Can a lawyer seek a conservator for a mentally ill client who refuses a settlement, and is that a conflict because the lawyer earns a fee if the settlement is approved?

Plain-English summary

A lawyer was retained on a contingent fee to bring a legal malpractice action; the agreement excluded appeals. Much of the case was dismissed on summary judgment, and the defendant offered to settle, but the client, who had a history of mental illness, refused to accept the settlement or pay for an appeal, and the circuit court found it lacked authority to order the settlement. The lawyer asked whether the lawyer could decline to follow the client's rejection, file for conservatorship, whether doing so created a conflict, and whether the lawyer could recover additional fees for the conservatorship petition.

The Committee began with MRPC 1.2(a), under which a lawyer must abide by the client's decision to accept or reject a settlement, but whose comment directs the lawyer to MRPC 1.14 when the client appears to suffer a mental disability. Under MRPC 1.14(b), the Committee concluded, a lawyer may seek appointment of a guardian or take other protective action only when the lawyer reasonably believes the client cannot adequately act in the client's own interest. Citing RI-51 and CI-1055, it concluded the lawyer's judgment about competency should be corroborated by professional consultation and reports, and the lawyer may, with consent, consult close relatives, while not prejudicing the client by revealing the client's condition to the adversary; here the client's condition was already known to opposing counsel. The Committee identified the probate-court route under MCL 700.469(2), which lets the court ratify a transaction in the protected person's best interests without appointing a conservator.

On the conflict question, the Committee concluded that forcing a settlement on an unconsenting client just so the lawyer could collect a contingent fee would be a conflict under MRPC 1.7(b), but because MRPC 1.2 lets the lawyer consider MRPC 1.14, and because a neutral probate judge would make the ultimate decision on the client's behalf, the lawyer could reasonably believe the representation would not be adversely affected, so the conflict was not impermissible. On fees, it concluded that under MCL 700.474 a lawyer not otherwise compensated may petition the probate court for reasonable compensation, while noting the statute does not specifically authorize fees for a non-appointed petitioning lawyer and that the probate court would weigh whether the contingent fee already adequately compensated the lawyer.

Currency note

This opinion was issued in 1991 and interprets the Michigan Rules of Professional Conduct as they then stood. MRPC 1.14, 1.2, and 1.7 have since been amended, and the cited probate statutes have been revised (Michigan's Estates and Protected Individuals Code superseded the Revised Probate Code). Later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules and statutes before relying on any specific rule, statute, or requirement mentioned here.

Common questions

Q: When can a lawyer seek a conservator or guardian for a client?

A: The opinion concluded a lawyer may seek a guardian or other protective action under MRPC 1.14(b) only when the lawyer reasonably believes the client cannot adequately act in the client's own interest.

Q: Is it a conflict to seek protective action so a rejected settlement can be approved, given the contingent fee?

A: The opinion concluded it is not an impermissible conflict, because a neutral probate judge makes the ultimate decision on the client's behalf, so the lawyer could reasonably believe the representation would not be adversely affected under MRPC 1.7(b).

Q: Can the lawyer charge extra for filing the conservatorship petition?

A: The opinion concluded that under MCL 700.474 a lawyer not otherwise compensated may petition the probate court for reasonable compensation, but the court would consider whether the existing contingent fee already adequately compensated the lawyer.

Background and rules framework

The opinion interpreted MRPC 1.2(a) / Model Rule 1.2 (abiding by the client's settlement decision), MRPC 1.14 / Model Rule 1.14 (client with diminished capacity; protective action), and MRPC 1.7(b) / Model Rule 1.7 (material limitation by the lawyer's own interests). It read these alongside the Michigan probate statutes governing protective orders and compensation in protective proceedings.

Citations and references

Rules of Professional Conduct:

• MR 1.2 / MRPC 1.2(a) (client's settlement decision)
• MR 1.14 / MRPC 1.14 (client with diminished capacity; protective action)
• MR 1.7 / MRPC 1.7(b) (material limitation by the lawyer's own interests)

Statutes:

• MCL 700.461, 700.469(2), 700.474 (protective orders and compensation in protective proceedings)

Other opinions cited:

• RI-51; CI-1055: seeking a guardian or conservator for an incompetent client
• ABA Informal Op. 89-1530: consulting relatives about the client's capacity

See also

• ABA Formal Op. 96-404: Client Under a Disability
• Mich Ethics Op. RI-73: Fee After Contingent Case

Source

• Landing page: https://www.michbar.org/opinions/ethics/numbered_opinions?OpinionID=946&Type=6

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

RI-76

March 8, 1991

SYLLABUS

A lawyer may seek the appointment of a guardian or take other protective action with respect to a client, who has a history of mental illness and who has refused to accept a personal injury settlement or pay for an appeal, only when the lawyer reasonably believes the client cannot adequately act in the client's own interest.

Petitioning for such protective action does not create an impermissible conflict of interest between the lawyer who would collect a fee upon acceptance of the settlement offer and the client who has rejected settlement when an independent adjudicator determines the client's disability and whether the settlement should be accepted.

