association has adopted the following factors to use to determine whether an attorney can provide clients with competent and diligent representation as required by the Model Rule 1.7:
1. The nature of the conflict of interest;
2. The likelihood that client confidences or secrets in one representation will be relevant to the other representation;
3. The ability of the lawyer or law firm to ensure that the clients’ confidential information will be preserved;
4. The ability of the lawyer to explain, and the clients’ ability to understand, the reasonably foreseeable risks of the conflict; and
5. The lawyer’s relationship with the clients.
Some conflicts of interest are so serious that regardless of whether the clients would provide informed consent, the conflict is nonconsentable and the representation cannot occur or continue. An attorney cannot represent multiple clients unless the attorney has a reasonably objective belief that he or she can sufficiently represent each client’s individual interests.
Even though it is recommended that the attorney discuss what will happen if a conflict of interest that cannot be resolved develops, not all states require the attorney to do so. A 1997 Florida ethics case states that an attorney is not required to discuss potential conflicts of interest with the clients if there is no objective evidence that the clients’ interests conflict (finding that husband and wife appeared to be knowledgeable and there did not appear to be any conflicts; therefore, the attorney could represent them without obtaining any consent from them).
Second, the attorney must determine whether the representation is prohibited by the law because the conflicts of interest are nonconsentable. For example, in Florida, an attorney cannot represent both members of a married couple in a divorce.
Third, the attorney must ask whether the representation of multiple clients will involve one client asserting a claim against another client in the same litigation or other proceeding before a tribunal. This situation presents a nonconsentable conflict of interest because the Model Rules advocate the adversarial system and zealous representation of each client. “The basis of the adversarial system is the belief that truth emerges when each side has zealous representation that will present the client’s position free of divided loyalty to the opposition in the litigation. ‘Whether clients are aligned directly against each other within the meaning of this paragraph requires examination of the context of the proceeding.’” For example, in a contested guardianship, the attorney cannot represent both the individual petitioning to be appointed guardian and the ward.
C. Informed Consent
After considering all three factors, the attorney can continue the representation if he or she determines that the conflict of interest is consentable and each affected client gives informed consent in writing. Informed consent requires that each affected client be aware of the relevant circumstances and of the material and reasonably foreseeable ways in which a conflict could have adverse effects on the client’s interests. The nature of the conflict and the risks involved determine the information required for informed consent to occur. “When representation of multiple clients in a single matter is undertaken, the information must include the implications of the common representation, including possible effects on loyalty, confidentiality and the attorney-client privilege and the advantages and risks involved.” Although informed consent must be in writing, the requirement that it be in writing does not supplant the need for the attorney to explain to the client the risks and advantages of the representation and what the reasonable alternatives are and give the client a reasonable opportunity to consider the risks and alternatives and ask questions. Any limitations regarding the scope of the representation should be communicated to the clients before representation commences.
As part of obtaining the client’s informed consent, the attorney should discuss with the client how representation of multiple clients (e.g., a married couple) impacts the attorney’s duty of confidentiality and attorney-client privilege. This discussion should include what occurs if a material dispute that results in litigation arises.
The attorney should also explain that if a nonconsentable conflict of interest arises, the attorney most likely will be required to withdraw from the representation. The duty of loyalty precludes an attorney from continuing the representation if one client asks the attorney not to disclose information that is relevant to the representation to another client. Accordingly, at the start of the representation, the attorney should inform clients about how information will be shared among them and under what circumstances the attorney will be required to withdraw.
Although Model Rule 1.7 discusses the circumstances in which the attorney can represent multiple clients if a concurrent conflict of interest exists or arises, Rule 1.7 and its Comments fall short. Rule 1.7 fails to identify the various ways in which an attorney can represent multiple clients. Although Rule 1.7 discusses how the attorney should approach a concurrent conflict of interest, the Rule does not discuss the different ways representation can occur or offer suggestions about how the attorney should approach each type of representation. NAELA Aspirational Standard D addresses what it means for representation to be individual, concurrent, or joint. The Standard also discusses what steps the attorney in a concurrent or joint representation should take regarding conflict of interest issues.
