Source: http://www.mccarthyfingar.com/publications/frank-w-streng-white-plains-lawyer-ethic3.aspx
Timestamp: 2019-04-23 18:27:18+00:00

Document:
• What is professionalism? How does a lawyer maintain professionalism and a successful business?
• What are lawyers selling? Knowledge, competence and experience in solving a client’s problem?
• Have you ever talked to anyone who attended a “lawyer bashing” revocable trust seminar?
• “Comments” for the new Code have now been released.
? It’s Still the Number One Rule . . . .
o SCPA 2111 (an attorney who is also a sole fiduciary must obtain court approval to receive advance legal fees).
o Effective March 4, 2002, all attorneys must have a written letter of engagement before commencing representation OR within a reasonable time after commencing representation of a client if it is impracticable at the time of commencement or if the scope of services cannot be determined at the time of the commencement of representation.
o For purposes of Part 1215, where an entity (such as an insurance carrier) engages an attorney to represent a third party, the term "client" shall mean the entity that engages the attorney.
o Where there is a significant change in the scope of services or the fee to be charged, an "updated letter of engagement" must be given to the client.
? where applicable, notice of the client's right to arbitration of fee disputes under Part 137.
? Under §137.1(b)(2), an attorney may make fee arbitration apply to disputed amounts less than $1,000 or more than $50,000 "if the parties have consented. ..." Without the client's consent, fee arbitration does not apply to sums less than $1,000 or more than $50,000.
? Under §137.2(b), an attorney may make fee arbitration mandatory for the client by obtaining the client's written consent in "a retainer agreement or other writing..." If not included in the retainer agreement, fee dispute arbitration commenced by a client is mandatory for the attorney but is not mandatory for the client if commenced by the attorney.
? Under §137.2(c), an attorney can make the arbitration award final, instead of subject to a de novo review, by obtaining the client's written consent.
? Under §137.2(d), an attorney can select a different arbitral forum for fee dispute arbitration, by obtaining the client's written consent.
o communication aimed primarily at securing business.
• Some Dos and Don’ts:.
o client testimonials are permitted if the client does not have a pending legal matter involving the attorney.
o the use of celebrities, voice-overs and depictions of fictionalized events is permitted so long as the attorney makes a full disclosure.
o monikers, nicknames and mottoes are banned -- such as "heavy hitter" or "dream team" -- that imply an ability to obtain results. Implications on commercial free speech?
o In Alexander v. Cahill, Judge Scullin, in the Northern District of New York, partially struck down portions of rule on commercial free speech grounds, thereby permitting a Syracuse law firm to continue advertising their alleged “heavy hitter” status.
o Email advertising is okay, provided the subject line contains the notation "ATTORNEY ADVERTISING."
o “Attorney Advertising”: You need to have the words “Attorney Advertising” on your home page.
o Pop-Up Ads/MetaTags: (g) A lawyer or law firm shall not utilize: (1) a pop-up or pop-under advertisement in connection with computer-accessed communications, other than on the lawyer or law firm’s own web site or other internet presence; or (2) meta tags or other hidden computer codes that, if displayed, would violate a disciplinary rule.
o Domain Names: (e) A lawyer or law firm may utilize a domain name for an internet web site that does not include the name of the lawyer or law firm provided: (1) all pages of the web site clearly and conspicuously include the actual name of the lawyer or law firm; (2) the lawyer or law firm in no way attempts to engage in the practice of law using the domain name; (3) the domain name does not imply an ability to obtain results in a matter; and (4) the domain name does not otherwise violate a disciplinary rule. (f) A lawyer or law firm may utilize a telephone number which contains a domain name, nickname, moniker or motto that does not otherwise violate a disciplinary rule.
o Filing with Departmental Disciplinary Committee of the appropriate judicial department.
o Retain e-mail and Web Site solicitations for only one year.
• What does it mean to “act in a fiduciary capacity” Is it different to “act in a representative capacity”? No; you are acting “in behalf” of someone else – the beneficiaries.
• When does a lawyer advise the fiduciary that “litigation . . . is anticipated”? For purposes of privilege, should we be identifying areas where litigation might be “anticipated”?
