first you say you will, and then you won’t: what … · 2013-10-17 · ©2003, janis reinken and...

FIRST YOU SAY YOU WILL, AND THEN YOU WON’T: What Happens to Estate Planning Attorneys when Caught in the

Middle Between Husband and Wife Clients

by

JANIS REINKEN Attorney / Director of Risk Management

Texas Lawyers’ Insurance Exchange 900 Congress Avenue, Suite 500

P. O. Box 13325 Austin, Texas 78711

1/800-252/9332 or 512/480-9074 www.tlie.org ° [email protected]

State Bar of Texas 27TH ANNUAL ADVANCED

ESTATE PLANNING AND PROBATE COURSE June 5-6, 2003 San Antonio

CHAPTER 16

©2003, Janis Reinken and Texas Lawyers’ Insurance Exchange

SBOT Advanced Estate Planning and Probate Course 2003 June 5, 2003, Marriott Rivercenter, San Antonio, Texas

First You Say You Will, and Then You Won’t: What Happens to Estate Planning Attorneys When Caught in the Middle

Between Husband and Wife Clients by Janis Reinken, Austin, Texas

Table of Contents

I. Basic Premises Regarding Husband and Wife Clients in Estate Planning A. The client-attorney relationship is fiduciary in nature. B. Proof of breach of fiduciary duty allows jury proof of misconduct, not just negligence.

1. The Disciplinary Rules as “some evidence” of misconduct 2. The “Bazillion Dollar Question:” what is attorney “misconduct,” anyway?

a. Selected Cases. b. Disciplinary Rules and professional misconduct

3. A breach of confidentiality or conflict may support a claim of breach of fiduciary duty based on misconduct.

C. Remedies: breach of fiduciary claims may be alleged as a basis for fee forfeiture, and /or in support of a damage claim.

1. Standard of care regarding legal malpractice liability theories; breach of fiduciary duty claims require client-attorney privity 2. High stakes in the breach: fiduciary duty damages and fiduciary duty fee forfeiture 3. The client’s claim of breach of fiduciary duty in support of attorney’s fee forfeiture is an equitable concept.

II. An attorney-client relationship (an element of fiduciary duty proof) can be created by express agreement, or imputed by proper proof of conduct and communication. A. The Accidental Client

B. A client relationship (agreed or imputed) with an attorney creates standing to assert a breach of fiduciary claim in a malpractice suit. III. Taking a client’s priorities and preferences for granted is risky business: they can and do change their minds, and sometimes they even withhold information. IV. Conclusion


SBOT Advanced Estate Planning and Probate Course 2003 June 5, 2003, Marriott Rivercenter, San Antonio, Texas

First You Say You Will, and Then You Won’t:

What Happens to Estate Planning Attorneys When Caught in the Middle Between Husband and Wife Clients

by Janis Reinken, Austin, Texas

Table of Citations and Other Authorities

Barcelo v. Elliott, 923 S.W.2d 575, 579 (Tex. 1996) Bell v. Phillips, 2002 Tex. App. LEXIS 2734, unpub. (Tex. App. Houston [14th] April 18, 2002) Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999) Chapman Children's Trust v. Porter & Hedges, L.L.P., 32 S.W.3d 429 (Tex. App. - Houston [14th] 2000). Cosgrove v. Grimes, 774 S.W.2d 662, 665 (Tex. 1989) Cuyler v. Minns, 60 SW3d 209, 214 (Tex. App. – Houston [14th] 2001, pet. den.) Daves v. Commission on Lawyer Discipline, 952 S.W.2d 573 (Tex. App. – Amarillo 1997, pet. den.) Deutsch v. Hoover, Bax & Slovacek, L.L.P., 97 S.W.3d 179 (Tex. App.—Houston [14th] 2002, no pet.). Estate of Arlitt v. Paterson, 995 S.W.2d 713 (Tex. App. - San Antonio, 1999, pet. den.) Estate of Murphy, 694 S.W.2d 10, 15 (Tex. App. - Corpus Christi, 1984, n.r.e.) Guest v. Cochran, 993 S.W.2d 397 (Tex. App. – Houston [14th] 1999, no pet.) Goffney v. Rabson, 56 S.W.3d 186, 193 (Tex. App. – Houston [14th] 2001, pet. den.) Haase v. Herberger, 44 S.W.3d 267 at 270 (Tex. App.–Houston [14th] 2001, no writ) Hunt v. Knolle, 551 S.W.2d 764, 766 (Tex. Civ. App.--Tyler 1977, no writ) Lee v. Lee, 47 S.W.3d 767 at 780-781 (Tex. App.–Houston [14th] 2001 [corr. opin. May 17, 2001], rev. den.) Lesikar v. Rappeport, 33 S.W.3d 282, 319 (Tex. App. – Texarkana 2000, rev. den.) Longaker v. Evans, 32 S.W.3d 725 (Tex. App. – San Antonio, 2000, review withdrawn pursuant to settlement (Jun 07, 2001)) Oechsner v. Ameritrust Texas, N.A., 840 S.W.2d 131, 132 (Tex. App. – El Paso, 1992, writ den.) Parker v. Carnahan, 772 S.W.2d 151, 156 (Tex. App.-Texarkana 1989, writ den.) Piro v. Sarofim, 80 S.W.3d 717 (Tex. App. – Houston [1st] 2002) Rutanen v. Baylis (In re Baylis), 313 F.3d 9 (U.S. 1st Cir., 2002) SMWNPF Holdings, Inc., v. DeVore, 165 F.3d 360 (U. S. 5th Cir. 1999) Thigpen v. Locke, 363 S.W.2d 247, 253 (Tex. 1962) Tips v. Yancey, 431 S.W.2d 763, 765 (Tex. 1968) (per curiam) Two Thirty-Nine Joint Venture v. Joe, 69 S.W.3d 896, 905-06 (Tex. App.- Dallas 2001, pet. granted 2/13/03, argued 2/9/03) Vinson & Elkins v. Moran, 946 S.W.2d 381 (Tex. App.- Houston [14th] 1997, writ dism'd by agr.) Wright v. Gundersen, 956 S.W.2d 43 (Tex. App. – Houston [14th], 1996, n.w.h.)

http://www.TexasBarCLE.com/CLE/PMCasemaker.asp?table=TX_caselaw&volume=923&edition=S.W.2d&page=575&id=73524_01



















http://www.TexasBarCLE.com/CLE/PMCasemaker.asp?table=US_5thcircuit&volume=313&edition=F.3d&page=9&id=73524_01




http://www.TexasBarCLE.com/CLE/PMCasemaker.asp?table=AR_caselaw&volume=69&edition=S.W.3d&page=896&id=73524_01




Other Authorities John S. Dzienkowski, Lawyers as Intermediaries: The Representation of Multiple Clients in the Modern Legal Profession, 1992 U. Ill. L. Rev. 741 R. Hal Moorman, Don’t Come to my Office with Suing Me on Your Mind: Ethical Engagement Letters (Houston Bar Association, March 6, 2003) TEX. DISCIPLINARY R. PROF. CONDUCT, preamble Par. 7. TEX. DISCIPLINARY R. PROF. CONDUCT, Preamble Par. 15, TEX. GOV'T CODE ANN., tit. 2, subtit. G app. A (Vernon’s, 1998). TEX. DISCIPLINARY R. PROF. CONDUCT, Rules 1.06, 1.07, 8.04 (1990) TEX. GOVT CODE ANN., tit. 2, subtit. G, app. (Vernon Supp. 1995)(State Bar Rules art X [[section]]9). ABA/BNA Lawyers’ Manual on Professional Conduc t, No. 247 at 51:316, Jan. 29, 2003 (©ABA/BNA 2003). ABA Model Rules of Professional Conduct (adopted August 2, 1983, as amended 2002) Profile of Legal Malpractice Claims 1996-1999, Table No. 1, page 59 (American Bar Association, April 2001) Selected Texas Divorce Statistics, at www.divorcereform.org/txdivorces.html (pub. AmericansforDivorceReform,[email protected]) U.S. Census Bureau, Statistics Abstract of the United States: 2002, from http://www.census.gov/prod/2003pubs/02statab/vitistat.pdf

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SBOT Advanced Estate Planning and Probate Course 2003 First You Say You Will, and Then You Won’t:

What Happens to Estate Planning Attorneys When Caught in the Middle Between Husband & Wife Clients © 2003, Janis Reinken and Texas Lawyers’ Insurance Exchange

First You Say You Will, and Then You Won’t: What Happens to Estate Planning Attorneys When Caught in the Middle

Between Husband and Wife Clients1 by Janis Reinken, Austin, Texas

SBOT Advanced Estate Planning and Probate Course 2003

June 5, 2003, Marriott Rivercenter, San Antonio, Texas

I. Basic Premises Regarding Husband and Wife Clients in Estate Planning A. The client-attorney relationship is fiduciary in nature.

