Conflict Issues in Representations Involving Estates

Under the substantive law of the District of Columbia, a lawyer retained by a personal representative or conservator for a representation in connection with a decedent’s or ward’s estate represents the personal representative or conservator rather than the estate. The lawyer may not, therefore, bring an action adverse to the personal representative or conservator without his or her consent.

Applicable Rules

• Rule 1.7 (Conflict of Interest: General Rule)
• Rule 1 .9 (Conflict of Interest: Former Client)

Inquiry
The inquiring lawyer has raised an issue concerning her representation of the estate of an incapacitated person. A court appointed X, Y, and Z as conservators1 for A’s estate. In addition to serving as a conservator for A’s estate, X also served as one of the two trustees for a trust established in A’s name. One of the beneficiaries of the trust was A’s estate.
     The two trustees initially retained the inquirer to perform an audit of the trust, paying her fees from funds in the trust. At the completion of the audit, the inquirer met with the trustees, as well as the conservators of A’s estate, to discuss issues identified in the audit. After the inquirer’s work for the trust had been completed, the conservators asked her to serve as counsel to A’s estate,2 and she accepted. The inquirer’s fees were paid by the conservator from the estate, subject to court approval.
     Approximately three years after the inquirer began her representation with respect to the estate, Y and Z (two of the three co-conservators) asked her to look into the question whether the fees of the two trustees of the trust—including X, the other conservator of A’s estate—were excessive. The inquirer prepared an opinion letter as to the propriety of the trustees’ fees and provided legal representation to Y and Z in their effort to remove X as a conservator. The court subsequently removed X as conservator. The question posed by the inquirer, at the direction of the court, is whether her continuing representation of the estate represents an impermissible conflict of interest because she had previously taken a position that is adverse to X.

Discussion
The answer to the immediate question posed by the inquirer is that, after the removal of X as a co-conservator, her representation of the estate or the remaining conservators does not present a conflict of interest under Rule 1.7 or Rule 1.9. Under the law in the District of Columbia, as discussed below, the inquirer had an attorney-client relationship with X. Accordingly, Rule 1.9 prohibits her, without consent, from now taking a position adverse to X in the same matter or one substantially related to a matter on which she previously represented X.3 As we take the facts, though, X is no longer a conservator of the estate, and the inquirer is therefore no longer involved in any action that is adverse to X. Accordingly, the inquirer’s current representation of A’s estate or the remaining conservators does not present a conflict of interest.
     The inquiry does, however, lead us to address a second question of greater significance to the trusts and estates bar: whether a conflict of interest existed when the inquirer took a position adverse to X at a time when X was still a co-conservator of A’s estate. The critical issue for answering that question is the identity of the client.
     The inquirer believed that it was permissible for her to take action adverse to X while X was still a conservator because the inquirer’s client was the estate and not the conservators. Underlying her position is the premise that the existence of a conflict in a matter involving an estate should be analyzed under Rule 1.13 (Organization as Client). Just as a corporation can hire a lawyer only if its constituents (e.g., president or general counsel) take steps to do so, an estate cannot hire a lawyer except through its constituents—in this case the conservators. Although X and the other conservators hired her and interacted with her, the inquirer believed that since she had been retained to represent the estate and her fees were being paid out of the estate, the estate was her client. Indeed, in a recent case in Michigan, the court analyzed whether an estate is a client within the scope of Rule 1.13, and concluded that it was. See Steinway v. Bolden, 460 N.W.2d 306 (Mich. Ct. App. 1990).
     Similarly, the inquirer also believed that X was not a former client with respect to her representation of the trust. Although X was a trustee at the time the inquirer provided advice concerning the trust, the inquirer understood her client to be the trust rather than the individual trustees.
    The position urged by the inquirer is by no means without force or logic. In general, the fact that the constituents of an organizational client interact with the client “does not mean, however, that constituents of an organizational client are the clients of the lawyer.” Rule 1.13, Comment 3. Although the lawyer communicates with the organization through its constituents, the client is the organization, not its constituents. Indeed, “[t]he principle that a lawyer represents the entity and not its individual shareholders or other constituents applies even when the shareholders come into conflict with the entity.” Opinion No. 216 (Jan. 15, 1991).4 Since the inquirer believed X’s actions were harmful to the estate—which she understood to be her client—she considered it appropriate to take actions adverse to X in order to benefit the estate.
     The critical flaw in the inquirer’s reasoning, however, is that under the substantive law of the District of Columbia, as well as the law of most jurisdictions, the client of a lawyer representing an estate is the fiduciary—in this case the conservator—and not the estate.5 On two recent occasions, the D.C. Court of Appeals has addressed the identity of the client in estates law. In a 1987 decision involving the question of compensation for the attorney for a decedent’s estate, the court stated:

The general purposes of the Reform Act, however, support the propositions that it sought to enhance the efficiency of these proceedings by increasing, at least with regard to undisputed matters, the power of the personal representative, and that counsel for the estate was viewed as an employee of the personal representative.

Poe v. Noble, 525 A.2d 190, 193 (D.C. 1987) (emphasis added). In a 1993 case, Hopkins v. Akins, 637 A.2d 424, 428 (D.C. 1993), which involved facts closer to those before us, the court considered the obligations of an attorney when the personal representative of a decedent’s estate is depleting the assets of the estate. The Hopkins court relied on the language from Poe quoted above to conclude that the attorney had no legal duty to the beneficiaries of the estate because the client was the personal representative of the estate and not the estate.
     Thus, even though the inquirer’s view that the estate was the client is a plausible one, that question is one of substantive law and this Committee has no authority to alter the result dictated by settled law in the District of Columbia. It is worth noting, moreover, that the law in the District of Columbia on this point is in accord with the law in most other jurisdictions. See American College of Trust and Estate Counsel, ACTEC Commentaries on the Model Rules of Professional Conduct 3 (2d ed. 1995) (“Under the majority view, a lawyer who represents a fiduciary generally with respect to a fiduciary estate stands in a lawyer-client relationship with the fiduciary and not with respect to the fiduciary estate or the beneficiaries.”); Jeffrey N. Pennell, Representations Involving Fiduciary Entities: Who Is the Client?, 62 Fordham L. Rev. 1319, 1321 (“A majority of authorities addressing this issue conclude (more or less) that the personal representative is the client . . . .”); see, e.g., Goldberg v. Frye, 266 Cal. Rptr. 483 (Ct. App. 1990); Rutkoski v. Hollis, 600 N.E.2d 1284 (Ill. App. Ct. 1992). Although we have not located any D.C. case applying the approach of Poe and Hopkins to a ward’s estate as opposed to a decedent’s estate, we see no reason why the D.C. Court of Appeals would reach a different result concerning such estates. See ACTEC Commentaries at 133 (“The lawyer retained by a fiduciary for a disabled person, including a guardian, conservator, or attorney-in-fact, stands in a lawyer-client relationship with respect to the fiduciary.”).
     Once it is recognized that the inquirer represented the conservators of the estate, and not the estate itself, it is apparent that she should not have assisted two of the conservators—Y and Z—in taking actions adverse to the third conservator—X—since X was a current client of hers. Specifically, Rule 1.7(b)(1) provides that a lawyer is conditionally prohibited from representing a client with respect to a matter if “a position to be taken by that client in that matter is adverse to a position taken or to be taken by another client in the same matter.” In the present case, the position of Y and Z was unquestionably adverse to X’s position since Y and Z were challenging the fees that X had been paid as a trustee. And X did not consent to the inquirer’s representation of Y and Z with respect to that issue.
     We note that commentators have struggled to find some justification for permitting a lawyer for an estate at least to be permitted—if not required—to disclose when he or she learns that the fiduciary is taking actions detrimental to the estate. See ACTEC Commentaries at 34 (“[I]n some circumstances the lawyer may be obligated to take affirmative action to protect the interests of the beneficiaries. Some courts have characterized the beneficiaries of a fiduciary estate as derivative or secondary clients of the lawyer for the fiduciary.”); Pennell, Who Is the Client? at 1321-22 (“many [authorities] also state that a duty – akin to a fiduciary duty—runs from the attorney directly to the beneficiaries of the fiduciary entity”). Indeed, Rule 1.6(d)(2)(A) provides that a lawyer may use or reveal client confidences or secrets “when permitted by these rules or required by law or court order.”
     In these circumstances, though, we can find no basis for a lawyer taking action adverse to a fiduciary client. To begin with, we are not aware of any rule of law in the District of Columbia permitting a lawyer for a fiduciary to disclose client confidences because the fiduciary may have breached some legal obligation.6 In addition, even if such a rule existed, that rule would not mean that the inquirer would be permitted to take a position adverse to X concerning that conduct. Indeed, a recent opinion by the ABA Committee on Professional Responsibility concerning counseling of a fiduciary explains that all of the Rules of Professional Conduct should apply in the context of estates law in the same manner that they would apply in any other situation. ABA Formal Op. 94-380 (May 9, 1994). Under the Rules, there was no basis for the inquirer to ignore the prohibition on taking actions adverse to another of her clients.
     We therefore conclude that when Y and Z approached the inquirer concerning X’s actions as trustee, the inquirer should have declined to provide legal advice, absent X’s consent, because X was a client. However, to the extent that the estate and the remaining conservators are no longer in a position adverse to X, we see no problem with the inquirer’s continued representation of the conservators.

