Source: http://www.mccarthyfingar.com/attorneys/frank-streng/speaking-engagements/ethical-isssues-in-estates-and-trusts-an.aspx
Timestamp: 2019-04-23 18:30:37+00:00

Document:
"Comments" for the new Code have now been released.
Have you ever talked to anyone who attended a "lawyer bashing" revocable trust seminar?
SCPA 2111 (an attorney who is also a sole fiduciary must obtain court approval to receive advance legal fees).
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.
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.
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.
to domestic relations matters which are still subject to Part 1400 of the Joint Rules of the Appellate Division.
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.
New Code upholds challenged rules, but we await Second Circuit holding.
client testimonials are permitted if the client does not have a pending legal matter involving the attorney.
Words or statements required by new rule to appear in an advertisement must be "clearly legible and capable of being read by the average person, if written, and intelligible if spoken aloud."
the use of celebrities, voice-overs and depictions of fictionalized events is permitted so long as the attorney makes a full disclosure.
monikers, nicknames and mottoes are banned -- such as "heavy hitter" or "dream team" -- that imply an ability to obtain results.
advertising "techniques to obtain attention banned that demonstrate a clear and intentional lack of relevance to the selection of counsel, including the portrayal of lawyers exhibiting characteristics clearly unrelated to legal competence."
E.g., advertisements run by a Long Island, N.Y., attorney who permitted herself to be filmed in provocative poses to tout her real estate practice. Cleavage has nothing to do with legal abilities.
"factually supported" descriptions in advertising and web sites are okay, so long as they are accompanied by the following disclaimer: "Prior results do not guarantee a similar outcome."
Email advertising is okay, provided the subject line contains the notation "ATTORNEY ADVERTISING."
names of clients "regularly represented" are okay, provided that the client has given "prior written consent"
banned: "portrayal of a judge, the portrayal of a fictitious law firm, the use of a fictitious name to refer to lawyers not associated together in a law firm, or otherwise imply that lawyers are associated in a law firm if that is not the case"
"1) legal and nonlegal education, degrees and other scholastic distinctions, dates of admission to any bar; areas of the law in which the lawyer or law firm practices, as authorized by the code of professional responsibility this Part; public offices and teaching positions held; publications of law related matters authored by the lawyer; memberships in bar associations or other professional societies or organizations, including offices and committee assignments therein; foreign language fluency; and bona fide professional ratings"
Must be "open to public inspection"
Filing with Departmental Disciplinary Committee of the appropriate judicial department.
"All advertisements of legal services that are mailed, or are distributed other than by radio, television, directory, newspaper, magazine or other periodical, by a lawyer or law firm that practices law in this State"
Retain e-mail and Web Site solicitations for only one year.
Initial: "preserved upon the initial publication of the web site"
Omnibus: retain no "less frequently than once every 90 days."
Address of Lawyer or Law Firm.
. A factually-supported description of a lawyer’s or law firm’s accomplishment is okay, so long as it is accompanied by the following disclaimer: "Prior results do not guarantee a similar outcome."
Lawyer websites must include the street address of the office of the advertising lawyer or law firm: (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.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. You need to have the words "Attorney Advertising" on your home page.
"Confidential information" consists of information gained during or relating to the representation of a client, whatever its source, that is (a) protected by the attorney-client privilege, (b) likely to be embarrassing or detrimental to the client if disclosed, or (c) information that the client has requested be kept confidential. "Confidential information" does not ordinarily include (i) a lawyer’s legal knowledge or legal research or (ii) information that is generally known in the local community or in the trade, field or profession to which the information relates.
Act as the sole advocate?
Act as "co-counsel" and use a trial counsel?
: 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.
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.
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?
: 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?
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.
Representing Multiple Objectants in Will Contest with Different Interests.
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.
form language in Will does not do the trick; need separate form.
Query: whose will is it?!?!
Your role: "scrivener" v. "estate planner"
Can you represent a third party in bringing a guardianship proceeding to appoint a guardian for your client?
"A lawyer serving as a client’s attorney-in-fact may not petition for the appointment of a guardian without the client’s consent unless the lawyer determines that the client is incapacitated; there is not practical alternative, through the use of the power of attorney or otherwise, to protect the client’s best interests; and there is no one else available to serve as petitioner. Subject to conflict of interest restrictions, if the lawyer petitions for the appointment of a guardian, the client does not oppose the petition, and the lawyer will not be a witness in a contested hearing, the lawyer may represent him-or herself in the proceeding."
Ethical dilemmas for advocates: When does your duty of advocacy end and your relationship to the Surrogate’s Court and its personnel begin?
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.
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.
(a) Prohibition Against Commingling and Misappropriation of Client Funds or Property.
A lawyer in possession of any funds or other property belonging to another person, where such possession is incident to his or her practice of law, is a fiduciary, and must not misappropriate such funds or property or commingle such funds or property with his or her own.
(1) A lawyer who is in possession of funds belonging to another person incident to the lawyer’s practice of law shall maintain such funds in a banking institution within New York State that agrees to provide dishonored check reports in accordance with the provisions of 22 N.Y.C.R.R. Part 1300. "Banking institution" means a state or national bank, trust company, savings bank, savings and loan association or credit union. Such funds shall be maintained, in the lawyer’s own name, or in the name of a firm of lawyers of which the lawyer is a member, or in the name of the lawyer or firm of lawyers by whom the lawyer is employed, in a special account or accounts, separate from any business or personal accounts of the lawyer or lawyer’s firm, and separate from any accounts that the lawyer may maintain as executor, guardian, trustee or receiver, or in any other fiduciary capacity; into such special account or accounts all funds held in escrow or otherwise entrusted to the lawyer or firm shall be deposited; provided, however, that such funds may be maintained in a banking institution located outside New York State if such banking institution complies with 22 N.Y.C.R.R. Part 1300 and the lawyer has obtained the prior written approval of the person to whom such funds belong specifying the name and address of the office or branch of the banking institution where such funds are to be maintained.