Where an acknowledged attorney-client relationship exists between a lawyer and a client, Texas common law places a fiduciary duty on the attorney who serves in the role of agent to the client as principal. See, e.g., Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999), and Thigpen v. Locke, 363 S.W.2d 247, 253 (Tex. 1962) (a fiduciary relationship arises from such special relationships as principal-agent, attorney-client, or guardian-ward). It may come as no revelation to most attorneys that “A fiduciary relationship exists between attorneys and clients as a matter of law.” Goffney v. Rabson, 56 S.W.3d 186, 193 (Tex. App. – Houston [14th] 2001, pet. den.) (the client sued the lawyer for malpractice in an underlying suit involving a will contest).2

1 Although this paper contains some practical information and discussion for avoiding legal malpractice claims, the information presented is not intended to establish, define, or augment the standard of care for attorneys, or to create new standards of care; some claim avoidance techniques may be suggested in order to minimize the likelihood of spurious claims which frequently are asserted against careful, ethical attorneys.

This paper will not attempt to address the nuances pertaining to claims arising out of joint and mutual wills between husband and wife, inasmuch as use of that type of will seems to have dropped in frequency following the 1968 legislative changes allowing women to convey interests in real property. Litigation concerning joint and mutual wills between spouses appears to have been more frequent before the late 1970’s than it has been since then. See, e.g., Tips v. Yancey, 431 S.W.2d 763, 765 (Tex. 1968) (per curiam) and Hunt v. Knolle, 551 S.W.2d 764, 766 (Tex. Civ. App.--Tyler 1977, no writ); cf., Estate of Murphy, 694 S.W.2d 10, 15 (Tex. App. - Corpus Christi, 1984, n.r.e.) (contractual wills between two sisters). Also, outside the scope of this paper will be the implications of any relationship between an attorney who prepares wills for clients and those third parties who claim inheritance rights under those wills or other estate planning documents (or notwithstanding them, as the case may be). 2 However, it has not been established in Texas that an attorney owes any fiduciary duty to a non-client. In Lesikar v. Rappeport, 33 S.W.3d 282, 319 (Tex. App. – Texarkana 2000, rev. den.), a summary judgment was affirmed for the opposition attorney in estate litigation; one co-executrix alleged the attorney for the other co-executrix had engaged in a conspiracy to assist her in having committed the fraud and breaches of fiduciary duty as found by the jury. The Court








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However, after Burrow v. Arce, the implications of a breach of that fiduciary duty now carry more impact, suggesting a need for more precautionary measures in dealing with marital estate planning clientele. The equitable “fee-forfeiture” doctrine adopted by the Supreme Court in Burrow v. Arce prompted the setting of an evidentiary standard for the finder of fact in evaluating the gravity of the misconduct associated with such a breach of fiduciary duty. Breach of fiduciary duty claims may or may not be treated distinctly from claims of negligence, in a legal malpractice case; the general idea is that a malpractice claim sounds in tort and should not be “fractured.”

For example, one Court of Appeals concluded, in a law firm’s fee suit against a client-

real estate investor, that the trial court erred in directing a verdict against a client claiming fee forfeiture based on alleged breaches of fiduciary duty concerning conflict of interest complaints under Rule 1.06 (b)-(d). Deutsch v. Hoover, Bax & Slovacek, L.L.P., 97 S.W.3d 179 (Tex. App.—Houston [14th] 2002, no pet.). After considering various precedent concerning the impermissible “fracturing” of a negligence claim of malpractice into other additional claims, the Court concluded that, since the evidence raised a material fact issue regarding alleged wrongful conduct due to conflicts of interest, on remand the trial court should charge the jury as to both claims, regardless of whether the claims were alleged in the alternative. Id. (citing Burrow v. Arce in support of the proposition that the jury should decide fact issues regarding breach of fiduciary duty and negligence even though the same actionable conduct served as a basis for both theories of recovery).

B. Proof of breach of fiduciary duty allows jury proof of misconduct, not just negligence.

1. The Disciplinary Rules as “some evidence” of misconduct In short, Burrow v. Arce has altered the landscape in terms of the evidence potentially

admissible in a legal malpractice suit wherein a client alleges the attorney has breached a fiduciary duty (meaning generally, committing misconduct by breaching a disciplinary rule) as well as negligently represented the client’s interests. Whereas a failure to comply with the Texas Disciplinary Rules of Professional Conduct (TDRPC) is not in itself the basis for a cause of action for damages,3 a trial court may admit evidence of Disciplinary Rule violations

pointed out the attorney’s fiduciary duties were owed to his client, not to the other co-executrix; as such, the co-executrix client (and not the attorney) owed fiduciary duties to the estate. 3 TEX. DISC. RULES OF PROF. COND., Preamble Par. 15, TEX. GOV'T CODE ANN., tit. 2, subtit. G app. A (Vernon’s, 1998). “These rules do not undertake to define standards of civil liability of lawyers for professional conduct. Violation of a rule does not give rise to a private cause of action nor does it create any presumption that a legal duty to a client has been breached. Likewise, these rules are not designed to be standards for procedural decisions. Furthermore, the purpose of these rules can be abused when they are invoked by opposing parties as procedural weapons. . . . Accordingly, nothing in the rules should be deemed to augment any substantive legal duty of lawyers or the extra-disciplinary consequences of violating such a duty.” See also, Cuyler v. Minns, 60 SW3d 209, 214 (Tex. App. – Houston [14th] 2001, pet.



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(misconduct) for the jury to consider regarding a client’s breach of fiduciary duty claim for fee forfeiture, alongside the evidence of negligence allegedly constituting a breach of the standard of care. Cf., Two Thirty-Nine Joint Venture v. Joe, 69 S.W.3d 896, 905-06 (Tex. App.- Dallas 2001, pet. granted 2/13/03, argued 2/9/03)(citing Burrow v. Arce).

Although not a probate case, consider the result of a malpractice trial in which legal

expert witnesses for both sides were allowed to testify to the Disciplinary Rules as some evidence of the standard of care. In Piro v. Sarofim, 80 S.W.3d 717 (Tex. App. – Houston [1st] 2002), a divorce client obtained a $3,000,000 verdict for actual damages and another $3,000,000 as fee forfeiture for breach of fiduciary duty, however the trial court entered judgment only as to the forfeiture. The Court of Appeals held it was not error for the trial court to admit into evidence the testimony about the Disciplinary Rules from two well-known legal malpractice expert witnesses. Some trial courts might admit evidence of the Disciplinary Rules and some might not, but if so, it will challenge the ability of the jury to discern between the Disciplinary Rules as some proof of the breach of fiduciary duty, and the standard of care as applied to proof of negligence claims.

Another Court of Appeals case (recently argued before the Supreme Court) has potential

implications in regard to use of the Disciplinary Rules as some evidence of the standard of care. Two Thirty-Nine Joint Venture v. Joe, 69 S.W.3d 896 (Tex. App.- Dallas 2001, pet. granted 2/13/03, argued 2/9/03). At issue there was an attorney’s role serving as a public official voting on a municipal zoning matter affecting the interest of a real estate developer client. The Court of Appeals discussed at some length the duty of loyalty and the fiduciary duty owed by an attorney to a client, relying heavily on the Restatement in analyzing the application of conflict Rules 1.06 (general rule), 1.10 (successive government and private employment), and 1.13 (public interest activities). 69 S.W.3d. at 905-06.4 In the context of this paper as regards future liability den.)(client disappointed with trial recovery amount brought negligence and breach of fiduciary duty claims, among others). 4 “[The complaining client and] its expert used the Texas Disciplinary Rules of Professional Conduct to demonstrate the standard of care and duties of an attorney to avoid conflicts and keep the client informed. The preamble of the Disciplinary Rules states that the rules are not to define the standards of civil liability. TEX. DISCIPLINARY R. PROF'L CONDUCT preamble P 15, reprinted in TEX. GOV'T CODE ANN., tit. 2, subtit. G app. A (Vernon 1998) (TEX. STATE BAR R. art. X, § 9) ("Violation of a rule does not give rise to a private cause of action nor does it create any presumption that a legal duty to a client has been breached."). However, the preamble does not comment on and is not inconsistent with the use of the rules as evidence of a violation of an existing duty of care, as provided for by the Restatement (Third) of the Law Governing Lawyers. See RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 52(2) & cmt. (f) (2000). Section 52(2) provides that a rule or statute regulating the conduct of lawyers does not give rise to an implied cause of action for professional negligence or breach of fiduciary duty, but it may be considered by a trier of fact in understanding and applying the standard of care for malpractice or determining a breach of fiduciary duty. Id. § 52(2). This provision reflects a common-sense approach to using the rules




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exposure of estate planning and probate counsel, the relevance of the JV Two Thirty-Nine case (and its pending outcome at the Supreme Court) is not based on the outcome of the developer’s dispute with the attorneys over the alleged conflict and lack of disclosure, but on the court’s reasoning:

“Barring the use of the code and denying that the code is relevant to the duties a lawyer has to his client is not logical and would require the re-creation of a standard of care without reference to verifiable or pre-existing rules of conduct. [citing to Note, The Evidentiary Use of the Ethics Codes in Legal Malpractice: Erasing a Double Standard, 109 HARV. L. REV. 1102, 1119 (1996).] Therefore, the trier of fact may consider the construction of a relevant rule of professional conduct that is designed for the protection of persons in the position of the claimant as evidence of the standard of care and breach of the standard. RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 52, cmt. (f). Notwithstanding the disciplinary rules, an attorney's duty of care includes the duty to avoid conflicts of interest that may impair the attorney's ability to exercise independent professional judgment on behalf of the client. Id. § 16(3); 1 GEOFFREY C. HAZARD, JR. & W. WILLIAM HODES, THE LAW OF LAWYERING § 4.4 (2001). And the duty to avoid conflicts of interest is a key aspect of the [*18] fiduciary duty that an attorney owes to his client generally. RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 16(3).” Joe v. Two Thirty Nine Joint Venture, supra, 69 S.W.3d at 905. 2. The “Bazillion Dollar Question:” what is attorney “misconduct,” anyway? a. Selected Cases.

of conduct in a malpractice or breach of fiduciary duty action. A standard of care in a professional negligence suit does and should reflect work custom. Note, The Evidentiary Use of the Ethics Codes in Legal Malpractice: Erasing a Double Standard, 109 HARV. L. REV. 1102, 1118 (1996) (citing Charles W. Wolfram, The Code of Professional Responsibility as a Measure of Attorney Liability in Civil Litigation [*17] , 30 S.C. L. REV. 281, 294 (1979)). Lawyers have established codes of conduct to reflect a professional consensus that no attorney shall fall below. Id.; see TEX. DISCIPLINARY R. PROF'L CONDUCT, preamble Par. 7. 69 S.W.3d at p. 905.

“. . .When a lawyer continues representation with the possibility of a conflict without obtaining properly informed consent from the affected client, there is a breach of the duty of loyalty. 1 HAZARD & HODES, supra, § 4.4. Because avoiding conflicts of interest and thereby observing the fiduciary duty of loyalty is an action that a reasonably prudent lawyer would observe in relation to the client, a lawyer can be civilly liable to a client if the lawyer breaches a fiduciary duty to a client by not avoiding impermissible conflicts of interest, and the breach is a legal cause of injury. RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS §§ 16(3), 49; 1 HAZARD & HODES, supra, § 4.4; see Arce v. Burrow, 958 S.W.2d 239, 245-46 (Tex. App.-Houston [14th Dist.] 1997) (describing attorney's fiduciary duty to client), aff'd in part & rev'd in part on other grounds, 997 S.W.2d 229 (Tex. 1999).” 69 S.W.3d at p. 905-06.




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One is tempted to say that this seems to be something for juries to know, and attorneys to find out; however, no risk-avoidant attorney wants to serve as poster child to demonstrate the answer. Considering the relative newness of the Burrow v Arce ruling, the answer in published precedent is determined on a case-by-case basis and probably will remain so, until some malpractice cases are tried to verdict and appealed.

One viewpoint was expressed by the Fourteenth Court of Appeals in a legal malpractice

case arising from a $750,000 loss at trial of a will contest matter. Goffney v. Rabson, 56 S.W.3d 186 (Tex. App.--Houston [14th] 2001, pet. den.). In Goffney, a malpractice suit by a disgruntled will contest client, the Court of Appeals reversed a judgment of $225,000 in actual damages plus specials. In holding that Rabson’s pleadings had dropped the claim for legal malpractice (and in so doing abandoned the breach of fiduciary claim in her amended pleadings), the Fourteenth Court described the kind of conduct commonly associated with an attorney’s breach of fiduciary duty:

“Breach of fiduciary duty by an attorney most often involves the attorney's failure to disclose conflicts of interest, failure to deliver funds belonging to the client, placing personal interests over the client's interests, improper use of client confidences, taking advantage of the client's trust, engaging in self-dealing, and making misrepresentations

[citations in footnote omitted].” Goffney v. Rabson, 56 S.W.3d at 193.

The will contest client, Rabson, belatedly added her breach of fiduciary duty claims against Goffney, who as the third attorney on the estate case had been denied a motion to withdraw and was unable to obtain a continuance for further preparation. At trial of the estate case, the jury found Rabson had not prosecuted the will contest in good faith and with just cause, and awarded $750,000 against her based on claims for her interference with the right of inheritance, intentional infliction of emotional distress, and attorney's fees. She then filed for bankruptcy. 56 S.W.2d at 189. Hence, her malpractice claims against the attorney.

And, in the context of bankruptcy proceedings and fiduciary defalcation as a non-

dischargeable debt, consider one attempt by the U.S. Court of Appeals for the First Circuit to clarify what constituted “defalcation” by an attorney serving as co-trustee, in which it bestowed a mixed blessing on the attorney. Rutanen v. Baylis (In re Baylis), 313 F.3d 9 (U.S. 1st Cir., 2002). There, the Court determined that a probate court judgment against the attorney/co-trustee was a non-dischargeable one for reasons of defalcation under 11 U.S.C. Sec. 523(a)(4) (2000), but reduced the amount owed due to lack of any finding by the district court or bankruptcy court of any willfulness or intent to injure. Baylis, the attorney, created a trust for a client then served as co-trustee with the deceased client’s daughter in managing some real estate rental property owned by the trust. The income beneficiaries accused the attorney/co-trustee of "willful and malicious injury by a debtor to another entity or to the property of another entity" under Sec.523(a)(6), for failing to sell some estate properties for bona fide offers near $1.6 million, in deference to the daughter/co-trustee’s interest in keeping the properties in the family although they were not a good source of income-production, causing a loss to the estate and trust. The





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probate court found the co-trustees had violated their fiduciary duties, and awarded judgments of $330,079.95 to the beneficiaries and $607,900.27 to the remaindermen.

Although the First Circuit viewed the co-trustee daughter as having committed a

sufficiently egregious breach of her own duty of loyalty around the time of the proposed sales, it looked differently upon whether the attorney/co-trustee's failure to bring her defalcation to the attention of the probate court was a defalcation in itself. The Court was “troubled” by the fact that Baylis failed to disclose material information to the probate court when he applied for instructions to sell; he did not describe the co-trustee's conflict of interest, her breach of fiduciary duty, or the facts giving rise to the problem. However, the Court characterized his judgment in handling his “troublesome” co-trustee as flawed and clearly negligent, but not entirely unreasonable and as such, not so reckless as to rise to the level of fault needed to constitute a defalcation.

b. Disciplinary Rules and professional misconduct The ABA Model Rules and their comments offer more descriptive guidance in regard to

misconduct (or compliant conduct) than is often found in the Texas Disciplinary Rules. However, the basic principles are frequently similar. For instance, Texas Rule 8.04 contains a catch-all provision, similar to the ABA Model Rule counterpart:5

“(a) A lawyer shall not:

(1) violate these rules, knowingly assist or induce another to do so, or do so through the acts of another, whether or not such violation occurred in the course of a client-lawyer relationship;

(2) commit a serious crime or commit any other criminal act that reflects adversely on the lawyers honesty, trustworthiness or fitness as a lawyer in other respects;

(3) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; . . .

(12) violate any other laws of this state relating to the professional conduct of lawyers and to the practice of law.

5 “MAINTAINING THE INTEGRITY OF THE PROFESSION: RULE 8.4 MISCONDUCT It is professional misconduct for a lawyer to: (a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another; (b) commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects; (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; . . . .” ABA Model Rules of Professional Conduct (adopted August 2, 1983, as amended 2002) (©ABA/Center for Professional Responsibility, 2003 Edition; also see http://www.abanet.org/cpr/mrpc/mrpc_toc.html).

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(b) As used in subsection (a)(2) of this Rule, serious crime means barratry; any felony involving moral turpitude; any misdemeanor involving theft, embezzlement, or fraudulent or reckless misappropriation of money or other property; or any attempt, conspiracy, or solicitation of another to commit any of the foregoing crimes.” Tex. Disciplinary R. Prof. Conduct, Rule 8.04 (1989) reprinted in Tex. Govt Code Ann., tit. 2, subtit. G, app. (Vernon Supp. 1995)(State Bar Rules art X [[section]]9). So, according to Texas Rule 8.04(a)(1), a lawyer shall not violate the Disciplinary Rules.