D. NAELA Aspirational Standard D — Conflict of Interest
NAELA Aspirational Standard D provides additional guidance on how the attorney should navigate conflict of interest issues when representing a married couple in estate planning. Section 1 of the Standard addresses the situation in which prospective clients request that the attorney represent multiple family members in related or distinct matters. The Standard encourages the attorney to exercise caution because multiple representation can lead to misunderstandings among family members. The attorney should take steps to educate prospective clients regarding the differences among individual, concurrent, and joint representation. While individual representation is preferred, “joint representation may be appropriate when there is no material conflict of interest between the parties, they have shared goals and common interests, and joint representation will further family harmony, economic efficiency, and consistency of action and serve the best interests of the clients.” Joint representation is favored over concurrent representation; concurrent representation should only be undertaken cautiously because the disclosure of confidences by one client to the exclusion of the other may interfere with the attorney’s ethical duties of loyalty and impartiality. Conversely, joint representation allows for candid representation because the attorney can disclose all information to each client.
As a prerequisite to concurrent or joint representation, the attorney should obtain the informed consent of all affected parties by reviewing with them the advantages and disadvantages of their chosen method of representation. The attorney should communicate to the clients in a way that will be best understood by each. Standard D recognizes that elder and special needs law may involve clients who have differing abilities regarding making decisions and providing consent. Certainly, the attorney should consider separate, private, direct, and personal communications with each potential client to allow each client to freely ask questions regarding the consequences of individual, concurrent, and joint representation.
If a conflict arises when the attorney is representing multiple clients, the attorney should consider withdrawing as counsel because he or she has confidential information about all the clients. Standard D recognizes that some state ethics rules may allow for continued representation but advises against it because doing so is risky.
III. Practical Application of Model Rule 1.7 and Aspirational Standard D: Three Scenarios
A. Scenario 1 — I Want Hold Your Hand: Nonconflict Estate Planning
Fred and Lucy have been married for 40 years. They have four children, all of whom are gainfully employed and self-supporting. Fred and Lucy want an attorney to prepare estate planning documents for them. Their general estate plan is that upon the death of one spouse, the surviving spouse is to inherit all of the deceased spouse’s assets. Upon the death of the surviving spouse, all assets are to be divided equally among their four children. Fred and Lucy name each other as trustee and executor as well as attorney-in-fact and health care representative. Upon the incapacity or death of either of them, their second eldest child, who lives locally, will serve as trustee, executor, attorney-in-fact, and health care representative.
In this situation, the attorney faces a somewhat simple issue. Representation of both Fred and Lucy is an efficient way to accomplish their estate planning goals. Model Rule 1.7 does not require the attorney to discuss whether individual, joint, or concurrent representation is appropriate or conflict of interest issues; however, NAELA Aspirational Standard D recommends such discussion.
Pursuant to Standard D, the attorney should both inform Fred and Lucy that they have the option of obtaining independent counsel and discuss the advantages and disadvantages of independent and joint representation. The attorney should tell Fred and Lucy that if they elect to be represented jointly, doing so can provide for cost-efficient estate planning but confidences will be shared. In addition to explaining the effects on the duty of confidentiality, the attorney should advise Fred and Lucy that in the unlikely event litigation occurs between them, the attorney-client privilege is lost. (Certainly, concurrent representation can be discussed, but the attorney will most likely discourage this type of representation because in concurrent representation confidences are not shared.)
Furthermore, the attorney should explain to Fred and Lucy that if a conflict of interest develops during the course of the representation, the attorney will need to determine whether the representation can continue and, if it can, under what circumstances. Certainly, the attorney should explain that if the conflict is material and determined to be nonconsentable, withdrawal as counsel will occur and Fred and Lucy will need to obtain other counsel for their legal needs. Although Fred and Lucy’s attorney is not required to provide this information in writing and obtain informed consent in writing, Aspirational Standard D encourages the attorney to be cognizant of how each client will best comprehend the information being provided and provide the information verbally as well as in writing.
B. Scenario 2 — We Can Work It Out: A Consentable Conflict
George and Ginger have been married for 10 years. George has two adult sons who live independently. Ginger has one adult daughter who has a disability that will prevent her from ever living independently. George and Ginger do not have a premarital agreement. They each have estates valued at approximately $1 million. They consult with an attorney to prepare revocable living trusts, pour-over wills, powers of attorney, and a third-party supplemental needs trust for Ginger’s daughter.