(2) A lawyer or the lawyer’s firm shall identify the special bank account or accounts required by Rule 1.15(b)(1) as an "Attorney Special Account," or "Attorney Trust Account," or "Attorney Escrow Account," and shall obtain checks and deposit slips that bear such title. Such title may be accompanied by such other descriptive language as the lawyer may deem appropriate, provided that such additional language distinguishes such special account or accounts from other bank accounts that are maintained by the lawyer or the lawyer’s firm.
(3) Funds reasonably sufficient to maintain the account or to pay account charges may be deposited therein.
(4) Funds belonging in part to a client or third person and in part currently or potentially to the lawyer or law firm shall be kept in such special account or accounts, but the portion belonging to the lawyer or law firm may be withdrawn when due unless the right of the lawyer or law firm to receive it is disputed by the client or third person, in which event the disputed portion shall not be withdrawn until the dispute is finally resolved.
(4) promptly pay or deliver to the client or third person as requested by the client or third person the funds, securities, or other properties in the possession of the lawyer that the client or third person is entitled to receive.
(2) Lawyers shall make accurate entries of all financial transactions in their records of receipts and disbursements, in their special accounts, in their ledger books or similar records, and in any other books of account kept by them in the regular course of their practice, which entries shall be made at or near the time of the act, condition or event recorded.
(3) For purposes of Rule 1.15(d), a lawyer may satisfy the requirements of maintaining "copies" by maintaining any of the following items: original records, photocopies, microfilm, optical imaging, and any other medium that preserves an image of the document that cannot be altered without detection.
All special account withdrawals shall be made only to a named payee and not to cash. Such withdrawals shall be made by check or, with the prior written approval of the party entitled to the proceeds, by bank transfer. Only a lawyer admitted to practice law in New York State shall be an authorized signatory of a special account.
Whenever any sum of money is payable to a client and the lawyer is unable to locate the client, the lawyer shall apply to the court in which the action was brought if in the unified court system, or, if no action was commenced in the unified court system, to the Supreme Court in the county in which the lawyer maintains an office for the practice of law, for an order directing payment to the lawyer of any fees and disbursements that are owed by the client and the balance, if any, to the Lawyers’ Fund for Client Protection for safeguarding and disbursement to persons who are entitled thereto.
(g) Designation of Successor Signatories.
(1) Upon the death of a lawyer who was the sole signatory on an attorney trust, escrow or special account, an application may be made to the Supreme Court for an order designating a successor signatory for such trust, escrow or special account, who shall be a member of the bar in good standing and admitted to the practice of law in New York State.
(2) An application to designate a successor signatory shall be made to the Supreme Court in the judicial district in which the deceased lawyer maintained an office for the practice of law. The application may be made by the legal representative of the deceased lawyer’s estate; a lawyer who was affiliated with the deceased lawyer in the practice of law; any person who has a beneficial interest in such trust, escrow or special account; an officer of a city or county bar association; or counsel for an attorney disciplinary committee. No lawyer may charge a legal fee for assisting with an application to designate a successor signatory pursuant to this Rule.
(3) The Supreme Court may designate a successor signatory and may direct the safeguarding of funds from such trust, escrow or special account, and the disbursement of such funds to persons who are entitled thereto, and may order that funds in such account be deposited with the Lawyers’ Fund for Client Protection for safeguarding and disbursement to persons who are entitled thereto.
(h) Dissolution of a Firm.
Upon the dissolution of any firm of lawyers, the former partners or members shall make appropriate arrangements for the maintenance, by one of them or by a successor firm, of the records specified in Rule 1.15(d).
(i) Availability of Bookkeeping Records: Records Subject to Production in Disciplinary Investigations and Proceedings.
The financial records required by this Rule shall be located, or made available, at the principal New York State office of the lawyers subject hereto, and any such records shall be produced in response to a notice or subpoena duces tecum issued in connection with a complaint before or any investigation by the appropriate grievance or departmental disciplinary committee, or shall be produced at the direction of the appropriate Appellate Division before any person designated by it. All books and records produced pursuant to this Rule shall be kept confidential, except for the purpose of the particular proceeding, and their contents shall not be disclosed by anyone in violation of the attorney-client privilege.
A lawyer who does not maintain and keep the accounts and records as specified and required by this Rule, or who does not produce any such records pursuant to this Rule, shall be deemed in violation of these Rules and shall be subject to disciplinary proceedings.
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.
What exactly is a non NY matter?
The single biggest criticism of lawyers is their failure to return phone calls or otherwise communicate with their clients.
Retainer agreement. Who do you represent and who pays the bill?
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.
-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?
. 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.
Husband and Wife who cannot agree on who the "ultimate" beneficiaries of estate will be.
. Is all fair in love and Medicaid eligibility? 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.
Will contest on your Will.
Estate Litigation dealing with nonprobate assets payable to fiduciary.
Keep in mind who you represent.Likelihood that your fiduciary is the person in control. However, when there is estate litigation, you may have estate counsel giving testimony; and it may be helpful or harmful to fiduciary 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.
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"?
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.
communication aimed primarily at securing business.

References: §137
 §137
 §137
 §137
 § 32
 § 412
 v.