In the context of husband-wife representation in estate planning, it seems the particular rules most apropos for discussion would be confidentiality (the bedrock for the conflict of interest rules) and consent to multiple representation. Here is where the Texas Disciplinary Rules present a dichotomy: on the one hand, the general conflict Rule 1.06 would not necessarily treat common representation of two parties as a conflict situation requiring a waiver, unless the parties were materially adverse to each other (assume the substantially related matter as a given in planning the marital estate). On the other hand, the joint client conflict Rule 1.07(d) is newer (effective Jan. 1, 1990), and it states that where a lawyer is representing “two or more parties with potentially conflicting interests” in common representation (assume again that marital estate planning meets that test), the lawyer is serving as intermediary if their interests “potentially conflict.”6

In that event, Rule 1.07 would dictate that disclosure (written or unwritten) be made to all parties that the attorney-client privilege is being waived, and a signed conflict waiver obtained from each, still keeping each client adequately informed, maintaining impartiality. Rule 1.07(a)(1) and Comments 6, 7. Comment 1 also refers to estate distribution as being a potential common representation situation where a lawyer might serve as intermediary: “A lawyer acting as intermediary may seek to establish or adjust a relationship between clients on an amicable and mutually advantageous basis. For example, the lawyer may assist in organizing a business in which two or more clients are entrepreneurs, in working out the financial reorganization of an enterprise in which two or more clients have an interest, in arranging a property distribution in settlement of an estate or in mediating a dispute between clients. The lawyer seeks to resolve potentially conflicting interests by developing the parties’ mutual interests.”

Compare or contrast with that provision, however, Comment 15 to Rule 1.06: “Conflict

questions may also arise in estate planning and estate administration. A lawyer may be called upon to prepare wills for several family members, such as husband and wife, and depending

6 Although the 2002 revisions of the ABA Model Rules deleted the intermediary rule formerly stated in 2.2, see John S. Dzienkowski, Lawyers as Intermediaries: The Representation of Multiple Clients in the Modern Legal Profession, 1992 U. Ill. L. Rev. 741, for a comprehensive analysis of the rules applied to multi-party representation by lawyers acting as intermediaries.

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upon the circumstances, a conflict of interest may arise. . . . The lawyer should make clear the relationship to the parties involved.”7

In terms of applying the conflict of interest rules in the husband-wife estate planning

context, the attorney faces a dilemma in regard to conflict of interest disclosure and consent rule to follow. If alleged to have breached a fiduciary duty to one of the spouse-clients, would the criteria of Rule 1.06 apply, or would the court look to Rule 1.07 for its ins tructions to the jury? Which conflict rule would a Texas court apply, if called upon to instruct a jury in a breach of fiduciary duty case alleging conflict of interest as misconduct by the attorney defendant, seeking either the remedy of fee forfeiture or damages or both? Might the court submit both rule-based allegation fact issues to the jury on misconduct at the same juncture as the fact issue concerning standard of ordinary care? Would a jury perceive its function as one of disciplinary enforcement, or liability assessment?

Again, the case law developed since Burrow v. Arce is limited but growing; in the debate

over whether a conflict of interest required a proper waiver by the client, the possibility exists 7 The comments to the ABA Model Rules are somewhat more descriptive than the Texas comments; however, Texas has yet to propose any rule revisions following the approval of the new Model Rules most recently in 2002: see http://www.abanet.org/cpr/mrpc/rule_1_7.html. Relevant excerpts of Rule 1.7 (which now requires written consent to waive a conflict of interest in concurrent representation) and its comments are quoted in an Appendix to this paper. However, consider the notion expressed in the ABA Practice Guide concerning multiple representation and conflicts of interest, that more leeway exists in matters not involving litigation, such as estate planning: “Lawyers frequently assist multiple clients who have a common goal, such as providing estate planning for spouses. If the circumstances do not present any realistic threat that the lawyer’s responsibilities to one client will materially limit or adversely affect the representation of the other, no conflict is presented, and the lawyer is not ethically obligated to seek client consent. Restatement of the Law Governing Lawyers, Sec. 130 cmt. c (2000) . . .” ABA/BNA Lawyers’ Manual on Professional Conduct, No. 247 at 51:316, Jan. 29, 2003 (©ABA/BNA 2003). In estate planning for husband and wife, the attorney may proceed without a conflict waiver if there is “no evidence of a conflict between their interests; however, if a conflict is apparent or foreseeable the lawyer must obtain informed consent to undertake the representation. Restatement of the Law Governing Lawyers Sec. 130 cmt. c (2000). . . . This dual representation can become complicated if one spouse confides secrets to the lawyer and asks that they not be revealed to the other spouse,” summarizing Florida Ethics Opinion 95-4 (1997) where the committee advised that the attorney would need to withdraw from representing either party when the husband confided that he wished to provide for a beneficiary unknown to the wife. Id., at 51:325-26. In addition, reference is made there to criticism in commentary by legal author and frequent expert witness, Geoffrey Hazard, to the effect that it would be a “legal and ethical oxymoron” to attempt simultaneous separate representation of spouses under an explicit agreement not to share the confidence of one with the other. Id. at 51:326, citing Hazard, Conflict of Interest in Estate Planning for Husband and Wife, 20 Prob. Law 1, 13 (1994).

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that a court could apply either Rule 1.06, or 1.07, whether or not the client provided a written waiver of consent. Such questions have not been answered frequently in Texas courts since Burrow v. Arce was issued, so the responsibilities of the attorney in these regards have not been clarified substantially in Texas case law. As a result of the Burrow v. Arce opinion, however, a trial court’s determination of breach of fiduciary duty claims will likely turn, not only on the standard of care to be applied, but will also depend at least in part on the application of conflict of interest Rules 1.06 and 1.07 of the Texas Disciplinary Rules of Professional Conduct and the evidence presented to the finder of fact on the issue of the alleged fiduciary duty breach. In one instance involving a non-spousal conflict of interest, the trial court opted for both possibilities.

Consider for example, the trial court’s presentation of multiple conflict Rules issues to the jury, in a disciplinary matter arising out of a personal injury case settlement proceeds dispute where the attorney had a conflict in representing the parents and their minor child regarding division of the funds. In Daves v. Commission on Lawyer Discipline, 952 S.W.2d 573 (Tex. App. – Amarillo 1997, pet. den.), the jury answered affirmatively to all three questions, whether Daves had committed violations of Rules 1.06 and 1.07 (conflict of interest provisions) and Rule 3.02 (minimizing the burdens and delays of litigation provision) of the Texas Disciplinary Rules of Professional Conduct. In submitting questions that tracked the language of Rules 1.06, 1.07 and 3.02, the trial court followed Tex. Rule of Civ. Proc. 278, treating all three issues as being supported by the pleadings and the evidence. 952 S.W.2d at 578. Considering the charge as whole, any error was held harmless. Id., at 579.8 The three jury questions presented at trial read as follows:

“Question 1: Did [the attorney] represent [the Parents] at a time where the representation of either or [sic] them involved a substantially rela ted matter in which either of their interests was materially and directly adverse to the interest of [the Child]? Question 2: Did [the attorney] represent [the Parents] where the representation of either

8 In the accompanying instructions to each question,

“. . . the trial court made clear to the jury that in order to answer each question affirmatively, they must conclude that Daves represented both the Parents and the Child. The instructions refer in several places to ‘common representation,’ ‘the representation of one client ... adversely affected by the lawyer's representation of ... the other client,’ ‘simultaneous representation,’ and ‘dual representation.’ These phrases instruct the jury that a common representation must be present to have a conflict of interest.

The instruction used in Question Three is illustrative of the way in which the trial court made the jury aware that they must find that Daves represented both the Parents and the Child to answer the question affirmatively. The instruction reads,

‘You are instructed that a lawyer acts as an intermediary between clients if the lawyer represents two or more parties with potentially conflicting interests.’

A lawyer may act as an arbitrator or mediator between or among parties who are not clients of the lawyer even when the lawyer has been appointed with the concurrence of the parties.” Daves, supra, 952 S.W.2d at 579.




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of them reasonably appeared to be or became adversely limited by [the attorney’s] responsibilities to [the Child]? Question 3: Did [the attorney] act as an intermediary between the interests of [the Parents] and the interests of [the Child] with respect to their respective claims against Southwest Neuropsychiatric Institute and Lionel Bell?” Id., at p. 578. The Court of Appeals affirmed the nine months’ suspension and assessment of attorney’s

fees based on the jury’s findings of violations of Rules 1.06(b)(1) and (2), 1.07, and 3.02.9 (See further discussion hereinbelow).

3. A breach of confidentiality or conflict may support a claim of breach of fiduciary duty

based on misconduct. Appearances can be deceiving: which brings us back to the nature of the attorney-client

relationship, its fiduciary character, and the duty of confidentiality, and the risk of assuming too much knowledge about what the clients will or won’t do with their estate plan. Consider the prospect of meeting with husband and wife who want you to draft separate wills for them at about the same time, and it seems they are in agreement about the disposition of their community and separate estates. What happens if one spouse requests that the attorney keep confidential certain facts from the other spouse? Is it necessary, or is it even appropriate, for the attorney to meet separately with each party to explain the wills before they are executed? How might Texas courts interpret a situation in which each will stands on its own, yet the interwoven nature of community assets and liabilities (not to mention homestead rights) and tax implications effectively keep the two wills from being treated independently? What duties would an attorney preparing the wills owe to such a married couple, in regard to confidentiality, loyalty and conflicts of interest? Are both parties considered to be joint clients of the attorney, or is each a separate client of the attorney?

