TULANE TAX INSTITUTE November 1, 2012

Westin Canal Place Hotel

New Orleans, LA

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PROFESSIONALISM IN TAX AND ESTATE PLANNING

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Richard C. Stanley Stanley, Reuter, Ross, Thornton & Alford, L.L.C. 909 Poydras Street, Suite 2500 New Orleans, Louisiana 70112

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On first looking into the Louisiana Rules of Professional Conduct, a newcomer to the

practice of trusts and successions law may conclude that there are very few ethical pitfalls for

estate planning attorneys. Other than Rule 1.8(c) – which specifically precludes a lawyer from

preparing an instrument in which the lawyer or a member of the lawyer’s family receives a gift

from the client (except in instances where the client is related to the donee) – there are no ethical

mandates specific to a successions practice. The absence of specific rules may be misleading to

the novice, but often is a source of frustration to the veteran lawyer who knows that a practice

concentrated in trusts and successions presents numerous professional and ethical questions that

are not easily resolved under the general pronouncements contained in the rules.

This paper will address several liability, professional, and ethical issues important to a

trusts and successions practice. Specifically, this paper will discuss: (1) who the succession

attorney represents, and potential issues regarding the attorney’s fee; (2) possible duties of the

succession attorney to third-party beneficiaries; and (3) potential conflict issues stemming from

the representation.

A. Determining Who You Represent and Who Is Responsible for Legal Fees

1. Who a Succession Attorney Represents

When an attorney is retained to represent a “succession,” the scope of the attorney’s

representation may not immediately be clear. Does the attorney represent the “succession” itself,

i.e., the property, rights, and obligations of the decedent? Or does the attorney represent the

succession representative (i.e., the executor), the actual person responsible for administering the

affairs of the succession?

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The Louisiana Supreme Court addressed this question head-on in Succession of Wallace,

574 So. 2d 348 (La. 1991), finding that an attorney retained by a succession actually represents

the succession representative, rather than the succession itself. The heart of Wallace concerned a

conflict between a rule of professional conduct that allowed a client to discharge a lawyer at any

time, with or without cause, and a newly-enacted statute that allowed an executor to discharge an

attorney designated in the testator’s will only for “just cause.” Id. at 349. In the process of

holding the statute unconstitutional, the Court commented on the relationship between a

succession and the succession’s attorney, noting, “That an attorney who renders legal services in

furtherance of the administration of a testate succession is acting as the attorney for the executor

conducting that administration seems self-evident. The decisions of this court . . . indicate that

regardless of who names the attorney, he becomes the executor’s attorney when he advises and

assists the executor in the management of the estate.” Id. at 355. Later in the opinion, the Court

restated this position more forcefully, opining that “it is universally held that when an attorney is

employed to render services in procuring the admission of a will to probate, or in settling the

estate, he acts as attorney of the executor, and not of the estate, and for his services the executor

is personally responsible.” Id. at 357. The Court noted that under Louisiana law, a succession is

defined as a process (the transmission of the estate of the deceased to his successors), rather than

as a distinct legal entity; so representation by an attorney of a “succession,” as such, is not

possible. Id. at 358 (citing La. Civ. Code arts. 871–872).

However, in so concluding, the Court reasoned that “it is difficult to imagine any

valuable legal service that a lawyer could render for the testate succession that would not also aid

the executor in the performance of his broad duties.” Id. at 356. Therefore, implicit in the

Wallace Court’s decision is that the interests of the succession and succession representative are

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aligned because the succession representative is “the majordomo of the estate, having possession

of all its property as well as the power and the responsibility to preserve its assets and enforce its

claims.” Id. at 357. This begs the question: To whom does an attorney owe his or her loyalty if

the interests of the succession and the succession representative conflict? Should the attorney

advance the interests of the succession representative, whom the attorney technically represents,

or the heirs and legatees, who are the ultimate beneficiaries of the succession? The Louisiana

jurisprudence has yet to resolve this important question, leaving attorneys retained to represent a

succession with a professional quandary, and perhaps an ethical one too.

