9 Ethical Issues in the Representation of Clients in Premarital and Postmarital Agreements

• Library: Premarital Agreements: Drafting and Negotiation (ABA) (2017 Ed.)

9 Ethical Issues in the Representation of Clients in Premarital and postmarital Agreements

§9.01 Overview

This chapter addresses ethics issues that may arise in the representation of a party to a premarital or postmarital agreement, including

• Dealing with a client whose capacity may be diminished;
• Dealing with an unrepresented party;
• Lawyer competence, particularly in the representation of the weaker party;
• Representation of both parties to an agreement (i.e., joint representation); and
• The lawyer as mediator.

Unethical behavior on the part of a lawyer for one of the parties is not an independent basis for attacking the validity of an agreement. However, lawyer misconduct may cause a court to deem an agreement the product of undue influence.¹ The combination of improper joint representation and other factors, such as inadequate disclosure, can cause a court to invalidate an agreement.² Arguably, incompetent lawyering may also expose the lawyer to a claim even when the validity of the agreement is upheld.³

For example, Estate of Campbell v. Chaney⁴ was a malpractice action against a drafting lawyer filed after the deceased husband's estate settled the widow's challenge to the validity of a premarital agreement. The lawyer's experts testified the widow's claim would have failed had it been tried. The court rejected the lawyer's summary judgment motion, holding that the alleged deficiencies in the process leading to execution provided a basis on which a trier of fact could find that the estate suffered a loss when it settled a case whose outcome was not certain. The estate did not have to prove the widow's claim of invalidity would have succeeded in order to prevail against the lawyer. Rather, the court held as follows:

The negligence of an attorney does not depend on whether the agreement can be enforced. If an attorney drafts a prenuptial agreement without attaching a financial statement, the fact-finder could conclude that the attorney failed to use reasonable care, that is, that the attorney was negligent. It is immaterial that the agreement might later be enforced after a finding that the widow already knew the financial information. The fact-finder could still find that the attorney failed to exercise reasonable care in drafting the agreement. If that failure caused the estate to settle a claim that a proper agreement would have made meritless, then the attorney may be held liable.⁵

The discussion in this chapter applies equally to a same-sex couple entering into a premarital agreement or postmarital agreement.

§9.02 Dealing with a client whose capacity to Contract May Be Diminished

The proper conduct of a representation when the client's mental capacity may be diminished is a problem with no easy solution. The question of client capacity may present itself under a variety of circumstances, including the following:

• A potential client with whom the lawyer has no prior relationship may seek representation in connection with a premarital or postmarital agreement, or the other party to the proposed agreement, or a third party, such as an adult child, seeks such representation on behalf of the client. After undertaking the representation, the lawyer may come to suspect the client is impaired.
• An existing client who evidences some diminution in mental capacity seeks representation in connection with a premarital or postmarital agreement, an amendment to an agreement, or an agreement to revoke an existing agreement.
• A couple with whom the lawyer has an existing lawyer-client relationship seeks representation in connection with a postmarital agreement (or an amendment or revocation of an existing premarital agreement) where it appears one member of the couple may have diminished capacity.

The question is not simply whether the client is entirely lacking in legal capacity to contract. A client's capacity may be diminished but not entirely lacking. Such a person may be vulnerable to fraud or undue influence as well as physical harm. Indeed, the ABA Model Rules recognize that a client's capacity to make decisions may be diminished as a result of being at risk of physical harm. The issues that a lawyer for a client whose capacity may be diminished must consider include these:

• Does a new client with whom the lawyer has no prior relationship have sufficient capacity to form a lawyer-client relationship?⁶
• Can the lawyer continue an attorney-client relationship with an existing client whose capacity may be diminished?
• Can the lawyer engage in, or continue, a joint representation?
• What steps can the lawyer take to assess client capacity?
• What information can the lawyer reveal, and to whom, to assess client capacity?
• What steps can the lawyer take to protect the client if the lawyer determines that protective steps are necessary, and what information can the lawyer reveal to take protective action?