• Waiver of attorney-client privilege in fee disputes. But is there a risk in asserting privilege for trusts and estates lawyers whose fee applications may need to be determined by the Court; and the lawyer is considered, more than in other areas, to be “officers of the Court”?
• the independent trustee of residuary trust?
• permissible lifetime beneficiaries of residuary trust?
• remainderman of residuary trust?
• the outright residuary beneficiaries?
• Act as the sole advocate?
• Act as “co-counsel” and use a trial counsel?
• Will contest on your Will. Answer: Get trial counsel for probate proceeding; and represent the fiduciary of the estate on administration issues. In many instances, it might be advisable to have a different lawyer acting as counsel of record; and not simply as a trial counsel.
• Estate Litigation dealing with nonprobate assets payable to fiduciary. Keep in mind who you represent.
• Similar in substance to DRs, but Rule 3.7(a) eliminates the distinction between accepting employment (see DR 5-102(A)) and continuing employment (see DR 5-102(C)) in favor of a unified rule impliedly covering both.
• Typically, the advocate/witness rule becomes relevant in will contests.
A: All these questions were posited and decided in a decision entered by Surrogate Reitz , Putnam County, in an unpublished Decision entered January 26, 2009 in the Matter of Skolinsky.
Consider Matter of Walsh, 17 Misc 3d 407 (Surr. Ct., Bronx, 2007), where Surrogate Holtzman, found that “in this SCPA 2103 discovery proceeding, the respondent moves to disqualify the petitioner, who is the executor of the estate and an attorney, from representing himself in his fiduciary capacity. The respondent contends that the advocate-witness rule mandates the petitioner's disqualification (Code of Professional Responsibility, DR 5-102 [22 NYCRR 1200.21].The novel issue presented is whether the petitioner has the same right to represent himself in his fiduciary capacity as he does individually. The court holds that he does not.” Id at 408.
The Walsh, supra, case involved an interesting clash between an individual's fundamental right to represent him or herself and the ethical proscription against an advocate also being a witness in a proceeding (DR 5-102). Walsh case involved a SCPA 2103 discovery proceeding commenced by the executor, an attorney who was representing himself as the petitioner. The respondent moved to disqualify the attorney because the respondent had consulted a lawyer friend about an issue in the proceeding and, through happenstance, the lawyer friend subsequently consulted the petitioner-lawyer who gave certain advice contrary to the position he was taking in the discovery proceeding.
Surrogate Hotzman held that the policy behind the advocate/witness rule trumps the right of self-representation where the advocate is not a party in his/her individual capacity.
• Conflict Rules. Existence of Conflict: Under Rule 1.7, you first determine whether a conflict exists. A conflict exists if either (1) the attorney’s exercise of independent professional judgment on behalf of one client will be or is likely to be adversely affected by representing the other client, or (2) the simultaneous representation of both clients would be likely to involve the lawyer in representing differing interests.
• Possible Waiver of Conflict by Clients: If there is a conflict, the attorney must determine whether the conflict may be waived by both clients. Specifically, both clients can waive the conflict, provided it is obvious that the lawyer can adequately represent the interests of each client.
• Disclosure before Obtaining Waivers: If the attorney concludes that, upon waiver, he or she can still adequately represent client, the attorney can obtain waiver from both clients only after full disclosure of the possible effect of the joint representation on the exercise of the lawyer’s independent professional judgment on behalf of each.
• Representing multiple clients with potential conflicts of interest is a common theme for many trusts and estates lawyers, particularly since a substantial part of trusts and estates practice is considered to be “nonadversarial.” Examples of some problems follow.
• Rule 1.7(a) compares with DR 5-101 & 5-105(A)-(B). The new rule is similar in substance to DRs but combines personal conflicts and client-to-client conflicts into a single paragraph, and combines restrictions on accepting representation and continuing representation into a single paragraph.
• Rule 1.7(b) compares with DR 5-101 & 5-105(C). This new rule is partly similar in substance to the consent provisions in DRs 5-101 and 5-105(C), but Rule 1.7(b) adds additional criteria for ‘consent ability’ and specifies two forms of non-consentable conflicts. The Rules also contain a definition of what is informed consent.
• the effect on the attorney-client privilege if the clients get into a dispute with each other in the future.