2. Whether Court Approval Is Needed To Collect an Attorney Fee

A related question is whether an attorney who has provided valuable legal services to a

succession needs to secure approval from the court before he or she may collect a legal fee from

the succession representative. The starting point for this analysis is Louisiana Code of Civil

Procedure article 3301, which provides generally that “[a] succession representative may pay an

estate debt only with the authorization of the court.” What constitutes an “estate debt” is not

defined in the article; the article appears to be broad in scope, with comment (b) to Article 3301

noting only that “[t]hese articles do not apply to the payment of debts incurred in the operation of

a business owned by a succession.” But attorney fees, which are earned by the succession’s

attorney for valuable legal services performed after the decedent’s death, might seem at first

glance to fall outside the traditionally understood meaning of an “estate debt,” that is, debts

incurred by the decedent before his or her death. Does an attorney, then, need to seek a court’s

approval just to receive payment for services already rendered?

The Wallace Court seems to already have answered this question in the affirmative, at

least in passing. Rebutting an argument by the respondent that the deceased testator, rather than

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the succession representative, is the true client of an attorney for the succession, the Court noted

that “it is the executor’s duty to pay the lawyer’s fee with succession funds as a debt of the

succession.” Wallace, 574 So. 2d at 359 (emphasis added). Thus, the Wallace Court seems to

have viewed attorney fees as an “estate debt” whose payment is subject to court approval under

Louisiana Code of Civil Procedure article 3301. Furthermore, at least two subsequent Louisiana

appellate court decisions have affirmed this view. In Succession of McLean, 26,566 (La. App. 2

Cir. 3/1/95), 651 So. 2d 920, the Louisiana Second Circuit noted, while ruling upon the propriety

of an attorney fee award, noted that “[s]uch fees, in reasonable amounts, are clearly legitimate

succession debts. The succession representative who seeks court approval to pay such fees must,

however, meet a threshold burden of establishing the basis and amount of the fees, just as she

would be required to do to obtain court approval to pay other debts or charges of the succession.”

McLean, 651 So. 2d at 929. The Louisiana Fourth Circuit later quoted the McLean court’s

position with approval in Succession of Sporl, 2004-1373 (La. App. 4 Cir. 4/6/05), 900 So. 2d

1054, 1062–63, in the course of invalidating an excessive attorney fee award paid to outside

counsel by the succession representative.

It thus seems that attorney fees are debts of the succession that require court approval

before being paid out by the succession representative, just as any other estate debt. An attorney

should be mindful of this caveat before agreeing to undertake representation in a succession

proceeding. If an estate is low on assets, or if the estate accumulates an excessive amount of

expenses after the decedent’s death, then a court may be reluctant to approve a large attorney fee

award. This, in turn, could lead to a succession attorney being uncompensated or

undercompensated for many hours spent providing legitimate and useful legal services.

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B. Duties to Third-Party Beneficiaries

1. Safekeeping of Property Under Rule 1.15

Oftentimes a lawyer representing a succession will find himself or herself in possession

of property of the succession, tasked with keeping the property safe pending distribution of the

property to the heirs and legatees of the decedent. In this circumstance, what duties does the

attorney owe in connection with the property, both to the attorney’s client and to other

beneficiaries of the decedent’s will?

The lawyer’s basic duties in this situation are governed by Louisiana Rule of Professional

Conduct 1.15, which deals generally with the safekeeping of property. Rule 1.15(a) provides, “A

lawyer shall hold property of clients or third persons that is in a lawyer’s possession in

connection with a representation separate from the lawyer’s own property. . . . Complete records

of such account funds and other property shall be kept by the lawyer and shall be preserved for a

period of five years after termination of the representation.” And Rule 1.15(d) states, “Upon

receiving funds or other property in which a client or third person has an interest, a lawyer shall

promptly notify the client or third person. . . . [A] lawyer shall promptly deliver to the client or

third person any funds or other property that the client or third person is entitled to receive and,

upon request by the client or third person, shall promptly render a full accounting regarding such

property.”

Given that the Louisiana Rules of Professional Conduct apply generally to the practice of

law in this State, there is no reason to think that they would not apply to an attorney who is

safeguarding the property of an heir or legatee to a succession – even if that heir or legatee is not

the attorney’s client – because ownership of the decedent’s property is immediately transmitted

to the heirs and legatees upon the decedent’s death. See La. Civ. Code art. 935. Indeed,

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Comment 1 to ABA Model Rule 1.15 (upon which Louisiana Rule 1.15 is based) expressly

contemplates this scenario, noting that “[s]eparate trust accounts may be warranted when

administering estate monies or acting in similar fiduciary capacities.”

