Ezel / Ethics Opinions / NYSBA
NYSBA 2016-01-21

Can a firm that represents nursing homes form a nonprofit to serve as guardian for the homes' residents, and then represent that nonprofit?

Short answer: It may form the nonprofit, but representing it can create conflicts. The opinion concludes property-guardianship work may be consentable depending on the facts, but if the matter involves the guardian asserting a claim against a nursing-home client the firm also represents in the matter (such as a quality-of-care claim), the conflict is non-consentable.
Currency note: this opinion is from 2016
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked at the bottom of this page) is the authoritative source for any reliance.

NY State Bar Ethics Opinion 1083: Forming a nonprofit guardian for nursing-home residents

Short answer: A firm that represents nursing homes may form a nonprofit to accept guardianship appointments for low-asset residents, but representing that nonprofit can create conflicts; some are consentable depending on the facts, while a matter in which the guardian asserts a claim against a nursing-home client the firm represents in the same matter is non-consentable.

Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the New York State Bar Association's rules of professional conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.

About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.

View original opinion

Plain-English summary

A lawyer in a firm that represents many nursing homes proposed to form an independent nonprofit to accept judicial guardianship appointments for low-asset, long-term residents who lack capacity to authorize release of the financial records needed to document Medicaid eligibility, and who risk discharge for non-payment. The nonprofit would be staffed and governed independently of the firm; the nursing home would petition for a guardian and pay the firm for that representation, and the nonprofit would charge the home a flat fee to accept appointment as property-management and personal-needs guardian (¶¶ 1-13). The inquiry asked whether the firm could later represent the nonprofit in preparing the Medicaid application (property guardianship) or in personal-needs matters, given that the firm formed the nonprofit and regularly represents the home (¶¶ 14-15).

The committee framed the analysis under Rule 1.7 (concurrent conflicts), Rule 1.0(f) and Comment [8] (differing interests), Rule 1.9(a) (former clients), and Rule 1.10(a) (imputation) (¶¶ 17-21). On forming the nonprofit, it concluded that if the firm acts on its own behalf rather than for a client, Rules 1.7(a)(1) and 1.9 do not apply, and the Rule 1.7(a)(2) personal-interest risk does not arise because the firm accepts the formation serves the nursing-home clients' interests (¶¶ 22-24).

On representing the nonprofit, the committee distinguished property-guardianship work from personal-needs work. Property work (including the Medicaid application) presents a potential Rule 1.7(a)(1) conflict because the guardian must act for the incapacitated person while the home may have differing financial interests, but where the resident has limited assets the interests often align, citing N.Y. State 1046 (2015); whether interests differ is a fact question beyond the committee's jurisdiction, and a Rule 1.7(a)(2) personal-interest question remains (¶¶ 25-26). Personal-needs matters (quality of care, treatment, place of abode) are more likely to involve differing interests between the guardian and the home (¶ 27). The committee then applied Rule 1.7(b): consent can sometimes cure a conflict, but not where the firm could not reasonably believe it can provide competent and diligent representation to each client, where the representation is prohibited by law, or where it involves one client asserting a claim against another client in the same proceeding (¶¶ 28-29). It concluded that a matter in which the guardian asserts a claim against a nursing-home client the firm represents in that matter is non-consentable; and even if the firm represented only the guardian, a Rule 1.7(a)(2) question about competent, diligent representation would remain (¶¶ 29-31).

In practice

Under the New York rules as they stood at the time of the opinion, the committee held that forming the nonprofit is permissible (when the firm acts for itself), but representing the nonprofit afterward depends heavily on the facts. The opinion repeatedly routes the dispositive questions (whether interests "differ," whether the law prohibits the dual role) to fact and law outside its jurisdiction, and it identifies the one clear bright line: where the guardian and the nursing home are adverse on a claim in the same matter and the firm represents both, the conflict cannot be cured by consent. The committee also flagged a Rule 8.4(c) duty to inform the court of the nonprofit's capabilities and potential conflicts.

Common questions

Q: Can a firm that represents nursing homes set up a nonprofit to act as guardian for residents?

A: Yes. The opinion concludes the firm may form such a nonprofit to accept guardianship appointments for low-asset residents who cannot document Medicaid eligibility (¶¶ 1, 31).

Q: When is representing the nonprofit a non-consentable conflict?

A: When the matter involves the guardian asserting a claim against a nursing-home client the firm represents in that same matter (for example, a quality-of-care claim); the committee concluded that conflict cannot be cured by consent under Rule 1.7(b) (¶¶ 29, 31).

Q: Does a low-asset resident change the conflict analysis for the Medicaid application?

A: Often. The committee concluded that where the incapacitated person has limited assets, the interests of the resident and the home in obtaining a guardian and completing the Medicaid application generally align, citing N.Y. State 1046; whether they differ is a fact question (¶ 25).

Background and rules framework

The opinion interprets New York Rules 1.7(a) and (b) (concurrent conflicts and the conditions for consent), 1.0(f) and Comment [8] (definition of "differing interests"), 1.9(a) (duties to former clients), 1.10(a) (imputation within a firm), and 8.4(c) (deceit/misrepresentation, here the duty to inform the court), corresponding to ABA Model Rules 1.7, 1.0, 1.9, 1.10, and 8.4. The non-consentability analysis turns on Rule 1.7(b)(3)'s bar on consenting to one client's claim against another client in the same proceeding.

Citations and references

Rules of Professional Conduct:

  • MR 1.7 / NY RPC 1.7(a), (b) (concurrent conflicts; consent conditions)
  • MR 1.9 / NY RPC 1.9(a) (former clients)
  • MR 1.10 / NY RPC 1.10(a) (imputation)
  • MR 8.4 / NY RPC 8.4(c) (deceit; misrepresentation)

Statutes:

  • N.Y. Mental Hygiene Law §§ 81.19, 81.20, 81.21, 81.22 (guardianship powers and duties)

Other opinions cited:

  • N.Y. State 1046 (2015): the interests of an incapacitated person and a care facility are not always differing

See also

Source