• Inform each potential client of her/his right to separate counsel in both individual and fiduciary capacities. In certain instances, the estate attorney might insist that before signing a retainer letter the potential client be represented individually.
• Specify in the retainer letter the capacity of representation, i.e., as a fiduciary, not as a beneficiary or individually. Emphasize in this regard that counsel will not represent the client individually against the estate.
• Include a waiver by the clients of any future claims of conflict arising from the multiple representation, including a statement that the lawyer would not be conflicted out in defending the estate against any claim that the client might bring against the estate in his/her own individual capacity. In the event that one of the clients determines in the future to retain separate counsel in his/her fiduciary capacity, the consents could also include a waiver of any claim at that point that counsel cannot continue to represent the other fiduciaries.
• Spell out with specificity all potential areas of potential conflict.
• Describe the advantages and risks of multiple representations, emphasizing the latter, particularly if disqualification is necessary in the future, resulting in the need to hire new attorneys.
• Include a provision indicating that where litigation is brought by one client in her/his individual capacity against the others in their fiduciary capacities, the attorney's communication with the latter regarding the same will be privileged and not subject to disclosure, as will the attorney's work product.
• Have a provision explaining that the attorney-client privilege will not apply generally between the co-clients, nor will it apply to beneficiaries, at least when there is no litigation.
Comments: Some of these provisions might seem onerous, possibly causing the clients not to hire the attorney. However, that is precisely the point - to wit: the estate attorney should approach any multiple representations with a great deal of caution. Further, multiple representation where there are actual conflicts of interest should be avoided assiduously. In addition, when these issues have both been discussed and put in writing in the engagement letter, the clients are able to make an educated decision whether to proceed with one attorney or seek separate counsel.
Comment: In a second marriage situation, it is understandable that a lawyer may find it difficult to represent the interests of both the second wife income beneficiary and the children from the first marriage remainder persons. See Matter of Heller, 23 AD 3d 61 (2d Dep’t. 2005), aff’d, 6 NY 3d 649 (2006) which is a case dealing with a unitrust election by a trustee.
Comment: Two cases recite these principals where clients may be better served by retaining counsel to represent the family as a unit, including possible family controlled entities in the context of estate planning, administration and even litigation. See In the Matter of Brandman [NYLJ, 11/15/99, 29, col. 3]; and In the Estate of Roccesano, [NYLJ, 6/11/2002, 34, col. 1].
• There are a number of situations in which lawyers representing co-executors, co-administrators, grantors, trustees and beneficiaries may possibly violate the rules.
“[C]ontinued representation under the circumstances would tend to inflame the atmosphere of distrust extant between the co-administrators, impede the cooperation between their counsel and the free flow of information between them, resulting in the prolongation of the final settlement of the estate to the detriment of all the distributees. Further representation of Philip Hof could tend to taint that testimony and further the appearance of impropriety.” Id at 598.
• Asset allocation, discretionary distributions, accountings, and exercise of trustee powers - these are only some of the matters rife with potential conflict between trustees and beneficiaries. May a lawyer properly advocate for these different and potentially conflicting interests?
• Stock concentration cases like In Matter of Dumont, 4 Misc. 3d 1003 (Surr. Ct., Monroe), reversed, 28 A.D. 3d 1257 (4th Dep’t 2006), lv appl. Denied, 7 N.Y.3d 922; rearg denied, 7 N.Y.3d 649) provides examples of situations in which the interests of the trustee and income beneficiary are not aligned.
Yes, if the decision about investing funds is supported by both executors. EPTL 10-10.7 provides that a joint power conferred upon two fiduciaries may be exercised jointly by both such fiduciaries. In general, a joint power is one which requires the exercise of discretion and in addition, that they act unanimously, (Fritz v. City Trust Co., 72 App Div 532, aff'd 173 NY 622; See also Scott on Trusts, [4th ed.] § 194).
• Francis Margesson was the sole income beneficiary of a trust, founded predominantly with large concentrations of four stocks. Bank of New York had been a co-trustee since 1989 and became sole trustee in 1996.
• Because sale of the highly appreciated stocks would result in substantial tax liability, there was a long-standing understanding that the trust would be managed to avoid unnecessary sale of these stocks. Francis was 74 years old when Bank of New York became sole trustee.
