Can a lawyer who sits on a company's board of directors prepare an estate plan for a client who wants to name that same company as a beneficiary?

Plain-English summary

The Committee addressed whether a lawyer who is a member of a company's board of directors may render estate-planning services to a client who wants to name that same company as a beneficiary, and whether the lawyer must disclose the board relationship. The opinion was issued under Nevada's then-current Supreme Court Rules; it relied on SCR 157, the predecessor to current NRPC 1.7 (a lawyer shall not represent a client if the representation may be materially limited by the lawyer's responsibilities to a third person or by the lawyer's own interests), and SCR 167 on the duty to exercise independent professional judgment and render candid advice.

On the first question the answer was no. Although the lawyer does not represent the company and there is no attorney-client relationship with it, the lawyer holds a fiduciary relationship to the company as a board member, with duties of loyalty, confidentiality, and impartiality. Those duties, plus the lawyer's inside knowledge of the company's financial situation and interest in advancing its economic goals, could limit the lawyer's ability to be an independent, loyal advisor to the estate-planning client. The opinion gives a concrete example: if the company is quietly heading toward bankruptcy or dissolution, the lawyer's inside knowledge and confidentiality duty could keep the lawyer from warning the client, who might then build an estate plan around a beneficiary that is about to disappear.

On the second question the answer was yes. The lawyer must disclose that the lawyer is associated with the company and that there may be a conflict of interest. If a conflict exists, the lawyer may still seek the written consent of both parties under SCR 157, but only if the lawyer reasonably believes the representation will not be adversely affected; the lawyer should explain the implications, advantages, and disadvantages before seeking consent, and must obtain the company's consent to disclose any information that could affect the client's decisions. Regardless of whether an actual conflict exists, the opinion concludes the lawyer should reveal any potential conflict so the client can make an informed, independent decision to proceed or seek other counsel. (The State Bar later re-issued this analysis, updated to the current NRPC numbering, as Formal Opinion 47.)

In practice

The opinion holds that, under the Nevada rules as they stood at the time, a lawyer-director should not prepare an estate plan naming the company as a beneficiary because the lawyer's fiduciary duties to the company can compromise independent and loyal advice to the estate-planning client. Disclosure of the board relationship and any potential conflict is required, and the lawyer may undertake the work only with the informed written consent of both the client and the company and a reasonable belief that the representation will not be adversely affected. Because this opinion was issued under the former Supreme Court Rules, its SCR 157 and SCR 167 citations now correspond to NRPC 1.7 and 2.1; verify the current rule text before relying on it.

Common questions

Q: Can a lawyer on a company's board prepare an estate plan that leaves money to that company?

A: The opinion concluded the lawyer should not, because the lawyer's fiduciary duties to the company and inside knowledge of its finances create a conflict that can compromise independent advice to the estate-planning client.

Q: Is the company a client of the lawyer in this situation?

A: No. The opinion explains there is no attorney-client relationship with the company, but the lawyer still holds a fiduciary relationship to it as a director, with duties of loyalty, confidentiality, and impartiality.

Q: Can the lawyer cure the conflict with consent?

A: Per the opinion, the lawyer may seek the written consent of both the client and the company, but only if the lawyer reasonably believes the representation will not be adversely affected, and must obtain the company's consent to disclose information that could affect the client's decisions.

Background and rules framework

The opinion interprets the conflict-of-interest standard then codified at Nevada Supreme Court Rule 157 (now NRPC 1.7), which mirrors ABA Model Rule 1.7, together with the duty to exercise independent professional judgment and render candid advice under SCR 167 (now NRPC 2.1). It relies on the comments to ABA Model Rule 1.7 (consulted for guidance under SCR 150(2)) and on Nevada authority including Duval Ranching Co. v. Glickman and Williams v. Waldman.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.7 / Nev. SCR 157 (now NRPC 1.7) (conflict of interest; material limitation)
• Model Rule 2.1 / Nev. SCR 167 (now NRPC 2.1) (independent judgment; candid advice)

Cases:

• Duval Ranching Co. v. Glickman, 930 F. Supp. 469 (D. Nev. 1996), conflict from responsibility to a third party
• Williams v. Waldman, 108 Nev. 466, 836 P.2d 614 (1992), client entitled to disinterested advice

Other opinions cited:

• Maryland State Bar Ass'n Comm. on Ethics, Docket 2003-09 (2003): lawyer on a church legacy committee offering estate plans benefiting the church

See also

• NV Ethics Op. 47: the same question, re-issued under current NRPC numbering
• ABA Formal Op. 98-410: lawyer serving as director of a client corporation

Source

• Landing page: https://nvbar.org/for-lawyers/ethics-discipline/ethics-opinions/
• Original PDF: https://nvbar.org/wp-content/uploads/opinion_38.pdf