George and Ginger advise that upon the death of one spouse, the deceased spouse’s estate will be held in trust for the benefit of the surviving spouse. Upon the surviving spouse’s death, the three children will inherit all remaining assets. George wants the assets to be divided equally among the three children, with the share that is to pass to Ginger’s daughter to be distributed to the trustee of a third-party supplemental needs trust they want to create. Conversely, Ginger wants her daughter to receive half of the assets (made payable to the trustee of the third-party supplemental needs trust) and George’s children to each receive one-quarter.
This more complicated scenario presents several issues related to conflict of interest. The attorney is immediately faced with two potential clients who have different estate planning goals. In addition to the fact that George and Ginger each have children from other relationships, Ginger’s child has a disability. George and Ginger’s situation is further complicated by the fact that each has a different idea about how their assets ultimately should be divided among their children.
When confronted with multiple clients, such as in this scenario, the attorney should ensure that prospective clients understand whether the representation will be individual, joint, or concurrent. As soon as possible, George and Ginger’s attorney should meet with each spouse separately. The attorney should be mindful of the best method of communication for George and Ginger individually and use that method of communication as well as provide information in writing. Aspirational Standard D encourages the attorney to discuss the advantages and disadvantages of the various types of representation and discuss relevant conflicts of interest and how those conflicts affect the nature and scope of the representation. In this scenario, Standard D encourages individual representation but accepts joint representation if the clients are adequately informed and consent. The attorney should advise George and Ginger that if they choose joint representation, the attorney will present them with a written engagement agreement that sets forth certain ground rules, including the following:
1. The representation will be joint, which means that both George and Ginger will be clients and that confidences between George and the attorney will be shared with Ginger and vice versa.
2. Individual representation is an option for George and Ginger, and such representation will not adversely affect any duty of confidentiality or attorney-client privilege.
3. Regarding George and Ginger’s individual estate planning objectives, the attorney cannot and will not take any position on how the assets should be divided. Instead, the attorney will answer any questions regarding how asset disposition will affect certain legal rights. The attorney will not recommend one particular division of assets over another.
4. George and Ginger will need to make sure that they agree on how their assets will be distributed or agree that each will have his or her own estate plans that will not mirror the other. In this case, the attorney will largely serve as a scribe and set forth in writing how each of them wants the assets to be divided.
5. In the event that George and Ginger cannot agree and a material conflict of interest develops, the attorney will withdraw as counsel.
6. George and Ginger will be given information in writing to ensure informed consent.
C. Scenario 3 — Help! I Need Somebody, Help! Not Just Anybody: A Nonconsentable Conflict
Cary and Katherine have been married for 10 years. They have no children together. They visit their attorney because they need estate planning documents. During the meeting, they tell the attorney that their estate planning goals are basic. They want to provide for the surviving spouse, and upon the surviving spouse’s death, they want to leave their estates to their alma mater, Stetson University College of Law. After the attorney begins to prepare the documents, Cary contacts the attorney and advises her that he is having an extramarital relationship with Alice, to whom he wants to leave half of his estate if Katherine survives him. If Katherine does not survive him, upon his death he wants his entire estate to pass to Alice. Cary then tells the attorney that she cannot tell Katherine about Alice or tell Katherine that he wants to modify his estate plan so that it does not mirror her plan.
Even though this representation commenced as a garden variety representation similar to that presented in the first scenario, the factual circumstances quickly developed to present a conflict of interest. Certainly, under Model Rule 1.7, the attorney initially agreeing to represent both Cary and Katherine is allowed to do so. However, under the Model Rule, the attorney is not ethically required to discuss with Cary and Katherine at the beginning of the representation whether the representation will be individual, joint, or concurrent or the disadvantages and advantages of each. When Cary confides in the attorney and discloses his secret estate planning goals, both the attorney and Cary are placed in a difficult position. Because Cary and Katherine were not made aware of the implications of the type of representation, Cary does not have a reasonable basis to know how the attorney will handle this additional confidence. The attorney is also in a difficult position because she did not advise her clients from the start about what could occur if a conflict of interest arose.
