In our zeal to build a book of business, there may sometimes be a temptation, when a potential client presents at our door, reflexively to say “yes” without adequately assessing possible negative consequences. However, there are several client intake considerations that should be examined carefully before accepting a new client engagement.
Client Desirability
A given prospective client may simply be a person you’d be better off not representing. There are several indicators of possible problems, and, on reflection, you may conclude you just don’t want to deal with those problems. Are you the latest in a succession of lawyers or other professional service providers? Does the prospective client display a belligerent attitude? Is the prospective client overtly peculiar or eccentric? Does the prospective client appear to have an unusually controlling personality? When you raise the subject of fees and explain how you propose to charge for services rendered, does that discussion engender a resistant or even hostile reaction?
Meeting Clients’ Needs
In a complex and rapidly changing area of law such as estate planning, the duty of competence, and its related duty of diligence, should be of primary concern.1 Estate planning is a multi-faceted area of practice, and not many of us have true depth of ability and experience in all estate-planning subspecialties. Virtually all estate-planning professionals have a strong desire to be of service to all those who seek them out. It can be difficult to tell possible new clients that what they need isn’t a service we have the expertise or experience to provide, but being honest with a potential client about our professional capabilities is very important. Examples of estate-planning subspecialties with which capable estate planners may lack depth include business succession planning, asset protection planning (particularly, offshore asset protection planning), Medicaid planning, pre- and post-marital agreements and design and creation of tax-exempt charitable entities.
Additionally, the probate, trust, tax and property laws of the states and the District of Columbia vary widely, and no lawyer can profess to have detailed knowledge with respect to such laws in all jurisdictions. Thus, a lawyer should be circumspect when considering accepting an engagement to render estate-planning services for a potential client who’s located, or has business or property, in a jurisdiction about whose laws the lawyer isn’t knowledgeable. In such a case, the lawyer should refer the potential client to a lawyer who’s familiar with those laws or be prepared to associate and work closely with such a lawyer. The necessity for lawyers to take the steps described in this paragraph flows from their obligation to provide competent representation.2
Moreover, a lawyer should be cautious when contemplating rendering legal services in the situations described in the preceding paragraph because so doing could constitute unauthorized practice of law. The American Bar Association’s Model Rules of Professional Conduct (the Model Rules), in Model Rule 5.5(a), provide that “a lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction.” Model Rule 5.5(b) provides that a lawyer not licensed to practice in a given jurisdiction “shall not…hold out to the public or otherwise represent that the lawyer is admitted to practice law in [that] jurisdiction.”3
Client’s Ability to Pay
An estate planner rightly expects to be compensated fairly and promptly for services performed. An otherwise fine relationship between client and professional advisor may sour quickly if invoices languish. When in doubt, consider requiring a prospective client to provide a retainer. A retainer can be useful in demonstrating not only financial responsibility but also commitment.
Conflicts of Interest
Of course, an estate-planning professional should strive to avoid any existing or reasonably foreseeable conflicts of interest. Among the many types of conflicts of interest that may exist in the estate-planning context include conflicts between spouses or partners, a parent and child, the prospective client and a closely held business entity, the prospective client and an existing client, the prospective client (as beneficiary) and a fiduciary, the prospective client (as fiduciary) and beneficiaries and the prospective client and the lawyer.4
Some actual or potential conflicts of interest are or should be immediately evident. Others may be subtle or perhaps not yet fully developed. It’s common for an estate planner to work with both spouses or partners, particularly when the relationship between them is long term and any children are those of that one, long-term relationship. In such cases, both spouses or partners usually have the same estate-planning goals, and, in the initial meeting, it’s clear they’re very compatible.5
Other circumstances should cause the estate planner to proceed carefully before agreeing to a concurrent representation of spouses or partners. These circumstances include one spouse or partner appearing to be unduly dominant, the existence of legacy wealth belonging to one spouse or partner, the existence of a closely held business in which one spouse is deeply involved, the spouses or partners being involved in a second or subsequent marriage or relationship, the existence of children of only one spouse or partner, each spouse or partner expressing materially different dispositive objectives and the spouses or partners displaying a tense or tumultuous relationship.
