Estate Planning Clients and Conflicts of Interest

March 20, 2017

By:  Olivia R. Holcombe-Volke, J.D., olivia@elvilleassociates.com, 443-393-7696

Scenario One:  Mom and Dad meet with Attorney to prepare their estate plan.  Mom and Dad intend to leave their significant wealth to their only child, Daughter.  Happy with Attorney, they advise Daughter to meet with Attorney for her own estate planning.  Daughter, upon becoming a client of Attorney, discusses her plans for using Mom and Dad’s significant wealth after inheriting it.  A year later, following a family disagreement, Mom and Dad contact Attorney to change their estate plan:  now, they wish to leave 25% to Daughter, and 75% to Daughter’s arch-nemesis and rival in the family business, Cousin.

Scenario Two:  Son #2 contacts Attorney.  Dad is experiencing some minor memory loss and confusion.  Son #2 would like Attorney to prepare estate planning documents for Dad.  Attorney determines that Dad has sufficient mental capacity to understand and execute estate planning documents.  Attorney prepares, and Dad executes, the necessary documents.  Several months later, Son #1 contacts Attorney.  Dad’s mental and physical health have gone downhill, and Son #1 wishes to seek a court-ordered guardianship over Dad’s personal and financial affairs.

Scenario Three:  Niece is named as attorney-in-fact in elderly Uncle’s power of attorney.  Nephew is named as trustee in Uncle’s revocable living trust.  Niece and Nephew seek Attorney’s assistance in various aspects of handling Uncle’s property.  At a certain point, a major expense arises.  Niece and Nephew disagree as to whether the expense should be covered, and from which source of funds.

These three scenarios have one thing in common: the potential for, or actual existence of, a conflict of interest.

At the outset, the actions taken by Mom and Dad, Sons #1 and #2, and Niece and Nephew seem so logical.  Why wouldn’t parents who are happy with their estate planning attorney recommend their adult child meet with the same attorney for estate planning?  Why wouldn’t an adult child, faced with an elderly parent’s disability, seek assistance from the elderly parent’s attorney?  Why wouldn’t family members serving in different roles under a family member’s legal documents come to the same attorney for guidance?  These situations are so innocent – how can a conflict of interest possibly arise?

For guidance, it helps to know what a “conflict of interest” is, in the context of attorney-client relationships.  The Maryland Attorneys’ Rules of Professional Conduct, codified in the Maryland Rules at Title 19, Chapter 300 (Md. Rule 19-300.1 et seq) – specifically Rule 19-301.7 – states (in pertinent part):

…(A)n attorney shall not represent a client if the representation involves a conflict of interest. A conflict of interest exists if:

(1)  the representation of one client will be directly adverse to another client; or

(2)  there is a significant risk that the representation of one or more clients will be materially limited by the attorney’s responsibilities to another client, a former client or a third person or by a personal interest of the attorney.          

Of course, in Scenarios One, Two, and Three – as in most real-life situations – the potential for a conflict of interest does not mean that an actual conflict of interest will arise.
As attorneys, we are driven to say “yes, we can help you,”
and loathe to deny assistance to anyone seeking our guidance – so it is particularly difficult to know what to do for the sake of clients or potential clients, and how best to comply with the Rules of Professional Conduct, when a situation presents itself that might result in a conflict of interest.  Even where an actual conflict of interest may exist, Rule 19-301.7 takes this into account, stating (in pertinent part):

(b)  Notwithstanding the existence of a conflict of interest under section (a) of this Rule, an attorney may represent a client if:

(1)  the attorney reasonably believes that the attorney 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 attorney in the same litigation or other proceeding before a tribunal; and

(4)  each affected client gives informed consent, confirmed in writing. 

Conflicts of interest can arise in even the most innocent of situations.  They are never intended, so the best strategy for avoiding them is for attorneys to advise clients (and potential clients) regarding how (and in what situations) conflicts can be anticipated, and in some instances, to decline the representation.

Ultimately, the mere existence of the potential for a conflict of interest does not render the attorney-client relationship impossible, so long as the requirements of informed consent under Rule 19-301.7(b) are met.