Attorneys representing a succession should be mindful of their duties under Rule 1.15, as

failure to attend to those duties can result in disciplinary sanctions. Numerous reported

Louisiana Supreme Court decisions have disciplined attorneys for failing to properly manage

property of the succession. See, e.g., In re Lee, 2011-2530 (La. 4/13/12), 85 So. 3d 74

(sanctioning an attorney for, inter alia, failing to distribute savings from a bill reduction to the

co-executrixes, in violation of Rule 1.15(b)); In re Cooper, 2009-1848 (La. 12/11/09), 23 So. 3d

886 (permanently disbarring an attorney for, inter alia, failing to distribute succession proceeds

to the decedent’s heirs); In re Simpson, 2007-0070 (La. 6/29/07), 959 So. 2d 836 (sanctioning an

attorney for, inter alia, improperly withholding an attorney fee from succession funds due to the

decedent’s heirs). Succession attorneys should make every effort to keep succession property

separate from other property in the attorney’s custody, to maintain accurate and complete records

of the succession property, and to promptly distribute to the heirs and legatees any property of

the succession that is due to them.

2. Potential Liability Under Penalber

Another important question for an attorney representing a succession is what sort of

liability the attorney could be subject to for breach of the attorney’s duties, both to the attorney’s

client and to others. Could the attorney be liable to someone who is not the attorney’s client but

who nevertheless stands to benefit from the representation, such as an heir or legatee? The

answer to this question could determine whether an attorney agrees to represent a succession in

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the first place, as the risk from being potentially liable to numerous heirs and/or legatees might

outweigh any financial gain that the attorney stands to make from the representation.

The Louisiana Supreme Court addressed this issue, in at least one context, in the oft-cited

case of Penalber v. Blount, 550 So. 2d 577 (La. 1989). Penalber concerned an alleged wrongful

seizure by an attorney of oil and gas revenues belonging to a parish police jury, in violation of

the Louisiana Constitution and statutory law, where the police jury was not the attorney’s client.

Id. at 577–78. The issue before the Court was whether the non-client had a cause of action

against the opposing attorney, either under a negligence theory or under an intentional tort

theory, for the wrongful seizure of the revenues. Id. at 578. At the outset, the Court noted that

“Louisiana subscribes to the traditional, majority view that an attorney does not owe a legal duty

to his client’s adversary when acting in his client’s behalf. . . . A non-client, therefore, generally

cannot hold his adversary’s attorney personally liable for either malpractice or negligent breach

of a professional obligation.” Id. at 581. But the Court went on to remark, “Intentionally

tortious actions, ostensibly performed for a client’s benefit, will not shroud an attorney with

immunity. Consequently, even though an attorney does not generally owe a duty to his client’s

adversary, . . . an attorney may be held personally accountable for his intentional tortious

conduct . . . .” Id. at 582. Penalber has been since been upheld by the Louisiana Supreme Court

in more recent opinions. Scheffler v. Adams & Reese, LLP, 2006-1774 (La. 2/22/07), 950 So. 2d

641, 652; Montalvo v. Sondes, 93-2813 (La. 5/23/94), 637 So. 2d 127, 130.

Thus, while the Penalber Court held that a non-client generally did not have a cause of

action against the attorney of the non-client’s adversary for actions by the attorney related to the

representation, the Court left open an exception for when the attorney was using the

representation as a pretense for intentionally harming the non-client third party. But the

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Penalber Court expressly declined to address the situation where the non-client was not

adversarial to the attorney but was instead a third-party beneficiary: “This opinion does not

address situations where the non-client is not an adversary, but a third-party beneficiary.” Id. at

578 n.2.