Even if the lawyer obtains conflict waivers from both spouses or partners, the lawyer can’t assume that representing them concurrently will be appropriate indefinitely. Rather, the lawyer must be vigilant about identifying new conflicts arising in the future or the escalation of existing conflicts that might cause the ongoing concurrent representation to be inappropriate or require additional disclosures to and consents from the spouses or partners.
Unlawful or Unethical Conduct
Lawyers should be alert to the possibility of falling into the trap of aiding and abetting unlawful activity and committing a violation of applicable ethics rules. A lawyer should exercise particular care when considering accepting an engagement that involves assisting an individual in avoiding bankruptcy and other forms of asset protection planning.
While none of the provisions of the Model Rules specifically discusses asset protection planning, the language of the some of the Model Rules could encompass such services. One such rule is Model Rule 1.2(d), which states:
A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.
Cases and ethics opinions discussing the ethical implications of bankruptcy avoidance and asset protection planning show that a practitioner could be in violation of applicable ethics rules, or worse, if the practitioner helps a client to defraud known or foreseeable creditors.6
Endnotes
1. The American Bar Association’s Model Rules of Professional Conduct (the Model Rules), in Model Rule 1.1, provide that “[a] lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” Lack of skill or knowledge may be overcome through additional research and study or involving another lawyer who possesses the expertise to assist. The American College of Trust and Estate Counsel (ACTEC) Commentaries on the Model Rules of Professional Conduct (5th ed. 2016), published by the American College of Trust and Estate Counsel (the ACTEC Commentaries) on Model Rule 1.1. See, e.g., Discipline of Fett, 790 N.W.2d 840 (Minn. 2010).
2. Supra note 1.
3. It can be difficult to determine whether a lawyer is engaged in the practice of law within the meaning of Model Rule 5.5 because “practice of law” varies greatly from state to state. See the ACTEC Commentaries on Model Rule 5.5 for a more detailed discussion of various state approaches. See also In re Estate of Cooper, 746 N.W.2d 653 (Neb. 2008); In re Charges of Unprofessional Conduct in Panel File No. 39302, 884 N.W.2d 661 (Minn. 2016). The ACTEC Commentaries suggest that the best approach, though also the most conservative approach, for avoiding discipline may be to assume that any services the lawyers intend to render in a non-admitted jurisdiction constitute the practice of law, and the lawyers should conduct themselves accordingly. Note that a lawyer’s physical presence in a given jurisdiction often isn’t a prerequisite for a finding that the lawyer is or was engaged in the practice of law in that jurisdiction. See In re Charges of Unprofessional Conduct in Panel File No. 39302, supra (electronic mail communications sufficient to constitute practice of law in Minnesota) and Birbrower, Montalbano, Condon & Frank v. Superior Court, 949 P.2d 1 (1998) (even telephonic communications could constitute practice of law in California).
4. See, e.g., Haynes v. First National State Bank of New Jersey, 432 A.2d 890 (N.J. 1981); Will of Mann, 490 N.Y.S.2d 213 (1985); Matter of Aoki v. Aoki, 49 N.E.3d 1156 (2016).
5. See the ACTEC Commentaries on Model Rule 1.7, which state that a lawyer’s concurrent representation of multiple family members in the estate-planning context is often appropriate because it can result in more economical and better coordinated estate plans.
6. See, e.g., Iowa Supreme Court Attorney Disciplinary Board v. Ouderkirk, 845 N.W.2d 31 (Iowa 2014) (lawyer, at direction of judgment debtor-client, included provision in contract governing client’s sale of land directing buyer to withhold payment of any sales proceeds being garnished by judgment creditor); Martinez v. Hutton (In re Harwell), 628 F.3d 1312 (11th Cir. 2010) (lawyer, using his trust account, facilitated diversion of client’s funds from judgment creditor); Florida Bar v. Klein, 774 So.2d 685 (Fla. 2000) (lawyer who participated in corporation’s fraudulent transfer by preparing documents that created second corporation to minimize effects of bankruptcy violated Florida’s version of Model Rule 8.4(d), which precludes “conduct prejudicial to the administration of justice”); In re Kenyon, 491 S.E.2d 252 (S.C. 1997) (lawyers who assisted in improper conveyance of real property to avoid creditors of debtor’s probate estate violated
South Carolina’s version of Model Rule 1.2(d) by assisting estate in engaging in criminal or fraudulent conduct).