• In 1997, the Bank of New York sought to diversify the trust assets. Without communicating with the trust’s administrative officer or Francis, the trust’s investment officer sold a portion of the stock holdings. The sale resulted in Francis being personally liable for over $22,000 in capital gains. Francis then sued the Bank of New York for breach of fiduciary duty.
• The bank claimed it was merely complying with the prudent investor rule and the sale was made for the purpose of diversifying the trust’s investments.
• Medicaid Eligibility for Institutionalized Spouse f/b/o Community Spouse. Is all fair in love and Medicaid eligibility?
• Spousal Refusal Technique: A natural conflict with a married person’s duty of support [Domestic Relations Law § 32; Family Court Act § 412.
• Can we ethically represent the community spouse on spousal refusal matters even though, as part of the assignment process, the “refusing” spouse is subject to a lawsuit by “your client” – albeit, with the local Department of Social Services acting as “your client’s agent?
• Consider financial benefits that community spouse may get and why, as matter of substituted judgment, the institutionalize spouse (a) consents or (b) would consent as a matter of substituted judgment. But . . . how do you protect yourself. What if institutionalized spouse unable to consent because of mental disability?
• Lifetime Planning: Can you represent both clients in these scenarios? Does it matter whether husband and/or wife are on second or third marriages and have children of prior marriages?
• Husband and Wife in preparation of Wills and Trust Agreements and Related Estate Planning.
• Husband and Wife in Husband’s or Wife’s creation of Irrevocable Life Insurance Trust.
• Husband and Wife in Husband’s or Wife’s execution of spousal waiver of Qualified Plan accounts.
• Husband and Wife who cannot agree on who the “ultimate” beneficiaries of estate will be.
• Both fiancées in prospective marriage in the preparation and execution of prenuptial agreements.
• Multiple Fiduciaries. Inform fiduciaries of the consequences of representing all of them. In the event of a conflict, you may continue to represent one of them, with the consent of the other fiduciary. See discussion below on representing fiduciaries and beneficiaries.
• Fiduciary and Surviving Spouse in Will with Q-Tip trust with issues as to Whether Spouse Files Elective Share. Husband and Wife make reciprocal wills creating Credit Shelter outright bequests and Q-Tip trusts. Husband predeceases and an issue exists as to whether the wife will get “more money” by an elective share. Must there be independent representation for the wife?
• Communications with Beneficiaries. Can a lawyer represent one or more of the beneficiaries of the estate and the fiduciary of the estate? No, not in the proper sense, and the beneficiaries would need to engage separate counsel to represent their interest. But, to the extent that the fiduciary of the estate is considered to be acting in a representative capacity (as the representative of the residuary beneficiaries of the estate), then the lawyer for the fiduciary arguably has a duty to such beneficiaries (see Matter of Clarke, 12 N.Y.2d 183, 187 (1962) (“An attorney for the fiduciary has the same duty of undivided loyalty to the cestui as the fiduciary himself”). That duty is sometimes discharged by the lawyer having necessary communications with such beneficiaries in the proper representation of the fiduciary as the client. See discussion above for issues arising out of attorney-client privilege. Indeed, pursuant to SCPA 2102(1), a fiduciary has a duty to respond to written requests for information concerning an estate, and the attorney for the fiduciary will frequently provide to such beneficiaries copies of important documents in the estate, such as Federal and New York estate tax returns and related papers, even prior to an accounting.
• Representing Fiduciary in Individual and Representative Capacities. Can a lawyer represent a fiduciary both in his or her capacity as a fiduciary and his or her capacity as a beneficiary. Yes, and it happens all the time. But, what if the fiduciary/beneficiary has offered a will for probate and substantial litigation and/or controversies take place in the estate, such as a will contest and other similar problems for which your client is the target? The answer is still yes, but the lawyer needs to evaluate all of the consequences in these difficult scenarios.
• Consider: Retainer agreement. Who do you represent and who pays the bill?
• clients with differing goals in will contest (distributees with interest in challenging will; distributees with interest in sustaining a claim against the estate for debt.
• Putnam rule has been widely expanded to apply to just about anyone with a confidential relationship able to exercise influence.
• Do not influence a client to name you as fiduciary; avoid the appearance of impropriety.