The Penalber opinion therefore leaves open two questions in the context of estate

planning: under what circumstances an heir or legatee to a will can be considered “adversarial”

to the succession representative, and whether a non-adversarial heir or legatee can have any

cause of action against the succession representative’s attorney for breach of the attorney’s

duties. The state circuit courts have split on the second question, although the majority of the

decisions have allowed the legatee or heir to sue the succession attorney despite the lack of

contractual privity between the attorney and the non-client. See Desire Narcotics Rehab. Ctr.,

Inc. v. White, 97-2758 (La. App. 4 Cir. 4/14/99), 732 So. 2d 144, 146 (legatee is third-party

beneficiary who has cause of action against attorney who prepared will in the event the will is

invalid); Anderson v. Collins, 26,142 (La. App. 2 Cir. 1/6/95), 648 So. 2d 1371, 1378

(presumptive heir could have cause of action against attorney administering succession, despite

lack of attorney–client privity); Succession of Killingsworth, 270 So. 2d 196, 205 (La. Ct. App.

1st 1972) (allowing a third-party legatee to sue the succession attorney under Louisiana Civil

Code article 2315), aff’d in part and rev’d in part on other grounds, 292 So. 2d 536 (La. 1973);

Woodfork v. Sanders, 248 So. 2d 419, 425 (La. Ct. App. 2d 1971) (allowing a third-party legatee

to sue the succession attorney under a stipulation pour autrui theory). But see Costello v. Hardy,

02-1156 (La. App. 5 Cir. 3/25/03), 844 So. 2d 212, 215 (upholding a privity defense in granting

summary judgment against a presumptive heir in a legal malpractice suit), aff’d in part, rev’d in

part on other grounds, 2003-1146 (La. 1/21/04), 864 So. 2d 129. Due to the unsettled nature of

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these issues, the succession attorney should be cautious when undertaking a representation where

the attorney suspects that an heir or legatee may become hostile to the interests of the succession

as a whole.

3. Time Limitations on Legal Malpractice Actions

As with other attorneys, those attorneys who are asked to represent a succession will

want to know what sort of potential liability they would expose themselves to by undertaking the

representation. Part of this risk–reward analysis entails knowing how long an aggrieved client or

third party would have to bring a malpractice suit against the succession attorney.

First enacted in 1990 and most recently amended in 1992, La. Rev. Stat. § 9:5605

governs the limitations periods for legal malpractice actions in Louisiana. The statute provides:

A. No action for damages against any attorney at law duly admitted to practice in this state, any partnership of such attorneys at law, or any professional corporation, company, organization, association, enterprise, or other commercial business or professional combination authorized by the laws of this state to engage in the practice of law, whether based upon tort, or breach of contract, or otherwise, arising out of an engagement to provide legal services shall be brought unless filed in a court of competent jurisdiction and proper venue within one year from the date of the alleged act, omission, or neglect, or within one year from the date that the alleged act, omission, or neglect is discovered or should have been discovered; however, even as to actions filed within one year from the date of such discovery, in all events such actions shall be filed at the latest within three years from the date of the alleged act, omission, or neglect. B. The provisions of this Section are remedial and apply to all causes of action without regard to the date when the alleged act, omission, or neglect occurred. However, with respect to any alleged act, omission, or neglect occurring prior to September 7, 1990, actions must, in all events, be filed in a court of competent jurisdiction and proper venue on or before September 7, 1993, without regard to the date of discovery of the alleged act, omission, or neglect. The one-year and three-year periods of limitation provided in Subsection A of this Section are peremptive periods within the meaning of Civil Code Article 3458 and, in accordance with Civil Code Article 3461, may not be renounced, interrupted, or suspended.

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C. Notwithstanding any other law to the contrary, in all actions brought in this state against any attorney at law duly admitted to practice in this state, any partnership of such attorneys at law, or any professional law corporation, company, organization, association, enterprise, or other commercial business or professional combination authorized by the laws of this state to engage in the practice of law, the prescriptive and peremptive period shall be governed exclusively by this Section. D. The provisions of this Section shall apply to all persons whether or not infirm or under disability of any kind and including minors and interdicts. E. The peremptive period provided in Subsection A of this Section shall not apply in cases of fraud, as defined in Civil Code Article 1953.