9 Daves had been hired by some parents of an injured minor after they discharged the

previous attorney who had negotiated a tentative $1.5 million settlement under which the hospital had promised to pay only the child. Daves obtained appointments of the parents to serve as co-guardians of the estate and the person of the minor, and the parents offered to accept $500,000 of the total offered but no settlement was reached. Since the attorney was not court-appointed to represent the interests of the minor child, the Court cited Parker v. Carnahan, supra, among other authority, in justification of the determination that his actions and the evident intentions of the parents supported the finding of an imputed attorney-client relationship with the child. Daves, 952 S.W.2d at 577. The Court noted that, even after attorneys ad litem were appointed to represent the child’s interests in the potential $1.5 million settlement, Daves acted without the involvement of the ad litems, in continuing to attempt re-negotiate the original settlement negotiated with the hospital by the parents’ previous attorney, both to the detriment of one client (the child) and to the benefit of the other clients, the parents. Id.


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Unfortunately, the answers to such questions have yet to be revealed, however one can expect them to be interpreted on a case-by-case basis in Texas courts. There has been very little clarifying litigation after Burrow v. Arce concerning the specific duties, standard of conduct, or conflict rule analysis that would apply specifically to representation of husband and wife when preparing their wills. However, consider one appellate court’s approach in Haase v. Herberger, 44 S.W.3d 267 at 270 (Tex. App.–Houston [14th] 2001, no writ hist.), where a litigation firm was representing Mr. and Mrs. Haase in a litigation matter still pending when they filed for divorce. Commenting on the dual representation of the husband and wife in their underlying pre-divorce residential construction dispute, the Court indicated there might have been some merit to the husband’s breach of fiduciary duty claim regarding the alleged representational conflict under TDRPC 1.06 in concluding the litigation settlement against his wishes. However, the Court held that in spite of the firm’s failure to follow the conflict criteria of Rule 1.06, there was no basis for imposing a fee forfeiture on the litigation firm because the divorce court had entered an order granting sole authority to the wife (represented by a different law firm) to settle the real estate litigation.

Given the context here, it would seem most likely that any conflict between husband and

wife estate planning clients could be resolved by each seeking the advice of independent counsel. However, if one party should one party and the survivor discover a complaint about the attorney’s fees or loss in actual damages to the survivor or the decedent’s estate, then conceivably the surviving spouse as executor could attempt that cause of action (although one could merely speculate on the outcome) against estate and trust counsel.

This did happen though, in at least one Court of Appeals case, where the decedent’s will

(and his death) pre-dated the adoption of Rule 1.07, reference was made to Rule 1.06 in the context of a conflict-based legal malpractice claim asserted by the widow, who asserted she and her deceased husband were joint clients of the firm that prepared their 1983 wills, which became the subject of a will contest when he died. In Estate of Arlitt v. Paterson, 995 S.W.2d 713 (Tex. App. - San Antonio, 1999, pet. den.), the same law firm had prepared wills for both Mr. & Mrs. Arlitt in 1983, and he died in 1987 after executing a codicil prepared by a different attorney. The codicil significantly altered Mr. Arlitt’s scheme of disposition and substantially disinherited Kristine, one of their four children. After enduring four years of a six-year will contest by that daughter, the widow and the three other siblings filed suit against both law firms.

Mrs. Arlitt and the three siblings sued individually, and in their respective capacities as executrix and individual beneficiaries. In addition to negligent misrepresentation and breach of contract, they alleged damage claims in negligence and gross negligence based on the premise that Mr. and Mrs. Arlitt, "‘on behalf of themselves, and also on behalf of their children (and as their children's agents),’ ‘sought and received legal estate planning services from the Attorneys; the Attorneys negligently advised Mr. and Mrs. Arlitt regarding their joint estate plan and negligently drafted Mr. Arlitt's 1983 will and 1985 codicil; [and that the claimants would] sustain substantial damages by . . . will contest(s), construction proceedings, and estate tax consequences.’” 995 S.W.2d at 717.




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The Arlitt legal malpractice litigation lasted over a period of ten years, in part due to tolling of the legal malpractice claims while the heirs worked out a settlement. Ultimately, the Court dismissed the individual claims of the children/beneficiaries with the exception of the negligent misrepresentation claims (not having been addressed in the defendants’ summary judgment motion), and it rejected the only legal malpractice cause of action available to Mrs. Arlitt in favor of Mr. Arlitt’s estate (which accrued after his death and provided her standing in her capacity as executrix), because the firms were not representing her in the estate matter. 995 S.W.2d at 720. However, the Court ruled that Barcelo v. Elliott, 923 S.W.2d 575, 579 (Tex. 1996), would not bar her individual claims alleging a joint client representation, “. . . because an attorney may not undertake a joint representation if a conflict of interest is presented, and she must withdraw if a conflict subsequently arises. Tex. Disciplinary R. Prof'l Conduct 1.06(b), (e) & cmt. 15, reprinted in Tex. Gov't Code Ann., tit. 2, subtit. G app. A (Vernon 1998).” 995 S.W.2d at 721. Thus Mrs. Arlitt’s individual legal malpractice claims based on her standing as a joint client were reversed and remanded, because they raised a material issue of fact whether the attorney defendants represented both Mr. and Mrs. Arlitt in providing their estate planning services. 995 S.W.2d at 722.

In another case interpreting Rule 1.06, a law firm brought a fee suit and drew a breach of

fiduciary duty counterclaim by a real estate investor; the Houston Fourteenth Court of Appeals referred to Rule 1.06 in regard to the alleged conflict of interest giving rise to the breach of fiduciary duty claim. Deutsch v. Hoover, Bax & Slovacek, L.L.P., 97 S.W.3d 179 (Tex. App.—Houston [14th] 2002, no pet.). After considering various precedent concerning the impermissible “fracturing” of a negligence claim of malpractice, the Court concluded that it would not treat the negligence claim and fiduciary duty claims as one, since the evidence raised a material fact issue regarding alleged wrongful conduct due to conflicts of interest, and instructed the trial court on remand to charge the jury as to both claims, regardless of whether the claims were alleged in the alternative.

In a disciplinary case involving conflicts of interest between representing some parents

and an incapacitated minor child in regard to a hospital’s settlement offer, the Amarillo Court of Appeals affirmed a nine-month suspension of an attorney who was found by a jury to have violated both Rules 1.06 and 1.07, and held that it was not error for the trial court to have submitted questions to the jury on the attorney’s alleged violation of both Rules. Daves v. Commission on Lawyer Discipline, 952 S.W.2d 573 (Tex. App. – Amarillo 1997, pet. den.).

Whether, as in the Daves case, another Court would go so far as to follow the same

approach in a malpractice liability case remains to be seen. However, it would seem logical that if an attorney defendant had obtained written conflict waivers from both clients in a common representation situation (assuming capacity of both parties and their informed consent), that a summary judgment motion would be viable and yet if denied, at least the court would be less likely to submit a jury issue on Rule 1.06 (no written consent required to waive substantially related/ materially adverse conflict in concurrent representation), and more likely to submit the issue on Rule 1.07 (written conflict waiver required where attorney is intermediary to two or more parties with potentially conflicting interests). Of course, not all trial courts would









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necessarily follow the same approach, and it is a matter of speculation how an appellate court might rule in such an instance.

C. Remedies: breach of fiduciary claims may be alleged as a basis for fee forfeiture, and /or in support of a damage claim.

While the client’s fee forfeiture remedy is a fairly daunting prospect in itself, that risk might present less exposure in a given case for an attorney defending a malpractice claim than would the prospect of a damage suit by a disgruntled party claiming a substantial loss to a financial interest held in a sizeable estate or trust. In general, anecdotal malpractice claim defense experience reveals that although there may be no specific legal precedent directly supporting that interested party’s particular malpractice claim or alleged standing to sue, that shortcoming seems to be no deterrent when it comes to protecting or pursuing a portion of a multi-million dollar estate or trust. The larger the interest at stake, the greater the incentive may be to assert the claim, because cost may not be an object to the sorely disappointed party – at least, not at the outset. And, there is some prospect they may be able to obtain contingent fee counsel.

