Taxation & Estate Planning

New Professional Reponsibility Rules for Estate Planners

By Joel A. Schoenmeyer

In last month's Illinois Bar Journal, Katarinna McBride and Graham B. Schmidt discuss a couple of new aspects of the Illinois Rules of Professional Conduct (the "Rules"). Their summary (here, but you have to be an ISBA member) is well worth reading.

The Rules were revised effective 1/1/10. The two of particular interest for estate planners are the following (my comments are in italics):

1. Client with Diminished Capacity. Revised Rule 1.14, which now states as follows:

(a) When a client?s capacity to make adequately considered decisions in connection with a representation is diminished, whether because of minority, mental impairment or for some other reason, the lawyer shall, as far as reasonably possible, maintain a normal client-lawyer relationship with the client. (But how can an attorney represent someone with diminished capacity? I don't know how such a client can effectively consent to representation. I also don't know how such a client can change his or her estate planning documents.)

(b) When the lawyer reasonably believes that the client has diminished capacity, is at risk of substantial physical, financial or other harm unless action is taken and cannot adequately act in the client?s own interest, the lawyer may take reasonably necessary protective action, including consulting with individuals or entities that have the ability to take action to protect the client and, in appropriate cases, seeking the appointment of a guardian ad litem, conservator or guardian. (I'm glad the Rule says "may" and not "shall" -- making an attorney have a duty to protect his or her clients, to the point where the attorney would HAVE to initiate a guardianship proceeding, would be a huge mistake.)

(c) Information relating to the representation of a client with diminished capacity is protected by Rule 1.6. When taking protective action pursuant to paragraph (b), the lawyer is impliedly authorized under Rule 1.6(a) to reveal information about the client, but only to the extent reasonably necessary to protect the client?s interests.

2. Duties to Prospective Client. New Rule 1.18, which states:

(a) A person who discusses with a lawyer the possibility of forming a client-lawyer relationship with respect to a matter is a prospective client.

(b) Even when no client-lawyer relationship ensues, a lawyer who has had discussions with a prospective client shall not use or reveal information learned in the consultation, except as Rule 1.9 would permit with respect to information of a former client. (See below for my main concerns. I understand why I have a duty to clients and former clients. I even understand why I have a duty to beneficiaries under my clients' estate planning documents, in the event that I screw up their bequests. I do NOT understand why I would have a duty to people who thought about hiring me, decided not to, and paid me nothing.)

(c) A lawyer subject to paragraph (b) shall not represent a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person in the matter, except as provided in paragraph (d). If a lawyer is disqualified from representation under this paragraph, no lawyer in a firm with which that lawyer is associated may knowingly undertake or continue representation in such a matter, except as provided in paragraph (d). (As someone who does a fair amount of phone consultations, I'm not thrilled by this Rule. People call for "free legal advice," which I try not to give. But people should also feel like they have a sense of what an attorney can do for them, BEFORE they hire the attorney. Am I supposed to say nothing of value to prospective clients? Am I supposed to stop them from telling me anything about their case, since by doing so I may be disqualified from representing the other side if they decide not to hire me?)

(d) When the lawyer has received disqualifying information as defined in paragraph (c), representation is permissible if:

(1) both the affected client and the prospective client have given informed consent, or

(2) the lawyer who received the information took reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether to represent the prospective client; and that lawyer is timely screened from any participation in the matter and is apportioned no part of the fee therefrom. (Basically, this is a loophole for big law firms. If you are a solo practitioner, or practice in a small town, you are out of luck with the new Rule 1.18.)

Full post as published by Death and Taxes Blog on September 07, 2010 (boomark / email).