Inquiry No. 95-5-16
Adopted: October 18, 1995

1. The D.C. Code defines “conservator” as “a person who is appointed by the court to manage the estate of a protected individual.” See D.C. Code Ann. § 21-2011(3).
2. While the inquirer understood that she was being asked to represent the estate, not the conservators, there was no formal engagement letter reflecting that understanding. Moreover, as we discuss below, the law in the District of Columbia is that the client in such situations is the conservator, not the estate.
3. Rule 1.9 provides that “A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client consents after consultation.”
4. A prior opinion, decided under the former D.C. Code of Professional Responsibility, as well as a number of court cases, have recognized that a lawyer representing an organization may take a position adverse to one of its constituents even where the lawyer has interacted with the constituent. See Opinion No. 159 (Sept. 15, 1985); Bobbitt v. Victorian House, Inc., 545 F. Supp. 1124, 1126 (N.D. Ill. 1982); U.S. Industries, Inc. v. Goldman, 421 F. Supp. 7, 11 (S.D.N.Y. 1976); Wayland v. Shore Lobster & Shrimp Corp., 537 F. Supp. 1220, 1223 (S.D.N.Y. 1982).
5. A comment to the Model Rules, which was not included in the D.C. Rules of Professional Conduct, explicitly contemplates that the identity of the client will depend on the underlying law of the jurisdiction. See Model Rule 1.7, Comment [13] (“In estate administration the identity of the client may be unclear under the law of a particular jurisdiction. Under one view, the client is the fiduciary; under another view the client is the estate or trust, including its beneficiaries.”). We accord no significance to the omission of this comment from the D.C. Rules.
6. In Hopkins, the court in describing the facts noted that after Hopkins learned that the personal representative of the estate was apparently stealing money from the estate, she disclosed the representative’s actions to both a former Register of Wills and the current Register of Wills. However, at the time that the lawyer in Hopkins disclosed her client’s confidences, the D.C. Code of Professional Responsibility was in effect, and it permitted a lawyer, without client consent, to reveal “[t]he intention of his client to commit a crime and the information necessary to prevent the crime.” DR 4-101(C)(3). Current D.C. Rule 1.6(c), by contrast, permits such a disclosure without consent only to prevent a criminal act likely to result in death or substantial bodily harm or to prevent bribery or intimidation of persons involved in judicial proceedings.