• Applies to Wills executed on or after 1/1/96 and, irrespective of the date of the Will, to estates of decedent’s dying after 12/31/96.
• Statute provides a form – use it.
• 2004 amendment requires that the acknowledgement appear in a document separate from the Will, but it can be affixed to the Will..
• Applies if either the attorney, a then affiliated attorney, or an employee of such attorney or then affiliated attorney is the Executor-Designee (effectively overrules the Third Dept, in Matter of Wagoner, 30 A.D.3d 805 (3d Dep’t 2006), which refused to limit to one-half the commissions of the attorney’s paralegal-executor, even though the attorney was the sole witness to the acknowledgment, in that the statute at that point only applied to attorney-designees).
• What if the witness is affiliated with the Executor-Designee? Surrogate Roth, in Matter of Hess, 21 Misc. 3d 507 (Surr. Ct., NY 2008), held that since the Attorney-Executor’s partner was the witness, and the Attorney-Executor were affiliated and therefore interested in the transaction, it was as if the Attorney-Executor has witnessed the Acknowledgement, which would be ineffective, and the attorney-executor was therefore limited to one-half statutory commissions. Later on, however, the Court indicated that it would not follow that rule.
• Query: What if the Will is prepared in CT by CT counsel? In Matter of Newell (NYLJ 6/6/02 p. 27, c. 4) [Surr. Ct., Suffolk], the Testator was domiciled in CT, there was no comparable statute in CT when the Will was executed, the draftsman was not admitted in NY, and at the time of execution it was not anticipated that the Testator would ever live in NY. Surrogate Czygier held that since at the time it was prepared it was not foreseeable that the Will would be probated in NY, it was not necessary to adhere to 2307-a and the attorney-executor would be entitled to full commissions.
• But, the statute does apply to an out of state attorney names as an executor in the Will of a NY domiciliary (Estate of Deener, 2008 Slip. Op. 28470 (Surr. Ct., NY).
• Can the attorney-designee receive full commissions if all of the beneficiaries waive and provide informed consents? Surrogate Roth said “yes” in Matter of Brokken, NYLJ 3/28/06, p.24.
• If a lawyer does not have prior experience in a particular legal matter, he or she can still be engaged. For example, a lawyer who has no experience even in litigation in the Surrogate’s Court involving sophisticated tax issues can be engaged, provided that lawyer commits himself or herself in becoming competent or associates with a lawyer who is competent on the tax issues.
• For lawyers with insufficient experience in this area, consult and pay out of your own pocket someone who is. Ethically, professionally and economically required. The alternative: your very sophisticated client sees your lack of experience in working on the tax aspect of the litigation; and your client either gets bum work or fires you.
• Before mandatory CLE, maintaining your skills and ability, through CLE, permitted us lawyers to satisfying our ethical obligations.
• The use of legal assistants by trusts and estates lawyers brings on ethical obligations. Assuring proper oversight and training is necessary to assure that competent legal work is carried out in behalf of a client.
• Performing legal work effectively, and expeditiously, is an important component of carrying out competent legal work.
• Communicate, Communicate, Communicate!!!! The single biggest criticism of lawyers is their failure to return phone calls or otherwise communicate with their clients.
• What exactly is a non NY matter?
• Can you represent a third party in bringing a guardianship proceeding to appoint a guardian for your client?
• Ethical dilemmas for advocates: When does your duty of advocacy end and your relationship to the Surrogate’s Court and its personnel begin?
• Full compliance with Rule 1.15 in dealing with client escrow accounts is essential to assure that a lawyer maintains his or her license to practice.
• Proper record keeping is the key.
• Should you use escrow accounts in the management of estates and trusts?
• Rule 1.15 goes beyond the management of escrow accounts; it goes to the core of the lawyer’s business records. Rule 1.15 requires retention for 7 years many business records, including, but not limited to, all escrow account records, special account records, retainer and compensation agreements, client disbursement records and bills.
• What are the stakes in proper management of escrow accounts: Westchester lawyers had their license suspended (later modified by the Second Department), in following circumstances.
• What about check fees, for example, certified check fees? Either know, with certainty, what they are if you permit them to be charged against the escrow account. Or, do what my firm does, and have such charges assessed against our firm’s business account.

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