Aspirational Standard D, however, does assist in providing the clients and the attorney with clarification as to whether the representation will be individual, joint, or concurrent. If the attorney had followed Standard D, she would have discussed with Cary and Katherine the advantages and disadvantages of each type of representation.
Standard D encourages the attorney to meet with Cary and Katherine separately as early as possible and to identify the best mode of communication to allow maximum understanding by both. The Standard encourages the attorney to recommend either individual or, if the facts lend themselves to it, joint representation. That being said, the attorney should still discuss concurrent representation with Cary and Katherine and the possible implications of this type of representation. It would be appropriate for the attorney to discuss concurrent representation with Cary and Katherine but to advise that she will not represent them in this capacity. Certainly, if joint representation is chosen, the attorney will want to discuss how joint representation affects the attorney’s duty of confidentiality and the attorney-client privilege.
Once Cary and Katherine and the attorney identify the type of representation that will occur and discuss its advantages and disadvantages, the attorney should obtain Cary and Katherine’s informed consent to the representation in writing. The engagement agreement should clearly outline the nature and scope of the representation as well as state what will happen if a conflict of interest arises. Certainly, Cary and Katherine should be advised that if the conflict is consentable and they each provide written informed consent, representation can occur. However, Cary and Katherine should be advised that in the event of a nonconsentable conflict of interest, the attorney will withdraw from the representation. The attorney should also address whether confidences disclosed by Cary or Katherine will be disclosed to the other.
Had the attorney in this scenario followed Aspirational Standard D, Cary and Katherine would have had a real opportunity to consider their alternatives and the type of representation that would occur. If joint representation were chosen, they would have been advised at the beginning how the duty of confidentiality and the attorney-client privilege would be affected. They would have known how the attorney would treat disclosure of any confidences. Specifically, Cary would have known that the attorney would disclose Cary’s alternative estate planning goals to Katherine and would be required to withdraw as counsel.
NAELA Aspirational Standard D lends itself to the creation of a checklist of steps an attorney should take when retained to prepare estate planning documents for a married couple. These steps are as follows:
1. Identify the clients.
2. Meet with each spouse separately if possible.
3. Determine what method of communication will be most conducive to maximizing the ability of the clients to communicate and comprehend the information being provided.
4. Explain to the couple the three options for representation: individual, joint, and concurrent.
5. Explain to the clients the advantages and disadvantages associated with each type of representation, including how each type affects the duty of confidentiality and the attorney-client privilege.
6. Discuss with the couple any apparent conflicts of interest that exist and how such conflicts will be handled during the representation.
7. Discuss with the couple any potential conflicts of interest that may develop and how the attorney will handle such conflicts. Also discuss consentable conflicts of interest versus those that are nonconsentable.
8. Communicate conflict of interest issues to the couple in writing as well as in person.
9. Obtain the couple’s informed consent to the representation in writing.
10. Memorialize all of the previous steps in the engagement agreement, which is prepared shortly after you agree to accept the representation.
11. If you decline the representation or the clients decide not to move forward, memorialize the fact that you were not retained.
Although the Model Rules of Professional Conduct, specifically Model Rule 1.7, provide some guidance regarding conflict of interest issues with concurrent representation, they do not require the attorney to discuss the effects of such representation in cases in which a married couple is being represented jointly. Although not having this discussion does not necessarily create ethical issues in each case, it does complicate matters if a conflict of interest develops because the clients were ill-informed from the outset and could be surprised by the consequences the conflict creates.
Conversely, NAELA Aspirational Standard D attempts to bridge the gaps in Model Rule 1.7 and encourages the attorney to address whether the representation will be individual, joint, or concurrent. The Standard also encourages the attorney to discuss the effects of a material conflict of interest on the representation in terms of the duty of confidentiality and attorney-client privilege and under what circumstances the attorney is required to withdraw as counsel. Furthermore, the attorney is encouraged to obtain informed consent from clients in writing regarding conflict of interest issues. Even though Model Rule 1.7 provides a basic framework for an attorney to provide ethical representation to a married couple needing assistance with their estate planning, Standard D provides additional guidance to allow the attorney to achieve the level of professionalism that all NAELA Aspirational Standards encourage.