This statute has been the subject of much litigation since it was enacted. Questions

concerning the statute included how many limitations periods the statute sets out, whether those

limitations periods are prescriptive or peremptive, and under what circumstances the periods can

be suspended, interrupted, or otherwise modified, as well as the statute’s constitutionality. The

Louisiana Supreme Court most recently considered the terms of La. Rev. Stat. § 9:5605 earlier

this year, in Jenkins v. Starns, 2011-1170 (La. 1/24/12), 85 So. 3d 612. According to the Jenkins

Court, the statute sets forth three limitations periods for legal malpractice actions: a one-year

period from the date of the act, neglect, or omission; a one-year period from the date of

discovery of the act, neglect, or omission; and a three-year period from the date of the act,

neglect, or omission when the malpractice is discovered after the date of the act, neglect, or

omission.1 Id. at 626. Pursuant to the plain language of the statute, all three of these periods are

1 There has been some confusion in the jurisprudence over whether the peremptive periods begin to run from the date of the actual negligent act, as the language of the statute indicates (and as most decisions have held), or whether they begin to run from the time the plaintiff actually sustains damage as a result of the attorney’s negligence (the “appreciable harm” test), which is arguably more equitable. Compare Reeder v. North, 97-0239 (La. 10/21/97), 701 So. 2d 1291, 1296 (peremptive periods commence from date of negligent act), with Leger v. Weinstein, 2003-1497 (La. App. 3 Cir. 10/27/04), 885 So. 2d 701, 707 (peremptive periods commence from date of appreciable harm). Recently, however, the Jenkins Court quoted, with apparent approval, an

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peremptive, meaning they cannot be renounced, suspended, interrupted, or otherwise modified.

Id. And due to the peremptive nature of these periods, they are not subject to the “continuous

representation” rule, which would otherwise operate to suspend the running of the periods while

the attorney continued to provide legal representation to the aggrieved client. Id. The

constitutionality of § 9:5605 has been upheld in the face of several legal challenges. Jones v.

Arias, 2010-0165 (La. App. 4 Cir. 12/9/10), 2010 WL 8972257; Needom v. Robein, 2008-0318

(La. App. 4 Cir. 2/18/09), 7 So. 3d 30.

In essence, then, a succession attorney is only exposed to a potential malpractice suit

from an aggrieved client or third party for a maximum of three years from the date of the alleged

negligent act, and potentially even sooner if the alleged negligence is discovered beforehand so

as to trigger the one-year peremptive period. This relatively short period of exposure provides

some degree of security to the succession attorney, who need not fear a legal malpractice action

being brought decades after the attorney finished work on the matter. See, e.g., Davis v. Conroy,

09-142 (La. App. 5 Cir. 10/13/09), 27 So. 3d 869 (client’s malpractice claim against succession

attorney was perempted under 9:5605); Strahan v. Maytag Corp., 1999-0869 (La. App. 4 Cir.

4/5/00), 760 So. 2d 463 (same). As with all other legal matters, however, the safer approach for

the succession attorney is to execute his or her duties with the utmost degree of care and

diligence, so as to minimize the risk of a malpractice suit being brought in the first place.

earlier, pre-9:5605 Louisiana Supreme Court decision holding that “[u]ntil the client suffers appreciable harm as a consequence of his attorney’s negligence, the client cannot establish a cause of action for malpractice.” Jenkins, 85 So. 3d at 622 n.4 (quoting Braud v. New England Ins. Co., 576 So. 2d 466, 468 (La. 1991)). This may suggest that the “appreciable harm” test determines the commencement of the peremptive periods for legal malpractice claims, despite the literal language of 9:5605 and despite the Court’s apparent decision to the contrary in Reeder.

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C. Representing a Husband and Wife in the Planning of Their Estates

Attorneys are often called upon to represent both a husband and wife in the planning of

their estates. This method of estate planning has numerous benefits for spouses, such as

minimizing legal costs and taking advantage of pooled resources and information. However, this

method of estate planning also presumes that the couples’ interests will be aligned. But what if

they are not? Can the attorney undertake the representation, and whose decision is it whether the

attorney can do so? And what if the spouses’ interests appear to be aligned initially, but diverge

after the representation has begun? What if one spouse reveals a confidence to the attorney?

Must he reveal the confidence to the other spouse? As we shall see below, the answer to these

pressing questions is not always clear.

1. The different methods for representing spouses in the planning of their estates: joint vs. separate representation types

There are two possible methods of representation when an attorney represents both a

husband and wife in the planning of their estates – joint representation and separate

representation.

In a joint representation, the attorney represents the husband and wife jointly, as opposed

to individually, to implement a coordinated estate plan. David P. Dunning & Michael V.

