Legal Ethics Opinion #l5l5
Attorney Drafting Instrument Which Names Self Either as
Personal Representative or Trustee or Which Directs
Such Other Designee to Employ Attorney as
Fiduciary Administrator
INQUIRY:
An attorney requests the Committee to opine as to the
circumstances under which an attorney may draft an instrument in
which the client names the attorney either as executor or trustee
or which specifically directs that other persons whom the
testator/grantor/client designates as executor or trustee consult
the attorney/draftsman for legal services. Specifically, the
attorney inquires:
(l) whether there must be a pre-existing attorney-client
relationship in addition to the attorney-client
relationship arising out of the preparation of the
instrument in order for the attorney to be named as
executor or trustee or for the document to designate
that the executor or trustee engage the services of the
attorney to provide legal services;
(2) what disclosure, if any, must be made to the client by
the attorney with respect to fees that may be charged
for the attorney's service as contemplated by the
instrument and, if disclosure is required, when must
the disclosure be made;
(3) (a) whether an attorney/executor or trustee may retain
his law firm as attorney for a trust or estate for
which he is serving as fiduciary;
(b) if it is proper to retain the executor or
trustee's own law firm, what limitations exist as
to compensation for each;
(c) whether the matter must be disclosed to the
testator/grantor/client in the course of the
preparation of the instrument;
(4) whether the Code of Professional Responsibility imposes
a minimum standard of competence upon attorneys serving
as fiduciaries; and
(5) whether Virginia attorneys initiate the conversation
with their clients as to who might be an appropriate
fiduciary for the client's trust or estate or who might
provide appropriate legal counsel to the estate, and
whether the attorney may suggest his willingness to
serve as such.
OPINION:
. Draftsman as Fiduciary
Must there be a pre-existing attorney-client relationship in
addition to the attorney-client relationship arising out of the
preparation of the instrument in order for the attorney to be
named as executor or trustee or for the document to designate
that the executor or trustee engage the services of the attorney
to provide legal services and, if so, what must be the nature
and quality of that attorney/client relationship?
Although the committee is of the opinion that a pre-existing
attorney/client relationship is not required, it believes that a
significant factor concerning the appropriateness of an attorney
being named as executor or trustee in a document drafted by the
attorney is whether the attorney draftsman took advantage of his
role as draftsman to secure such a nomination for the attorney or
another member of the attorney's firm. The naming of the
executor or trustee must be an informed and fully volitional act
of the client.
Although the issue of whether or not undue influence was exerted
upon the testator/grantor by the attorney requires a factual
determination, on a case-by-case basis, which is beyond the
purview of the committee, the committee is of the opinion that
the total lack of any pre-existing attorney/client relationship
greatly enhances the potential for a finding of undue influence.
The existence, duration, and nature of any earlier relationship
would obviously mitigate such a finding because, clearly, an
attorney with knowledge of the testator's/grantor's affairs,
values, and estate would be in a position to best serve the
client's needs. See DR 5-l0l(A); H. Drinker, Legal Ethics 94
(l979)(cited in ABA Comm. on Ethics and Professional
Responsibility, Informal Dec. 602 (l963). See also Estate of
Weinstock, 386 N.Y.S.2d l (l976)(when evidence also indicates
overreaching, attorneys who named themselves as executors and who
also were strangers to testator were removed as executors);
Haynes v. First Nat'l State Bank of New Jersey, 432 A.2d 890
(N.J. l98l); Disciplinary Board v. Amundson, 297 N.W.2d 433 (N.D.
l980); and Discipline of Theodosen, 303 N.W.2d l04 (S.D. l98l).
Furthermore, while the Virginia Code of Professional
responsibility does not generally preclude in-person
solicitation, DR 2-l03(A) prohibits it under certain
circumstances and requires that the attorney take into
consideration the "physical, emotional or mental state of the
person to whom the [solicitation] communication is directed and
the circumstances in which the communication is made."
Therefore, whether or not a pre-existing attorney/client
relationship is involved, in order to minimize the appearance of
undue influence, the attorney must consider carefully the
testator's/grantor's state of mind and health before recommending
himself or a member of his firm, for future employment as
executor or trustee.
. Disclosure of Fees
What disclosure, if any, must be made to the client by the
attorney with respect to fees that may be charged for the
attorney's service as contemplated by the instrument and, if
disclosure is required, when must the disclosure be made?
The committee believes that the disciplinary rules applicable to
your second question are DR 2-l05(A), requiring, in pertinent
part, that the attorney's fees be adequately explained to the
client; DR 5-l0l(A) requiring a client's consent, after full and
adequate disclosure, to the attorney's financial interest when
that interest may affect the exercise of the attorney's
professional judgment on behalf of his client; and DR 6-l0l(C)
which requires an attorney to keep a client reasonably informed
about matters in which the attorney's services are being
rendered.