In some circumstances the client may be so incapacitated that he or she cannot form or continue a lawyer-client relationship.⁷ Where the client does not wholly lack capacity, or where the lawyer already has a relationship with the client when diminution in capacity comes to light, most authorities advocate staying with the representation rather than withdrawing.⁸ This necessarily means the lawyer must "accept responsibility for determining when to question capacity and how to respond appropriately to the situation."⁹ In questioning capacity, the lawyer is advised to consider the following:

• The client's ability to articulate reasoning behind a decision;
• The variability of the client's state of mind;
• The client's ability to appreciate consequences of the decision;
• The irreversibility of the decision;
• The substantive fairness of the decision; and
• The consistency of the decision with lifetime commitments of the client.¹⁰

The lawyer is further advised to speak with the client alone.¹¹ This is particularly important when there are any indicators that the client may be under pressure or at risk of physical harm, from a spouse, paramour, family member, or someone else in a position of trust. The factors identified above recognize that "when the consequences of a decision are greater in terms of irreversibility, fairness to interested parties, and deviance from lifetime commitments of the client, then it is clinically and ethically appropriate to expect a higher level of functioning on the first three variables."¹²

ABA Model Rule 1.14 addresses the lawyer's role in dealing with client incapacity in several important respects.¹³ First, the rule allows the lawyer to act to protect a client's interests when the client's capacity is diminished; the client need not be wholly lacking in legal capacity. Second, the lawyer's options for protecting the client include seeking appointment of a guardian as well as actions short of seeking such an appointment, which may be far more intrusive than necessary. This can include "consulting with individuals or entities that have the ability to take action to protect the client. . . ."¹⁴ Appropriate individuals may include family members and medical providers. In cases where the lawyer has reason to believe the client or potential client has been the victim of domestic violence, an adult protective services agency may be an appropriate entity from which to seek protection on behalf of the client. Third, the lawyer may reveal client confidences to the extent necessary to protect the client's interests.¹⁵

In deciding whether to take protective action, and what action to take, the lawyer should be guided by the goals of respecting the wishes and values of the client, to the extent known, otherwise, according to the client's best interest; intruding into the client's decision-making autonomy to the least extent possible; maximizing client capacities; and maximizing family and social connections and community resources.¹⁶

In sum, a lawyer faced with a client who may be impaired and who seeks to execute a premarital or postmarital agreement, or to amend or cancel an agreement,¹⁷ must weigh the extent of the client's functioning, with the assistance of a diagnostician in appropriate cases,¹⁸ as it relates to the particular terms sought, and other relevant factors. When a client who may be impaired has been asked to execute an agreement, including a revocation of an agreement, that appears highly unfavorable to the client, or to his or her children, the situation calls for caution.¹⁹ In some instances, the lawyer may need to seek appointment of a guardian to obtain court approval of the agreement.²⁰

§9.03 Role of counsel for the proponent in

dealing with an unrepresented party

(a) Advice to Unrepresented Party to Get Independent Counsel

When the economically weaker party is represented by counsel, it is that lawyer's responsibility to protect his or her client's interests.²¹ However, when the weaker party does not have counsel, counsel for the proponent must take a more active role in dealing with the other party in order to further the interest of the proponent in securing the agreement from a successful attack on validity. This is particularly important when there is a substantial disparity in economic power, and the proposed terms will perpetuate the disparity.

In Bonds v. Bonds,²² the California Supreme Court upheld a premarital agreement, finding it was voluntary notwithstanding the wife's lack of independent counsel. There was a substantial factual basis for the trial court's finding of voluntariness. The intermediate appeals court was critical of the conduct of the husband's lawyers for failing to explain to the wife that her interests conflicted with the husband's, for failing to urge her to retain independent counsel, and for explaining the agreement to the wife paragraph by paragraph, which may have misled her to think they represented both parties.²³ Similarly, in Serbus' Estate v. Serbus,²⁴ the drafting lawyer did not advise the wife to obtain separate...