Could a corporation's director and lawyer also serve as executor and co-trustee of its deceased majority shareholder's estate?

Plain-English summary

A lawyer had handled matters for a group of related corporations and their majority shareholder, and served as a corporate director and secretary. After the shareholder died, the lawyer became executor of the estate and co-trustee of a trust holding corporate stock. The estate owed loans to the corporations, creating possible disputes over payment and other dealings.

The committee applied DR 4-101(B)(3) to confidential information from earlier corporate work and DR 5-105(A) through (C) to divided loyalty. It said abstaining from corporate votes on estate matters did not solve the problem of owing loyalty to both the estate and corporation. If the estate litigated against the corporation, the lawyer could not direct the litigation and remain a corporate director. Prior corporate confidences that could benefit the estate could also prevent the executor or trustee role without the corporation's consent after full disclosure.

The committee could not decide every proposed combination of roles without knowing whether disputes existed or were foreseeable. It said service as executor and co-trustee might be possible where the estate-corporation relationship was undisputed and no confidential-information problem arose. It described the permissible circumstances as narrow.

Currency note

This opinion was issued in 1981 under Vermont's former Code of Professional Responsibility. The Vermont Supreme Court's rules history says the Rules of Professional Conduct replaced the Code and applied to lawyer conduct after September 1, 1999; the court later made comprehensive amendments in 2009. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement.

Common questions

Q: Did abstaining from votes on the estate's loans resolve the conflict?

A: No. The committee said the lawyer's separate duties of loyalty to the estate and corporation remained even if the lawyer abstained from the corporate decision.

Q: Could the lawyer direct estate litigation against the corporation while remaining a director?

A: No. The opinion said the lawyer could not direct that litigation and remain a corporate director.

Q: Was every combination of estate and corporate roles barred?

A: No. The committee said some combinations could be permissible if the estate's dealings with the corporation were undisputed and prior confidences did not create a problem, but it could not resolve every variation on the limited facts.

Background and rules framework

The opinion analyzed former Code DR 4-101(B)(3) on use of a client's confidence or secret and DR 5-105(A) through (C) on multiple representation. It distinguished the lawyer's roles as corporate officer, corporate counsel, executor, and co-trustee.

Citations and references

Vermont Code of Professional Responsibility:

• DR 4-101(B)(3), DR 5-105(A), DR 5-105(B), DR 5-105(C)

Case cited:

• Cinema 5 Ltd. v. Cinerama, Inc., 528 F.2d 1384 (2d Cir. 1976), cited on divided loyalty in litigation.

See also

• Vermont Ethics Op. 83-04: Two clients in related divorces
• Vermont Ethics Op. 84-01: Police association counsel and criminal defense

Source

• Landing page: VBA conflict of interest opinions
• Original PDF: Vermont Advisory Opinion 81-11
• Rules history: Vermont Rules of Professional Conduct, “These rules apply to lawyer conduct after September 1, 1999.”