It is the committee's opinion that full disclosure of the
attorney/draftsman's potential fees as executor or trustee or
legal counsel to the estate must be made to the client, as
required by each of the pertinent disciplinary rules, prior to
the execution of the instrument. See Estate of Weinstock, 386
N.Y.S.2d l. The committee believes that the guidance articulated
in EC 2-2l is particularly pertinent in these circumstances:
As soon as feasible after a lawyer has been employed, it is
desirable that he reach a clear agreement with his client as
to the basis of the fee charges to be made....It is usually
beneficial to reduce to writing the understanding of the
parties regarding the fee....
The committee is of the further opinion that it is advisable that
the disclosure be made in written form, signed by the
testator/grantor, either in the will or trust agreement itself or
in a separate document.
Furthermore, when the attorney/draftsman or a member of his firm
is being named executor or trustee, the committee also believes
that the attorney has a duty to suggest that the client
investigate potential fees of others who might otherwise provide
such services. Finally, the committee is of the opinion that an
attorney/draftsman who contemplates charging separate fees for
investment, tax or other services, over and above the fees for
executor/trustee, must also fully disclose those separate fees.
3. Attorney/Fiduciary Retaining Own Law Firm as Attorney For
Trust/Estate
May an attorney/executor or trustee retain his law firm as
attorney for a trust or estate for which he is serving as
fiduciary? If it is proper to retain the executor or trustee's
own law firm, what limitations exist as to compensation for each?
Should this matter be disclosed to the testator/grantor/client in
the course of the preparation of the instrument?
The committee is of the opinion that the attorney named as
executor or trustee must disclose and obtain the consent of the
testator/grantor prior to the execution of the trust/will when
the attorney intends to or is considering retaining his law firm
as attorney for the trust or estate. The committee is of the
further opinion that the disclosure must include the general
compensation to be paid to the law firm. The role of the
attorney who serves as fiduciary to a trust or estate and
additionally engages his law firm as attorney for the same entity
presents a personal conflict as described by DR 5-l0l(A). In
such a situation, the attorney's own financial, business, or
personal interest may potentially affect the exercise of his
professional judgment on behalf of the trust or estate.
The committee has earlier opined that it is not per se improper
for an executor or trustee to engage his own law firm to provide
representation in legal matters relating to estate
administration. LEO #l387.
The committee believes that LEO #l353 is also relevant to the
question you raise. That opinion found that it would not be
improper for a lawyer who is employed both as Assistant General
Counsel to a corporation and as "of counsel" to a law firm to
retain the outside law firm to provide legal services to the same
corporate client. The committee did opine, however, that full
disclosure of the conflict must be made, consent from the
corporate client must be received, the lawyer must not provide
direct representation to the corporate client through the law
firm, thny of the fees received by the firm from the corporate
client, and communication between the outside law firm and the
corporation must be maintained with other directors or employees
of the corporation.
Legal Ethics Opinion #l353 dealt with a situation where the
consent of the client could be readily obtained. Clearly, if at
the time of the preparation of the document, the
attorney/draftsman/executor/trustee makes a full and adequate
disclosure of the possibility that the trustee/executor may
retain his firm as legal counsel and of the general compensation
that would be paid, and the testator/grantor/client consents,
then the personal conflict is cured. However, if the
trustee/executor did not obtain the consent of the now deceased
testator/grantor/client, either because it was not disclosed at
the time the document was drafted, or because the
executor/trustee did not draft the document, then the committee
is of the opinion that, after full and adequate disclosure, the
conflict can be cured by the consent of all the residual
beneficiaries of the estate or all of the income beneficiaries
and vested remainder beneficiaries of the trust.
. Fiduciary Competence
As a matter of ethical consideration, does the Code of
Professional Responsibility impose a minimum standard of
competence upon attorneys serving as fiduciaries?
Although the committee believes that standards for competence of
Virginia attorneys serving as fiduciaries are governed by
Virginia law and thus present a legal question beyond the purview
of the committee, the committee does direct your attention to LEO
#l325 which adopted the conclusions reached in ABA Formal Opinion
336 and found that
when an attorney assumes the responsibility of acting as a
fiduciary and violates his or her duty in a manner that
would justify disciplinary action had the relationship been
that of attorney/client, the attorney may be properly
disciplined pursuant to the [Virginia] Code of Professional
Responsibility.
Further, the committee directs your attention to DR 6-l0l(A)
which in pertinent part mandates that a lawyer should undertake
representation only in matters in which the lawyer can act with
competence and demonstrate the specific legal knowledge, skill,
efficiency, and thoroughness in preparation employed in
acceptable practice by lawyers undertaking similar matters.
Finally, the committee cautions that DR 6-l02(A) precludes a
lawyer from limiting his liability to his client for his personal
malpractice. See also LEO #l452 (an attorney/client relationship
arises between the attorney and the personal representative of an
estate, albeit for the ultimate benefit of the estate).
5. Suggestions for Fiduciaries
May Virginia attorneys initiate the conversation with their
clients as to who might be an appropriate fiduciary for the
client's trust or estate or who might provide appropriate legal
counsel to the estate, and, further, may the attorney suggest his
willingness to serve as such? Are there limitations on an
attorney's ability to solicit his designation as a fiduciary or
future legal counsel to the estate?