1. Standard of care regarding legal malpractice liability theories; breach of fiduciary duty claims require client-attorney privity

Breach of fiduciary duty claims, asserted in support of malpractice suits for damages by clients, have been common and remain so in legal malpractice pleadings. Such claims require proof of actual damages, and proof that those actual damages would have been recoverable by the claimant but for the attorney’s breach of duty. See Cosgrove v. Grimes, 774 S.W.2d 662, 665 (Tex. 1989) (legal malpractice plaintiff must prove “case within a case” to collect damages, meaning that but for the alleged breach of duty of the attorney, there would have been a successful outcome of the underlying dispute); cf., Bell v. Phillips, 2002 Tex. App. LEXIS 2734, unpub. (Tex. App. Houston [14th] April 18, 2002) (citing Cosgrove v. Grimes: Bell, a former divorce client, alleged but was unable to prove actual damages for the alleged breach of fiduciary duty in failing to obtain a damage recovery for her in a business litigation matter).

A few decisions from Courts of Appeals indicate recognition of standing on the part of an estate’s legal representative to assert a cause of action against the attorney who prepared the decedent’s will (or trust, as the case may be), provided that the estate (or trust) can establish a loss to the estate or trust due to an error or omission by the attorney constituting a breach of duty to the decedent (or settlor of the trust). Longaker v. Evans, 32 S.W.3d 725 (Tex. App. – San Antonio, 2000, review withdrawn pursuant to settlement (Jun 07, 2001)); Wright v. Gundersen, 956 S.W.2d 43 (Tex. App. – Houston [14th], 1996, n.w.h.); Guest v. Cochran, 993 S.W.2d 397 (Tex. App. – Houston [14th] 1999, no pet.). However, without proof of damages or loss to the estate or trust, it would appear that the legal representative would not have a recognized cause of action against the attorney who prepared the documents in question. The beneficiary would not have an individual cause of action against the decedent’s or settlor’s attorney concerning the allegedly defective documents or asset administration; the lack of privity with the attorney would





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bar a cause of action for negligence or breach of fiduciary duty damages if asserted individually and not as a legal representative standing in the shoes of the former client. Barcelo v. Elliott, 923 S.W.3d 575 (Tex. 1996) (grandchildren had no individual claims against decedent’s attorney).

2. High stakes in the breach: fiduciary duty damages and fiduciary duty fee forfeiture

Charging an excessive fee may give rise to recoverable damages for breach of fiduciary

duty. In Lee v. Lee, 47 S.W.3d 767 at 780-781 (Tex. App.–Houston [14th] 2001 [corr. opin. May 17, 2001], rev. den.), a non- legal malpractice case, some beneficiaries sued to remove a trustee and sought damages for breach of fiduciary duty and excessive fees, amounting to some $2 million over a twenty year period. A $2.2 million award was reinstated as damages for a claim of excessive fees (reversing a $1.5 million remittitur), although the Court held that Arce did not apply because no specific pleading for fee forfeiture had been alleged in relation to the fiduciary duty claim. Id., at 180.

A breach of fiduciary duty claim against an attorney does not mean damages are automatic. In Goffney v. Rabson, 56 S.W.3d 186 (Tex. App.--Houston [14th] 2001, pet. den.), a will contest client, Rabson, brought breach of fiduciary duty claims against Goffney, who as the third attorney on the case was unable to withdraw or obtain a continuance for further preparation. At trial of the estate case, a $750,000 verdict went against Rabson on claims against her for interference with the right of inheritance, intentional infliction of emotional distress, and attorney's fees. She then filed for bankruptcy. 56 S.W.2d at 189. In the malpractice suit, the Court of Appeals reversed a judgment of $225,000 in actual damages plus specials, ruling that Rabson’s pleadings had dropped the claim for legal malpractice and in so doing had abandoned the claim as amended, alleging breach of fiduciary duty. “Breach of fiduciary duty by an attorney most often involves the attorney's failure to disclose conflicts of interest, failure to deliver funds belonging to the client, placing personal interests over the client's interests, improper use of client confidences, taking advantage of the client's trust, engaging in self-dealing, and making misrepresentations [footnote to citations omitted].” Id., at 193.

3. The client’s claim of breach of fiduciary duty in support of attorney’s fee forfeiture is an equitable concept.

The teaching of Burrow v. Arce is that in Texas courts, at least since July of 1999, proof

of actual damages will not be required, provided the client can persuade a jury that misconduct by the attorney has occurred which diminished the value of the legal services rendered, and if the court determines that the misconduct was sufficiently “clear and serious” to warrant full or partial forfeiture. The underlying case concerned multiple parties represented by several law firms in a mass tort case, and although the injured parties received settlement distributions pursuant to court approval and suffered no actual damages, issues arose later about the propriety of the settlement distribution. Under consideration by the Supreme Court were four primary issues: “(a) are actual damages a prerequisite to fee forfeiture? (b) is fee forfeiture automatic and entire for all misconduct? (c) if not, is the amount of fee forfeiture a question of fact for a jury or



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one of law for the court? and (d) would the Clients' allegations, if true, entitle them to forfeiture of any or all of the Attorneys' fees?” 997 S.W.2d at p. 237.

The Supreme Court relied heavily on the Restatement in acknowledging fact issues about

the attorneys’ alleged misconduct that justified further review on reversal and remand: “The proposed Restatement (Third) of The Law Governing Lawyers rejects a rigid approach to attorney fee forfeiture. Section 49 states:

‘A lawyer engaging in clear and serious violation of duty to a client may be required to forfeit some or all of the lawyer's compensation for the matter. In determining whether and to what extent forfeiture is appropriate, relevant considerations include the gravity and timing of the violation, its wilfulness, its effect on the value of the lawyer's work for the client, any other threatened or actual harm to the client, and the adequacy of other remedies.’ RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 49 (Proposed Final Draft No. 1, 1996).10 The remedy is restricted to ‘clear and serious’ violations of duty. Comment d to section 49 explains: ‘A violation is clear if a reasonable lawyer, knowing the relevant facts and law reasonably accessible to the lawyer, would have known that the conduct was wrongful.’ Id. cmt. d.”

Burrow v. Arce, 997 S.W.2d at p. 241. II. An attorney-client relationship (an element of fiduciary duty proof) can be created by express agreement, or imputed by proper proof of conduct and communication. A. The Accidental Client

It seems safe to conclude that under the current state of the law, a client may seek damages and/or fee forfeiture in a legal malpractice action, if proper proof of breach of a fiduciary duty by that client’s attorney can be established. Here is the rub, though: the claimant need not be an acknowledged client (where there is a specific fee agreement), but may be an 10 The Court compared the remedy for an attorney’s misconduct in considering a forfeiture of fees to a fee forfeiture appropriately imposed upon an agent guilty of disobedient conduct constituting a willful and deliberate breach of contract, or upon a trustee committing a breach of trust, as stated in Section 469 of the Restatement (Second) of Agency (1958) and Section 243 of the Restatement (Second) of Trusts (1959). Burrow v. Arce, 997 S.W.2d at p. 237. The Court interpreted these principles as calling for a similar application regarding the forfeiture issue concerning an attorney’s fees: “. . . Section 49 of the proposed Restatement (Third) of The Law Governing Lawyers applies the same rule to lawyers, who stand in a relation of trust and agency toward their clients. Section 49 states in part: ‘A lawyer engaging in clear and serious violation of duty to a client may be required to forfeit some or all of the lawyer's compensation for the matter.’ RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 49 (Proposed Final Draft No. 1, 1996).” Id., 997 S.W.2d at 237.


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“accidental” or “imputed” client. A party seeking standing to claim breach of fiduciary duty and negligence may, by proper proof of facts, establish status as a client by way of a constructive or imputed attorney-client relationship. See, e.g., Parker v. Carnahan, 772 S.W.2d 151, 156 (Tex. App.-Texarkana 1989, writ denied) (firm represented husband in defense of federal tax indictment, wife cooperated to her detriment); see also, Vinson & Elkins v. Moran, 946 S.W.2d 381 (Tex. App.- Houston [14th] 1997, writ dism'd by agr.).11

The imputed or accidental client premise is not that new, although most of the case law

developing under that topic has occurred since the 1990 amendments to the Texas Disciplinary Rules of Professional Conduct. However, when considered in the light of the 1999 ruling in Burrow v. Arce, and the potential malpractice claims available to married couples as wills and estate planning clients, the potential risk of an imputed client claim may serve as a forewarning for the savvy estate planning practitioner. One may argue that since Burrow v. Arce, the significance has heightened in defining who is, and who is not, a client, in being sure they know their status, and assuring that the attorney has made reasonable efforts to resolve any apparent misunderstanding about the attorney’s role in the matter at hand. Rule 4.03 of the TDRPC also supports this disclosure in regard to contacts with unrepresented parties.

B. A client relationship (agreed or imputed) with an attorney creates standing to assert a breach of fiduciary claim in a malpractice suit.

Once that “client” threshold is crossed, the attorney’s challenges escalate in regard to defense of a “fiduciary duty for damages” claim, since it would generally be easier for the imputed client to show how the attorney failed to meet the various duties owed (as if they were a conventional fee-paying client), than it would be for the attorney to show that he did meet them without realizing there was an attorney-client relationship.

