J. Anthony McLain, J.
Representation of an Estate and Client Identity
When a lawyer is retained to assist in the administration or probate of an estate, whom does the lawyer represent?
What is a lawyer’s ethical responsibility when he discovers that the personal representative has misappropriated estate funds or property?
Generally, the lawyer represents the individual who hired him to assist in the administration or probate of the estate. If that person has only one role and is not a fiduciary, the lawyer represents only that person, unless the client and lawyer agree otherwise. If the person is the personal representative,1 the lawyer represents the personal representative individually, unless the personal representative and lawyer agree otherwise. The lawyer must be careful not to, either by affirmative action or omission, give the impression that he also represents the beneficiaries of the estate. As a result, if the client is the personal representative only, the lawyer must advise the heirs and devisees (“beneficiaries”) and other interested parties in the estate known to the lawyer that the lawyer’s only client is the personal representative in order to avoid violating Rule 4.3.2 A lawyer must comply with certain duties upon undertaking representation of a fiduciary or risk violating certain rules of professional conduct. If the lawyer failed to give such notice, it could be found that he has undertaken to represent both the fiduciary and the beneficiaries of the estate.
When a lawyer has actual knowledge that the personal representative has misappropriated estate funds, the lawyer’s first duty is to remonstrate with the personal representative in an effort to convince the personal representative to either replace the misappropriated funds or to inform the court of the personal representative’s misappropriation. If the personal representative refuses to do so, the lawyer should withdraw from the matter and, upon withdrawal, ask the court to order an accounting of the estate.
The Office of General Counsel frequently receives telephone calls from lawyers requesting ethics opinions concerning the representation of an estate. In explaining the ethical dilemma the lawyer is facing, the lawyer often refers to himself as “representing the estate.” The lawyer then goes on to describe a situation in which the interests of the estate or the fiduciary for the estate or a beneficiary may be in conflict. Oftentimes, whether a conflict of interest exists is entirely dependent on whom the lawyer actually represents in regard to the estate. Additionally, the bar sometimes receives complaints filed against the lawyer by the beneficiaries of the estate or the fiduciary of the estate. In those cases, identifying the true client will often determine whether the lawyer has breached any ethical duties. As a result, defining the lawyer’s actual client in an estate or probate matter is critical in determining whether a conflict of interest may exist and what duties a lawyer owes to the fiduciary and beneficiaries of the estate.
The Disciplinary Commission has never directly addressed the issue of whom the lawyer represents when assisting in the administration or probate of an estate. At best, the Disciplinary Commission indirectly addressed the issue in RO 1989-105, wherein the Disciplinary Commission was asked to provide a formal opinion on a lawyer’s ethical duties when an executrix absconded with the assets of the estate. In that situation, the lawyer prepared a will for a client who subsequently died. Upon the client’s death, the lawyer was asked by the deceased client’s widow to probate her husband’s will which named her as executrix. The testator was survived by his widow, an adult son and a minor son. After the lawyer assisted t he executrix in collecting the assets of the estate, including cash, the executrix moved to Tennessee, taking with her the cash assets of the estate. Thereafter, the executrix refused to communicate any further with the lawyer. The lawyer requested an opinion as to whether he could disclose the executrix’s actions to the other beneficiaries of the estate or to the court.
Relying on the former Code of Professional Responsibility, the Disciplinary Commission opined that the lawyer should first call upon the client to rectify the fraud and, if the client refused, then the lawyer should withdraw from the matter. The Disciplinary Commission went on to state that under the disciplinary rules, the lawyer had an obligation not to disclose the confidences and secrets of the client. Therefore, the lawyer could not disclose the executrix’s apparent fraud to the beneficiaries or the court. While not directly addressing the issue of client identity, it is clear that the Disciplinary Commission considered the executrix to be the lawyer’s sole client.
The Disciplinary Commission is also aware that the Office of General Counsel has given recent informal opinions concerning this issue. In their informal opinions, the Office of General Counsel has opined that the client is the estate. The lawyer represents the estate by acting for and through the fiduciary of the estate for the ultimate benefit of the beneficiaries of the estate. Because the lawyer is retained by the personal representative to represent the estate and because the personal representative is legally required to serve the beneficiaries, the lawyer also has an obligation to the beneficiaries. This relationship has been characterized as one where the fiduciary is not the only client, but merely the “primary client,” while the beneficiary is the “derivative client.” In some situations where there is a sole beneficiary of the estate, that beneficiary (ostensibly a non-client) may be entitled to the loyalty of the lawyer to much the same extent as the fiduciary.
In light of the lack of clarity as to the identity of the true client and the lawyer’s resulting professional responsibilities, the Disciplinary Commission has determined that it is necessary to issue a formal opinion on the matter in order to provide greater guidance to lawyers practicing in the area of estates and trusts.
There are three theories regarding the identity of the client when a lawyer handles an estate. The American Bar Association in Formal Opinion 94-380 recognized that the majority view is that the lawyer represents only the personal representative or fiduciary of the estate and not the beneficiaries of the estate, either jointly or individually. In reaching a similar conclusion, a number of other state bars have relied, in part, on state law that indicated that an estate is not a separate legal entity. In Ethics Opinion No. 91-2, the Alaska State Bar noted that an estate is “for probate purposes a collection of assets rather than an organization, and is not an entity involved in the probate proceedings.”3...