Bourland, Ethical Issues and Conflicts of Interest for the Estate Planning Professional, SR002

ALI-ABA 903, 914 (2009). Joint representation is premised upon the idea that the spouses will

agree on most points, or will have independently owned property rights that do not require

agreement. See Report of the Special Study Committee on Professional Responsibility,

Comments and Recommendations on the Lawyer’s Duties in Representing Husband and Wife, 28

Real Prop., Prob. & Tr. J., 765, 771 (1994). In a joint representation, there are no confidences

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between the parties, and any information relevant to the representation provided to the attorney

by one spouse must be disclosed to the other. Id. at 914-15. Critics of joint representation argue

that this open policy discourages spouses from confiding in the attorney, thereby preventing

them from obtaining the best and most comprehensive advice. Id. at 915. In spite of this

inherent limitation, joint representation is the most popular method by which spouses plan their

estates. Id.

In a separate representation, the attorney represents the husband and wife individually,

and each is considered a separate and distinct client. Id. As such, the attorney is not permitted to

disclose any information provided by one spouse to the other. Id. This creates an obvious

conflict of interest problem for the attorney: by withholding the information, the attorney may be

depriving one client of information crucial to formulating his or her estate plan, thereby

potentially violating his duties of loyalty and diligence. John R. Price, In Honor of Professor

John Gaubatz: The Fundamentals of Ethically Representing Multiple Clients in Estate Planning,

62 U. Miami L. Rev. 735, 750-51 (2008). On the other hand, if the attorney reveals the

information, he has plainly violated his duty of confidentiality to the revealing spouse. Id.

Because of these differences, the attorney should consult with each of the spouses about

the implications of joint vs. separate representation, including the risks and benefits, prior to

undertaking the representation. Michael V. Bourland & David P. Dunning, An Estate Planning

Lawyer’s Perspective, 15-DEC Prob. & Prop. 33, 35 (2001). The attorney should explain how

his role in a joint or separate representation will differ from the traditional role of an attorney as

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partisan advocate, especially with regards to confidentiality. Id. Most importantly, the consent

should be in a format that is easily understood by the parties.2

Regardless of whether the representation is joint or separate, whether the attorney can

represent both spouses is determined by Louisiana Rule of Professional Conduct (“LRPC”) Rule

1.7 (“Rule 1.7”).

2. Determining whether to represent spouses in the planning of their estates Rule 1.7 sets the standard for determining whether a potentially disqualifying conflict

exists in the representation of multiple parties, and whether the attorney may represent the parties

in spite of the conflict. Under Rule 1.7, a potentially disqualifying conflict (“concurrent

conflict”) exists if (1) his representation of one of the spouses will be directly adverse to the

other or (2) there is a serious risk that his responsibilities to one spouse will be materially limited

by his obligations to the other. La. R. Prof’l Conduct 1.7 (2012). Generally, conflicts

implicating Rule 1.7 are those on which only one spouse can succeed, for instance, whether

certain property will be classified as community or separate; conflicts involving a spouse’s

plainly separate property do not. See Report of the Special Study Committee, supra at 781.

Therefore, the attorney must consult with the spouses prior to the representation to determine the

spouses’ individual objectives and concerns regarding their estates. Price, supra, at 752-53.

Only then can the attorney make an educated, albeit subjective assessment, as to whether the

representation will result in a concurrent conflict.

If, after consulting with the spouses, the attorney determines that no concurrent conflict

exists, he can undertake the representation without the need to obtain the spouses’ written

2 Id. A sample conflict waiver can be found at 3 Am. Jur. Legal Forms 2d § 30.28, Estate Planning – Joint Representation Disclosure and Consent (2010).

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consent. If, however, the attorney determines that a concurrent conflict exists, the attorney may

nonetheless represent the spouses if he reasonably believes that he will be able to provide

competent and diligent representation to each spouse and each of the spouses gives informed

consent waiving the conflict, in writing.

