Can a lawyer who drafts a client's will or trust serve as the executor or trustee, hire their own firm as the estate's counsel, and be paid for both roles?

Plain-English summary

The committee addressed three situations that arise when a lawyer serves as a fiduciary, meaning the executor, administrator, or other personal representative of a decedent's estate, or the trustee of a trust: a client asks the lawyer to serve as fiduciary under an instrument the lawyer is drafting; the lawyer-fiduciary wants to appoint himself or his firm as counsel; and the lawyer-fiduciary is asked to represent a beneficiary or creditor of the estate or trust.

On the first situation, the committee held that a lawyer may agree to serve, but under Rule 1.4(b) must first discuss the client's options frankly, including the kinds of individuals or entities likely to serve effectively and the relative benefits, detriments, and costs of each. The opinion stated that the lawyer "must not, however, allow his potential self-interest to interfere with his exercise of independent professional judgment in recommending to the client the best choices for fiduciaries." Where a significant risk exists that the lawyer's advice on the selection will be materially limited by his own interest, Rule 1.7(a)(2) and (b) require the client's informed consent confirmed in writing. Accepting a fiduciary appointment is neither a prohibited gift under Rule 1.8(c) nor a business transaction under Rule 1.8(a), because the fiduciary is compensated for services.

On the second situation, the committee concluded that "the Model Rules do not prohibit the fiduciary from appointing himself or his firm as counsel to perform legal work during the administration of the estate or trust because the dual roles do not involve a conflict of interest." The constraint is on compensation: while Rule 1.5(a) governs legal fees rather than fiduciary commissions, fiduciary compensation for the same time and labor bears on what legal fee is reasonable. The opinion stated that "when the lawyer and his firm are fully compensated for his time and labor through fiduciary compensation, the same time and labor cannot properly be given full weight under Rule 1.5(a)(1)." Statutory rates and court approval after informed scrutiny are persuasive on overall reasonableness.

On the third situation, the committee held that a lawyer-fiduciary must resolve any conflict under Rule 1.7 before representing a beneficiary or creditor. Representing one in a claim against the estate or trust is ordinarily prohibited, and "would not be permissible even with the consent of the client, because it would be unreasonable for the lawyer to conclude that he could provide competent and diligent representation when opposing the interests of an estate or trust for which he is a fiduciary." Representation in an unrelated matter may be permissible under Rule 1.7(b) if the lawyer reasonably believes he can provide competent and diligent representation and obtains informed consent.

In practice

Under this opinion, a lawyer asked to serve as fiduciary under an instrument he drafts may do so after a Rule 1.4(b) discussion of the client's options and, where his own interest in the appointment could materially limit his advice, written informed consent. The opinion treats the reasonableness of the lawyer's combined fiduciary and legal compensation as the central constraint when the lawyer or firm also serves as counsel, and treats a lawyer-fiduciary's representation of a beneficiary or creditor in a claim against the estate or trust as ordinarily impermissible even with consent.

Common questions

Q: Can the lawyer who wrote my will serve as my executor or trustee?

A: Under this opinion, yes. The committee found nothing in the Model Rules barring a lawyer from accepting appointment as a fiduciary named in an instrument the lawyer prepares, provided the lawyer first gives the Rule 1.4(b) advice on the client's options and, where his self-interest could materially limit that advice, obtains informed consent confirmed in writing.

Q: Can the lawyer-fiduciary also act as the estate's lawyer and collect a second fee?

A: Yes, but the compensation is the limit. The opinion concluded the dual roles do not create a Rule 1.7 conflict, but the legal fee must be reasonable under Rule 1.5(a) in light of the fiduciary compensation already received for the same time and labor.

Q: Can the lawyer-fiduciary represent a beneficiary suing the estate?

A: No, ordinarily not, even with consent. The committee held it would be unreasonable for a lawyer to conclude he could competently represent a beneficiary or creditor while opposing the interests of an estate or trust for which he serves as fiduciary.

Background and rules framework

The opinion applied Rule 1.4(b) (communication adequate for informed decisions), Rule 1.5(a) (reasonable fees), Rule 1.7 (concurrent conflicts of interest), Rule 1.8(a) and (c) (business transactions with and gifts from clients), and Rule 2.1 (independent professional judgment). Because the ABA interprets the Model Rules directly, there is no state-rule analogue; jurisdictions vary in their adoption of these provisions and in statutes governing fiduciary compensation (the opinion cites examples such as New York's Surrogate's Court Procedure Act and California's Business and Professions Code).

Citations and references

Rules of Professional Conduct:

• MR 1.4(b) (communication)
• MR 1.5(a) (reasonable fees)
• MR 1.7 (concurrent conflicts of interest)
• MR 1.8(a), 1.8(c) (business transactions; gifts)
• MR 2.1 (independent professional judgment)

Other opinions cited:

• ABA Formal Op. 94-380 (1994): counseling a fiduciary; lawyer for a fiduciary does not also represent the beneficiaries
• ABA Formal Op. 98-410 (1998): lawyer serving as director of a client corporation
• ABA Formal Op. 93-379 (1993): billing for professional fees and expenses

Cases:

• Florida Bar v. Della-Donna, 583 So.2d 307 (Fla. 1989), lawyer-personal-representative discipline
• In re Will of Corya, 148 Misc.2d 723, 563 N.Y.S.2d 581 (1990), no full double compensation absent special circumstances

See also

• ABA Formal Op. 02-428: Drafting a will on a beneficiary-client's recommendation
• ABA Formal Op. 05-434: Disinheriting a beneficiary who is a client
• ABA Formal Op. 02-427: Security interest obtained to secure a fee
• RI EAP Op. 2005-08: No Rule 1.9 Conflict Representing Both Co-Trustees, and Detailed Engagement-Letter Disclosures Satisfy the Rules

Source

• Landing page: ABA Formal Ethics Opinions index
• Original PDF: 02-426.pdf