The committee is of the belief that DR 2-l03(A), regarding a
lawyer's solicitation of professional employment, is applicable
to the question you raise. In addition, Ethical Consideration
5-6 provides further guidance in that it instructs that
[A] lawyer should not consciously influence a client to name
him as executor, trustee, or lawyer in an instrument. In
those cases where a client wishes to name his lawyer as
such, care should be taken by the lawyer to avoid even the
appearance of impropriety.
The committee is of the opinion that, although conversation with
the testator/grantor as to the suitability of specific persons or
entities to serve as fiduciaries or legal counsel to the estate,
and recommendations that a professional fiduciary (e.g., a bank,
attorney, or accountant) would be preferable to or in addition to
a lay person in certain instances, is clearly in the nature of
appropriate legal advice to a client, the attorney's suggestion
of his own willingness to serve in those capacities would
constitute solicitation for future employment. Although the
Virginia Code of Professional Responsibility does not generally
preclude in-person solicitation, DR 2-l03(A) does, however,
prohibit it if the communication has a substantial potential for
or involves the use of overpersuasion or overreaching and
requires that the attorney take into consideration the
"sophistication regarding legal matters, [and] the physical,
emotional or mental state of the person to whom the
[solicitation] communication is directed and the circumstances in
which the communication is made." Therefore, the attorney must
consider carefully the testator's state of mind and health before
soliciting future employment as executor, trustee or legal
counsel to the estate, in order to minimize the appearance of
undue influence.
The committee is of the view that the same considerations apply
whether the document names the attorney as executor or trustee,
on the one hand, or directs that the executor/trustee whom the
client has designated engage the services of the attorney. In
addition, the same considerations would also apply to the issue
of waiving security on the executor's or trustee's bond where the
attorney or a member of the attorney's firm is designatestee.
Advice about the suitability of specific persons or entities to
serve as fiduciary should cover, in addition to competence and
personal service, matters of financial stability both for the
attorney and any agents with whom the attorney is expected to
deal.
In addition, it is especially important to review with the client
who wishes to avoid probate the availability of alternate
fiduciary review procedures. Whether or not the client elects to
remain within the probate system, the attorney in all cases
should carefully review with the client the potential
consequences of an elective waiver of security on the bond of the
fiduciary.
SUMMARY:
No previous attorney/client relationship is required before an
attorney may be named as executor or trustee in an instrument
drafted by the attorney or for the instrument to designate that
the executor or trustee consult the attorney/draftsman or his
firm to provide legal services in the administration of the
estate. However, the total lack of a pre-existing
attorney/client relationship may enhance the possibility of a
finding of undue influence. The attorney/draftsman must consider
the testator's/grantor's mental and physical health before
soliciting or accepting future employment as executor or trustee.
Full disclosure of the attorney/draftsman's potential fees as
executor or trustee or legal counsel to the estate must be made
to the client prior to the execution of the instrument. It is
advisable that the disclosure be made in written form, signed by
the testator/grantor, either in the will or trust agreement
itself or in a separate document. The attorney/draftsman has a
duty to suggest that the client investigate potential fees of
others who might otherwise provide such services. An
attorney/draftsman who contemplates charging separate fees for
investment, tax or other services, over and above the fees for
executor/trustee, must also fully disclose those separate fees.
An attorney/fiduciary executor or trustee may retain his own law
firm as attorney for the trust or estate; however, such
employment creates a personal conflict under DR 5-l0l(A) which
may be cured by the client's consent after full disclosure. If
consent was not received at the time the document was drafted,
the conflict can be cured by the consent of all the residual
beneficiaries of the estate or all the income beneficiaries and
vested remainder beneficiaries of the trust.
In the event that there are co-fiduciaries, consent must be
obtained from all such co-fiduciaries prior to the firm's taking
on representation of the estate.
Standards for competence of Virginia attorneys serving as
fiduciaries are governed by Virginia law. However, when an
attorney acts as a fiduciary and violates his or her duty in a
manner that would justify disciplinary action had the
relationship been that of attorney/client, the attorney may be
disciplined under the Code of Professional Responsibility. LEO
#l325. A lawyer should undertake representation only in matters
in which the lawyer can act with competence and demonstrate the
specific legal knowledge, skill, efficiency, and thoroughness in
preparation employed in acceptable practice by lawyers
undertaking similar matters. DR 6-l0l(A). A lawyer may not
limit his liability to his client for his personal malpractice.
DR 6-l02(A).
An attorney's suggestion to a testator/grantor of the attorney's
willingness to serve as fiduciary or legal counsel to the estate
constitutes solicitation for future employment. The attorney
must consider carefully the testator's state of mind and health
before soliciting future employment as executor, trustee or legal
counsel to the estate.
The same considerations apply to the issue of waiving security on
the executor's or trustee's bond where the attorney or a member
of the attorney's firm is designated as executor or trustee.
Advice as to the suitability of specific persons or entities to
serve as fiduciary should cover competence, personal service, and
matters of financial stability. The attorney should also review
probate and the availability of alternate fiduciary review
procedures, and the potential conseuences of an elective waiver
of security on the bond of the fiduciary.
Approved by Council
June l7, l993
Approved by Supreme Court
February 1, 1994
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