After Estate of Schneider v. Finmann, can the lawyer who drafted a decedent's estate plan also represent the executor administering that estate?

Plain-English summary

The committee addressed how Estate of Schneider v. Finmann, 15 N.Y.3d 306 (2010), affects a lawyer who drafted a client's estate plan and later wishes to represent the executor. In Schneider, the Court of Appeals overruled the line of cases holding that privity barred a deceased client's estate from suing the estate-planning lawyer for malpractice, holding that the executor or personal representative "stands in the shoes of the decedent" and can maintain a malpractice claim on the estate's behalf. Commentators then questioned whether an estate planner could ethically represent an executor of an estate the planner had structured.

Applying Rule 1.7, the committee distinguished three situations. In Situation A, the planner realizes at the outset that the legal work was negligent enough to give the executor a colorable (prima facie) malpractice claim; this creates a Rule 1.7(a)(2) conflict because there is a significant risk the lawyer's judgment will be adversely affected, and the conflict is non-consentable because the lawyer cannot reasonably believe he can competently advise the executor on whether to sue the lawyer himself. Citing Comment [14], the committee held the lawyer must not even seek consent; consent to a non-consentable conflict is ineffective, and Rule 1.10(a) imputes the disqualification to the whole firm. The lawyer must also report the apparent malpractice to the executor, who now stands in the decedent's shoes (citing N.Y. State 734 and N.Y. State 275 on the duty to report significant errors).

In Situation B, the planner perceives no apparent basis for a malpractice claim; there is no significant risk to the lawyer's judgment, Rule 1.7(b) consent is not triggered, and the lawyer may represent the executor. Schneider does not change the long-established trusts-and-estates practice, and an insignificant error need not be reported. In Situation C, the planner perceives no claim at the outset but comes to believe during the representation that a colorable claim exists; the conflict then becomes non-consentable just as in Situation A, because Rule 1.7(a)(2) does not distinguish conflicts arising mid-representation. The lawyer must withdraw under Rule 1.16(b)(1), take steps to avoid foreseeable prejudice to the executor, and report the apparent malpractice.

The committee noted that lawyer-fiduciaries and their firms have traditionally served as counsel on estates they administer (citing N.Y. State 471), the recognized advantages outweighing the apparent risk except where a colorable malpractice claim makes the conflict non-consentable. It added that a lawyer may settle a malpractice claim with the client only after fully apprising the client of the facts, withdrawing from the representation, and advising the client to retain independent counsel for the settlement (citing N.Y. State 591).

In practice

The opinion holds that, under Rules 1.7, 1.10, and 1.16 as they stood at the time, the lawyer who drafted an estate plan may represent the executor of that estate so long as no colorable legal malpractice claim against the lawyer is apparent. The controlling factor is the lawyer's perception of a colorable (prima facie) malpractice claim: if one is apparent at the outset or arises during the representation, the Rule 1.7(a)(2) conflict is non-consentable, the lawyer cannot seek or rely on the executor's consent, the disqualification is imputed firm-wide under Rule 1.10(a), the lawyer must decline or withdraw under Rule 1.16, and the lawyer must report the apparent malpractice to the executor. The committee held Schneider did not disturb the traditional practice of estate planners administering estates they planned where no such claim is apparent.

Common questions

Q: Can I represent the executor of an estate whose plan I drafted?

A: Yes, if you do not perceive a colorable malpractice claim against yourself. The committee held that absent an apparent basis for a malpractice claim, there is no significant risk to your judgment, Rule 1.7(b) consent is not triggered, and you may represent the executor.

Q: What if I realize my estate-planning work may have been negligent?

A: The committee held that if you perceive a colorable malpractice claim, the Rule 1.7(a)(2) conflict is non-consentable; you cannot seek or accept the executor's consent, you and your firm must decline or withdraw, and you must report the apparent malpractice to the executor.

Q: Does it matter whether I notice the problem at the start or later?

A: No. The committee held Rule 1.7(a)(2) does not distinguish conflicts that exist at the outset from those that arise during the representation; in either case the conflict is non-consentable and you must withdraw under Rule 1.16(b)(1).

Q: Did Schneider v. Finmann change the trusts-and-estates practice?

A: The committee held it did not change the basic conflicts analysis where no malpractice is apparent. Estate planners may still administer estates they planned, except where a colorable malpractice claim makes the conflict non-consentable.

Background and rules framework

The opinion interprets New York Rule 1.7(a)(2) (a conflict from a significant risk that the lawyer's own interests will adversely affect professional judgment), Rule 1.7(b) (consentability), Rule 1.10(a) (imputation), and Rule 1.16(b)(1) (mandatory withdrawal to avoid a rule violation), corresponding to ABA Model Rules 1.7, 1.10, and 1.16. The analysis is driven by Estate of Schneider v. Finmann, which gave the executor standing to bring the decedent's malpractice claim.

Citations and references

Rules of Professional Conduct:

• MR 1.7 / NY Rule 1.7(a)(2), (b): conflict from the lawyer's own interests and its consentability
• MR 1.10 / NY Rule 1.10(a): imputation of the disqualification to the firm
• MR 1.16 / NY Rule 1.16(b)(1): mandatory withdrawal to avoid a violation

Cases:

• Estate of Schneider v. Finmann, 15 N.Y.3d 306 (2010): executor stands in the decedent's shoes and may bring the estate's malpractice claim

Other opinions cited:

• N.Y. State 734 (2000); N.Y. State 275 (1972): duty to report a significant error that may give rise to a malpractice claim
• N.Y. State 591 (1988): conditions for negotiating settlement of a malpractice claim with a client
• N.Y. State 471 (1977): a fiduciary may retain his own firm as counsel

See also

• NY State Bar Ethics Op. 867: Lender and Seller, Same Firm
• NY State Bar Ethics Op. 868: Corporation and Its Sole Owner
• NY State Bar Ethics Op. 871: Opposing a Former Client

Source

• Landing page: https://nysba.org/ethics-opinion-865/