If the attorney believes a conflict exists or may arise, he should obtain the spouses’

written consent waiving the conflict. Ethical Issues, supra at 915. Whether a conflict exists, and

whether it potentially implicates Rule 1.7, is often a fact-intensive and subjective inquiry. As

such, the attorney should discuss any reasonably material conflict with the spouses and ask that

they consent to the potential conflict before beginning the representation. And though the

decision of what type of representation to undertake ultimately rests with the couple, the attorney

must make an independent assessment of whether and to what extent the couples’ interests may

diverge to determine whether he may ethically represent both parties. Id.

3. Determining whether to withdraw from representation

The attorney’s ethical obligations under Rule 1.7 do not end at the commencement of the

representation, and the attorney must stay diligent in anticipating and detecting conflicts. If, at

any point during the representation, a conflict arises, the attorney must reassess whether he can

diligently and competently represent the spouses. Price, supra, at 753. If the couple has already

signed a conflict waiver, the attorney must determine whether the waiver applies to the particular

conflict in question. Id. If the spouses have not previously waived the conflict, the attorney

must again consult with them, inform them of the conflict and its implications, and obtain their

written consent waiving the conflict in order to continue representation. If the attorney

determines that he cannot diligently and competently represent both spouses or the spouses do

not agree to waive the conflict, he must withdraw from the representation, provided that he

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complies with LRPC Rule 1.16(b) and obtains the court’s approval to terminate the

representation under Rule 1.16(c).

4. The problem of confidentiality when representing spouses in estate planning

In the context of joint representation, no ethical dilemma is as common (and as thorny) as

the issue of confidentiality. For example, what must an attorney do if one spouse reveals

confidential information and instructs the attorney not to tell the other spouse? If the attorney is

engaged in a separate representation, his ethical obligation is clear: he may not disclose the

information to the other spouse. In addition, the attorney has no duty to withdraw from the

representation unless and until the parties’ interests actually become adverse, and even then, only

if the spouses do not consent to continued representation. Recommendations, supra at 794.

In a joint representation, however, the attorney’s ethical obligations are more

complicated. First, the attorney must determine if the revealed confidence is one which

implicates Rule 1.7. Id. If so, the attorney must determine whether he can continue

representation and must obtain a conflict waiver from the couple to continue the representation,

regardless of whether the information is revealed to the other spouse. Id. If the lawyer’s

representation would create a serious risk of a future, material conflict, the attorney must

withdraw “unless each spouse makes a knowing consent to the representation pursuant to Rule

1.7” or “withdrawal would result in disclosure.” Id. at 790. In obtaining a conflict waiver, the

attorney must walk a fine line between revealing enough information to allow the non-revealing

spouse to make an informed decision regarding the conflict, while at the same time, withholding

enough information to ensure that he does not violate his duty of confidentiality to the revealing

spouse.

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The attorney also must decide whether to reveal the confidence to the other spouse. In

making this assessment, the attorney “must balance the potential for material harm to the

confiding spouse caused by disclosure against the potential for material harm to the other spouse

caused by failure to disclose.” Recommendations, supra at 787. If “the potential for harm from

disclosure is greater than the potential for harm from the failure to disclose, the lawyer should

refrain from disclosure, unless the confiding spouse consents to the disclosure. If the potential

for harm from failure to disclose is greater, the lawyer should first seek consent from the

confiding spouse” before disclosing the information. Id. According to the Recommendations,

however, the decision to disclose is simply a matter of the attorney’s conscience, and the

attorney is not required to disclose the confidence to the other spouse. Id.

5. Representing an Estate Administrator or Trustee

An attorney owes a number of duties to his client, including to zealously pursue the best

interests of his client with diligence and undivided loyalty. An attorney who fails to perform

those duties may find himself being sued for malpractice by his client or subject to disciplinary

proceedings. Therefore, it is vital for the attorney to know to whom he owes these duties.

However, as we saw in the context of representing a husband and wife in the planning of their

estates, identifying one’s client, or determining what duties the attorney owes, is not always as

simple as it sounds. For instance, when an attorney represents an estate administrator or trustee,

who is his client? According to one view, the client is the administrator or trustee, individually.

Ellen J. Burnett, Elizabeth J. Cohen & Martin Whittaker, Center for Professional Responsibility,

American Bar Association 123, Annotated Model Rules of Professional Conduct (7th ed. 2011).