Without an express attorney-client engagement agreement, however, the existence of an

attorney-client relationship is not a foregone conclusion. See, SMWNPF Holdings, Inc., v. DeVore, 165 F.3d 360 (U. S. 5th Cir. 1999). There, an imputed client-attorney relationship was alleged but the Court held that no standing existed to assert breach of fiduciary duty claims, because there was no evidence that an attorney-client relationship existed; the commercial litigation claimant’s alleged misunderstanding about the lack of an attorney-client representation was labeled “disingenuous” by the Court, considering the claimant’s level of business expertise, education, and past dealings with various attorneys.

11 Some litigious heirs brought direct and assigned malpractice claims against V&E,

which represented some co-executors in a will construction suit and later in the administration of the W.T. Moran estate administration; a different firm had prepared the estate planning wills for the decedent and his wife. In Vinson & Elkins v. Moran, the malpractice case jury found the attorneys had by their conduct established a client relationship with the beneficiaries during the handling of the W.T. Moran estate administration.





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And, in another instance, where no attorney-client relationship existed between the

claimants and the defendant law firm, a summary judgment for the defendant attorneys was affirmed in a case involving settlement of litigation and disbursement of settlement funds from a law firm’s trust account. Chapman Children's Trust v. Porter & Hedges, L.L.P., 32 S.W.3d 429 (Tex. App. - Houston [14th] 2000). There, the Court declined to impose a constructive fiduciary relationship based on the maintenance of a trust account, and explained the nature of a fiduciary relationship:

“A fiduciary duty requires the fiduciary to place the interest of the other party above his own. There are two types of fiduciary relationships. The first is a formal fiduciary relationship in which a duty arises as a matter of law, including those between an attorney and client, a principal and agent, a trustee and beneficiary, and partners in a partnership. The second is an informal fiduciary relationship, which may arise ‘from a moral, social, domestic or purely personal relationship . . . called a confidential relationship.’ Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 287 (Tex. 1998).” 32 S.W.3d 429 at 439 [additional citations omitted].

However, consider the “imputed” attorney-client relationship that resulted in one well-

publicized $35 million verdict against a large law firm representing some co-executors in estate administration and a will construction suit; a different firm had prepared the estate planning wills for the decedent and his wife. In Vinson & Elkins v. Moran, the malpractice case jury found the attorneys had established a client relationship with the beneficiaries during the handling of the W.T. Moran estate administration, in part because the firm included them in meetings at the law office, provided information, sent correspondence, and responded to tax-related inquiries, among other things. Vinson & Elkins v. Moran, 946 S.W.2d 381, 404-405, 411-13 (Tex. App.- Houston [14th] 1997, writ dism'd by agr.).

Although the malpractice case against V&E arose from the estate administration rather

than joint representation of Mr. & Mrs. Moran in planning their estates, it illustrates how a constructive attorney-client relationship may be imposed on lawyers from their contacts with several parties who have interests at stake, if the facts support such a finding. There, once a constructive client relationship was found, the claimants had standing to bring direct claims of negligence and breach of fiduciary duty, although not DTPA claims. 946 S.W.2d at 414.12

12 Upon his death in 1983, Mr. Moran bestowed his $85-$100 million estate upon his widow and thirteen other family members. Probate counsel for Mr. Moran withdrew from representation in anticipation of being required to testify in the will construction case about the estate planning documents they had prepared. That action was filed by V&E for the co-executors, raising questions about alleged errors by the estate planning counsel in some of the wills language, specifically the marital deduction to the widow. 946 S.W.2d at 386. The will construction case settled in 1985 and V&E took over the estate administration. Id.

Unhappy about the disposition of certain assets and litigation matters pending in the administration, some of the heirs sued V&E, alleging professional negligence, breach of






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III. Taking a client’s priorities and preferences for granted is risky business: they can and do change their minds, and sometimes they even withhold information. On one hand, it would seem a safe assumption that the relationship between two parties would be a substantially stable one if they ha ve been married only once and for many years, and their “mirror” wills leave everything to each other with remainder over to their adult children. On the other hand, appearances can be surprisingly misleading. Even if there is no outward evidence of a conflict between the spouses’ interests, is one foreseeable? How clear is your crystal ball?

Take, for example, the case of Mr. and Mrs. Oechsner, married with an adult son and daughter; whose wills had been in place an undetermined number of years although evidently prepared by attorneys given their disposition in trust to the surviving spouse with remainder over to the two children. However, Mrs. Oechsner, who was afflicted with multiple sclerosis and barely able to speak, changed her will about five years before her death in 1985, with the help of their grandson, an attorney. Oechsner v. Ameritrust Texas, N.A., 840 S.W.2d 131, 132 (Tex. App. – El Paso, 1992, writ den.). The daughter drove Mrs. Oechsner to a dentist’s office, where the will was executed. Unbeknownst to Mr. Oechsner, his wife had disinherited him through this new will, which he discovered two days after her funeral. Id.

Apparently, relationships between father and children were strained even before Mrs.

Oechsner’s death; it is not evident from the opinion if this might have been apparent to the lawyers who prepared the husband and wife wills. However, after her death, matters deteriorated further when their children became eager to take over the homestead and its furnishings, stepping in quickly after her demise to inventory the contents and attempting to divest him of the residence. Needless to say, Mr. Oechsner was not amused: he proceeded to prepare a new will in which he left the bulk of his estate to charity and the res to his housekeeper. When he died, fiduciary duty, conspiracy, and violations of the Texas Deceptive Trade Practices Act (DTPA). The litigation heirs complained that misconduct and mishandling of estate administration legal matters by V&E allowed the law firm to charge excessive fees and that certain individual lawyers for the executors had various unwaived conflicts of interest concerning ties with the bank/executor (e.g., directorships, stock holdings, or proprietary and financial interests) and other matters. The heirs argued that the conflicts system used by V & E was inadequate because it referenced only representational conflicts, but not any of the firm's or any individual attorney's interests, e.g., directorships, stock holdings, or proprietary and financial interests. 946 S.W.2d at 387. The Court of Appeals determined the litigation heirs had no consumer standing to assert DTPA claims, however reversed to allow clarification of the respective individual damage awards to two of the heirs, remanding for a new trial on both damages and liability. On re-trial, the litigation heirs would be allowed to pursue their direct, individual claims based on sufficient evidence found to have established an attorney-client relationship with V&E. 946 S.W.2d at 414.


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the son and daughter challenged his new will, claiming that at age 93, their father had been unduly influenced and was suffering from insane delusions centering around the misconception that his children had “taken property from him or had caused his wife to have left the children the property in her Will." 840 S.W.2d at 136. The Court held that if Mr. Oechsner thought those facts to be true, his state of mind was not irrational when he made the new will, based on the evidence.

This case may serve as encouragement for counsel to minimize any assumptions about the relationship between spouses, when planning the estates of husband and wife clients. Imagine Mr. Oechsner’s reaction upon learning that his own grandson had assis ted his wife in disinheriting him, after their many years of marriage. Imagine your own reaction, if you had been the attorney who prepared the couple’s wills and when the husband engaged you to probate the wife’s will, both of you learned for the first time that the will you had prepared for Mrs. Oechsner was no longer her “Last Will and Testament.”

This prompts the posing of a few rhetorical questions: in preparing husband and wife

wills, is it safe to assume anything about the nature of couple’s relationship, or their informed agreement about the disposition of their estates? If Mr. Oechsner could be so blindsided by the actions of a deceased spouse, how can the will-drafting attorney be aware of the status of the couple’s intentions, or know very much at all about their private bonds of trust, communication, or their dispositive plans, even when both parties appear to be competent and of similar mind regarding their estate plan? How much can an attorney safely assume in preparing husband-wife wills, when one party speaks for the couple and the other party has very little communication with the attorney, as was apparently the case with Mr. and Mrs. Arlitt? There can be no single answer to such questions, except to resort to the old adage, believe none of what you hear and only half of what you see. And document, document, document.

IV. Conclusion

As a result of evolving case law in the area of legal malpractice claims based on breach of fiduciary duty, estate planning and trust counsel may wish to review some practices long followed when representing spouses in estate and trust matters. Practices that were once customary and rather informal may call for re-examination in a stricter light after Burrow v. Arce. Since litigation on these issues will take a while to progress to the level of appellate review, it is a bit soon to assess the full impact of Burrow v. Arce in regard to use of the disciplinary rules as some evidence of the standard of care in a legal malpractice case. However, the careful practitioner can consider taking some steps now to avoid being the target of fiduciary duty claims – especially those based on conflict of interest -- arising from the professional (fiduciary) relationship with husband-and-wife clients. Since complete avoidance of conflicts of interest in trust and estate planning would be a virtual impossibility, placing a greater emphasis on proper management of documentation and preventive measures could mitigate malpractice and disciplinary problems arising from conflicts of interest, and perhaps minimize their frequency as well.