If not otherwise compensated, the lawyer may petition the probate court for reasonable compensation for filing the petition for a protective order or conservator on behalf of a client.

References: MRPC 1.2(a), 1.7(b), 1.14; RI-51; CI-1055; MCL 700.461, 700.469, 700.469(2), 700.474.

TEXT

A lawyer was retained to file a legal malpractice action against a client's former lawyer. The fee agreement specifically excluded appeals. The major part of the malpractice case was dismissed by summary judgment upon a theory of in pari delicto. The defendant has offered to settle the case, but the client, who has a history of mental illness, refuses to accept the settlement or pay for an appeal and the circuit court on motion found it had no authority to order the settlement. The lawyer asks:

• May the lawyer decline to follow the client's rejection of the settlement offer?

• May the lawyer file for conservatorship for the client?

• If the lawyer files for conservatorship of a client in order to enter into a settlement to which the client has not agreed, has the lawyer created an impermissible conflict of interest?

• May the lawyer recover fees and expenses, in addition to the contingency fee agreed upon, for the lawyer's efforts in filing the petition for conservatorship?

MRPC 1.2(a) states in part:

". . . A lawyer shall abide by a client's decision whether to accept an offer of settlement or mediation evaluation of a matter . . . ."

The comment to MRPC 1.2(a) states in part:

". . . In a case in which the client appears to be suffering mental disability, the lawyer's duty to abide by the client's decisions is to be guided by reference to Rule 1.14 . . . ."

MRPC 1.14 states:

"(a) When a client's ability to make adequately considered decisions in connection with the representation is impaired, whether because of minority or mental disability or for some other reason, the lawyer shall, as far as reasonably possible, maintain a normal client-lawyer relationship with the client.

"(b) A lawyer may seek the appointment of a guardian or take other protective action with respect to a client only when the lawyer reasonably believes that the client cannot adequately act in the client's own interest."

We have previously held that if a lawyer believes a client is unable to make decisions concerning representation or is incompetent, the lawyer should seek the appointment of a guardian or conservator for the client, RI-51 and CI-1055. The latter opinion also states that the lawyer's professional judgment concerning the client's competency should be corroborated by professional consultations and reports. The lawyer may also consult with close relatives of the client with the client's consent and whose advice the client might respect to determine if the refusal to accept the settlement is the result of a significant disability rather than simply unreasonable, ABA i89-1530. Further, continued representation should not violate the lawyer-client privilege nor prejudice the client's interests by informing the adversary of the client's mental condition. In this instance, a motion to enter the settlement has already been argued in the circuit court, and opposing counsel is aware of the client's condition.

Therefore, if the lawyer reasonably believes that the client cannot adequately act in the client's best interest by refusing to accept the settlement is this sufficient? A lawyer may petition the probate court for appointment of a person to act in the client's interest or a protective order which would authorize the acceptance of the settlement offer pursuant to MCL 700.469(2) which provides:

"When it is established in a proper proceeding that a basis exists as described in section 461 [MCL 700.461] for affecting the property and affairs of a person the court, without appointing a conservator, may authorize, direct or ratify any contract, trust or other transaction relating to the protected person's financial affairs or involving the person's estate if the court determines that the transaction is in the best interests of the protected person."

This section would allow ratification of the settlement by the probate court without the appointment of a conservator, if the client is not otherwise in need of a conservator. MCL 700.461(b) sets forth the conditions precedent for the appointment of a conservator or other protective order.

MRPC 1.7(b) states:

"A lawyer shall not represent a client if the representation of that client may be materially limited by . . . the lawyer's own interests, unless:

"(1) the lawyer reasonably believes the representation will not be adversely affected; and

"(2) the client consents after consultation . . . ."

Forcing a settlement on an unconsenting client so that the lawyer can obtain a contingency fee is a conflict of interest. However, MRPC 1.2 allows a lawyer to consider MRPC 1.14 when evaluating whether or not to abide by a client's decision. As a neutral party, the probate judge will be making the ultimate decision on behalf of the client as to whether the proposed settlement is in the client's best interest. Therefore, the lawyer could reasonably believe the representation will not be adversely affected by the petition pursuant to MRPC 1.14, and the conflict of interest is not an impermissible one.

As to the matter of the recovery of fees by the lawyer for time, effort and costs expended in petitioning the probate court for a conservator or protective order in order to gain approval of the settlement, MCL 700.474 states:

"If not otherwise compensated for services rendered, a guardian ad litem, visitor, lawyer, physician, conservator, or special conservator appointed in a protective proceeding is entitled to reasonable compensation from the estate."

Should the lawyer not be otherwise compensated, the lawyer may petition the probate court for reasonable compensation. MCL 700.474 does not specifically authorize fees for a lawyer filing a petition who is not appointed by the probate court. The probate court should and in reality probably will consider whether the fee to be earned by the lawyer if the settlement is approved adequately compensates the lawyer for all services rendered or is sufficiently inadequate to justify an additional fee for the probate court proceedings.