Under this view, the attorney owes the administrator or trustee a duty to zealously pursue the

administrator’s or trustee’s interests to exclusion of others. For example, if an attorney is

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representing an administrator who is entitled to some portion of the estate, the attorney should try

to maximize the administrator’s share, and to ensure that the distribution is approved by the

Court, without reference to the interests of the other beneficiaries. However, under another view,

the client is not the administrator or representative, individually, but the estate or trust, including

its beneficiaries. Id. Under this view, the attorney would have a duty to zealously advance the

interests of all the trust’s beneficiaries.

Under Louisiana law, when an attorney represents the administrator of an estate or a

trustee, the administrator or trustee, and not the estate or trust, is the attorney’s client.

Succession of Wallace, 574 So. 2d 348, 355, 357 (La. 1991). However, with the prevalence of

“family lawyers,” an administrator or trustee may also have formed attorney-client relationship

with the estate’s or trust’s beneficiaries as part of another transaction. See, e.g., Morse v. Clark,

890 So. 2d 496 (Fla. Dist. Ct. App. 2004) (disqualifying a law firm from representing a living

trust in probate proceedings because law firm already represented the assignee of intestate heirs

in unrelated matters; interest in upholding the validity of living trust was directly adverse to

heirs’ interest in maximizing the estate). In such cases, the attorney must be certain to perform

his due diligence to identify the beneficiaries that may also qualify as a client, to ensure that a

potentially disqualifying conflict does not exist.

Even if the attorney has not specifically represented a beneficiary, he may run into ethical

problems. For example, oftentimes, when a “family lawyer” drafts trust documents, the trustee

will name the lawyer to represent the trustee. As a result, the beneficiaries for whom the trust

was drafted may be unaware that they are not the attorney’s client. Joel C. Dobris, Ethical

Problems for Lawyers Upon Trust Terminations: Conflicts of Interest, 38 U. Miami L. Rev. 1, 2

(1983). This can result in conflict and a loss of trust between the attorney and the “family” who

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he ostensibly represents. Accordingly, an attorney who is hired to represent an administrator or

trustee should inform the beneficiaries that they are not technically his client as a matter of

professionalism, even though he has no ethical obligation to do so.

But what if the attorney plainly does not have an attorney-client relationship with a

beneficiary of the estate or trust? Does the attorney have any duties towards the beneficiaries?

Again, as the administrator’s or trustee’s attorney, the attorney is obligated to pursue the best

interests of his client. However, in determining what is in the client’s best interest, the attorney

must also bear in mind the administrator’s or trustee’s responsibilities to third parties.

Under Louisiana law, an administrator “is a fiduciary with respect to the succession, and

shall have the duty of collecting, preserving, and managing the property of the succession” and

must “act at all times as a prudent administrator, and shall be personally responsible for all

damages resulting from his failure to act.” La. C.C.P. art. 3191. To that end, the administrator

must ensure that the estate is equitably divided among the beneficiaries, and may not attempt to

obtain a larger share of the estate than is permitted by law. Similarly, a trust has a duty to

“administer the trust solely in the interest of the beneficiary,” and has a duty to “take, keep

control of, and preserve the trust property.” La. R.S. 9:2082; La. R.S. 9:2091. Moreover, if the

administrator or trustee is found to have mismanaged the estate or trust, he may be removed and

forced to pay damages. La. C.C.P. art. 3191. Clearly, there are very serious consequences for an

administrator or trustee who seeks his own interest to the detriment of his beneficiaries.

Therefore, when advising an administrator or trustee, an attorney must counsel the

administrator or trustee in a way that respects and remains mindful of these duties. If the

administrator has an obligation to ensure that he equitably divides the estate, the attorney must be

aware of that duty and should not counsel the client to seek a larger portion of the estate, even

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though it may be in the client’s individual best interest. Similarly, because trustees may not

engage in self-dealing with regards to trust property, an attorney representing the trustee should

counsel the client not to purchase trust property at a discounted rate, or similar action, no matter

how advantageous it would be to his client. La. R.S. 9:2085. See La. R.S. § 9:2087 (stating that

if a trustee delegates the performance of any function, the agent owe a duty to the beneficiaries to

exercise reasonable care and skill and that any agreement between the trustee and agent is void

as against public policy). Only by understanding his client’s obligations to the estate’s or trust’s

beneficiaries can the attorney perform his role professionally and free of ethical pitfalls.