20



21



Conflict Rules 1.06 v. 1.07, TDRPC

TEXAS DISCIPLINARY RULES OF PROFESSIONAL CONDUCT (Tex. Disciplinary R. Prof. Conduct, (1989) reprinted in Tex. Govt Code Ann., tit. 2, subtit. G, app. (Vernon Supp. 1995)(State Bar Rules art X [[section]]9)) “Rule 1.06 Conflict of Interest: General Rule (b) In other situations and except to the extent permitted by paragraph (c), a lawyer shall not represent a person if the representation of that person: (1) involves a substantially related matter in which that persons interests are materially and directly adverse to the interests of another client of the lawyer or the lawyers firm; or (2) reasonably appears to be or become adversely limited by the lawyers or law firm's responsibilities to another client or to a third person or by the lawyers or law firm’s own interests. (c) A lawyer may represent a client in the circumstances described in (b) if: (1) the lawyer reasonably believes the representation of each client will not be materially affected; and (2) each affected or potentially affected client consents to such representation after full disclosure of the existence, nature, implications, and possible adverse consequences of the common representation and the advantages involved, if any. (d) A lawyer who has represented multiple parties in a matter shall not thereafter represent any of such parties in a dispute among the parties arising out of the matter, unless prior consent is obtained from all such parties to the dispute. (e) If a lawyer has accepted representation in violation of this Rule, or if multiple representation properly accepted becomes improper under this Rule, the lawyer shall promptly withdraw from one or more representations to the extent necessary for any remaining representation not to be in violation of these Rules. (f) If a lawyer would be prohibited by this Rule from engaging in particular conduct, no other lawyer while a member or associated with that lawyer's firm may engage in that conduct. Comment: 15. Conflict questions may also arise in estate planning and estate administration. A lawyer may be called upon to prepare wills for several family members, such as husband and wife, and, depending upon the circumstances, a conflict of interest may arise. In estate administration it may be unclear whether the client is the fiduciary or is the estate or trust including its beneficiaries. The lawyer should make clear the relationship to the parties involved.” “Rule 1.07 Conflict of Interest: Intermediary (a) A lawyer shall not act as intermediary between clients unless:

22



(1) the lawyer consults with each client concerning the implications of the common representation, including the advantages and risks involved, and the effect on the attorney-client privileges, and obtains each clients written consent to the common representation; (2) the lawyer reasonably believes that the matter can be resolved without the necessity of contested litigation on terms compatible with the clients best interests, that each client will be able to make adequately informed decisions in the matter and that there is little risk of material prejudice to the interests of any of the clients if the contemplated resolution is unsuccessful; and (3) the lawyer reasonably believes that the common representation can be undertaken impartially and without improper effect on other responsibilities the lawyer has to any of the clients. (b) While acting as intermediary, the lawyer shall consult with each client concerning the decision to be made and the considerations relevant in making them, so that each client can make adequately informed decisions. (c) A lawyer shall withdraw as intermediary if any of the clients so requests, or if any of the conditions stated in paragraph (a) is no longer satisfied. Upon withdrawal, the lawyer shall not continue to represent any of the clients in the matter that was the subject of the intermediation. (d) Within the meaning of this Rule, a lawyer acts as intermediary if the lawyer represents two or more parties with potentially conflicting interests. (e) If a lawyer would be prohibited by this Rule from engaging in particular conduct, no other lawyer while a member of or associated with that lawyers firm may engage in that conduct. Comment: 1. A lawyer acting as intermediary may seek to establish or adjust a relationship between clients on an amicable and mutually advantageous basis. For example, the lawyer may assist in organizing a business in which two or more clients are entrepreneurs, in working out the financial reorganization of an enterprise in which two or more clients have an interest, in arranging a property distribution in settlement of an estate or in mediating a dispute between clients. The lawyer seeks to resolve potentially conflicting interests by developing the parties’ mutual interests. The alternative can be that each party may have to obtain separate representation, with the possibility in some situations of incurring additional cost, complication or even litigation. Given these and other relevant factors, all the clients may prefer that the lawyer act as intermediary.”

23



Selected ABA Model Rules

from http://www.abanet.org/cpr/mrpc/rule_1_7.html

Model Rules of Professional Conduct CLIENT-LAWYER RELATIONSHIP

RULE 1.7 CONFLICT OF INTEREST: CURRENT CLIENTS

“(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:

(1) the representation of one client will be directly adverse to another client; or

(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.

(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;

(2) the representation is not prohibited by law;

(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and

(4) each affected client gives informed consent, confirmed in writing.”

* * *

from http://www.abanet.org/cpr/mrpc/rule_1_7_comm.html

Model Rules of Professional Conduct CLIENT-LAWYER RELATIONSHIP

RULE 1.7 CONFLICT OF INTEREST: CURRENT CLIENTS (ABA 2003 Ed.) Comment

“[27] For example, conflict questions may arise in estate planning and estate administration. A lawyer may be called upon to prepare wills for several family members, such as husband and wife, and, depending upon the circumstances, a conflict of interest may be present. In estate administration the identity of the client may be unclear under the law of a particular jurisdiction. Under one view, the client is the fiduciary; under another view the client is the estate or trust,

24



including its beneficiaries. In order to comply with conflict of interest rules, the lawyer should make clear the lawyer's relationship to the parties involved. [28] Whether a conflict is consentable depends on the circumstances. For example, a lawyer may not represent multiple parties to a negotiation whose interests are fundamentally antagonistic to each other, but common representation is permissible where the clients are generally aligned in interest even though there is some difference in interest among them. Thus, a lawyer may seek to establish or adjust a relationship between clients on an amicable and mutually advantageous basis; for example, in helping to organize a business in which two or more clients are entrepreneurs, working out the financial reorganization of an enterprise in which two or more clients have an interest or arranging a property distribution in settlement of an estate. The lawyer seeks to resolve potentially adverse interests by developing the parties' mutual interests. Otherwise, each party might have to obtain separate representation, with the possibility of incurring additional cost, complication or even litigation. Given these and other relevant factors, the clients may prefer that the lawyer act for all of them. Special Considerations in Common representation [29] In considering whether to represent multiple clients in the same matter, a lawyer should be mindful that if the common representation fails because the potentially adverse interests cannot be reconciled, the result can be additional cost, embarrassment and recrimination. Ordinarily, the lawyer will be forced to withdraw from representing all of the clients if the common representation fails. In some situations, the risk of failure is so great that multiple representation is plainly impossible. For example, a lawyer cannot undertake common representation of clients where contentious litigation or negotiations between them are imminent or contemplated. Moreover, because the lawyer is required to be impartial between commonly represented clients, representation of multiple clients is improper when it is unlikely that impartiality can be maintained. Generally, if the relationship between the parties has already assumed antagonism, the possibility that the clients' interests can be adequately served by common representation is not very good. Other relevant factors are whether the lawyer subsequently will represent both parties on a continuing basis and whether the situation involves creating or terminating a relationship between the parties. [30] A particularly important factor in determining the appropriateness of common representation is the effect on client- lawyer confidentiality and the attorney-client privilege. With regard to the attorney-client privilege, the prevailing rule is that, as between commonly represented clients, the privilege does not attach. Hence, it must be assumed that if litigation eventuates between the clients, the privilege will not protect any such communications, and the clients should be so advised. [31] As to the duty of confidentiality, continued common representation will almost certainly be inadequate if one client asks the lawyer not to disclose to the other client information relevant to the common representation. This is so because the lawyer has an equal duty of loyalty to each client, and each client has the right to be informed of anything bearing on the representation that might affect that client's interests and the right to expect that the lawyer will use that information to that client's benefit. See Rule 1.4. The lawyer should, at the outset of the common representation and as part of the process of obtaining each client's informed consent, advise each client that information will be shared and that the lawyer will have to withdraw if one client

25



decides that some matter material to the representation should be kept from the other. In limited circumstances, it may be appropriate for the lawyer to proceed with the representation when the clients have agreed, after being properly informed, that the lawyer will keep certain information confidential. For example, the lawyer may reasonably conclude that failure to disclose one client's trade secrets to another client will not adversely affect representation involving a joint venture between the clients and agree to keep that information confidential with the informed consent of both clients. . . . [33] Subject to the above limitations, each client in the common representation has the right to loyal and diligent representation and the protection of Rule 1.9 concerning the obligations to a former client. The client also has the right to discharge the lawyer as stated in Rule 1.16.”

* * *

from http://www.abanet.org/cpr/e2k-rule22.html

Rule 2.2 was deleted in the 2002 Model Rule Revisions:

“RULE 2.2: INTERMEDIARY (a) A lawyer may act as intermediary between clients if:

(1) the lawyer consults with each client concerning the implications of the common representation, including the advantages and risks involved, and the effect on the attorney-client privileges, and obtains each client's consent to the common representation; (2) the lawyer reasonably believes that the matter can be resolved on terms compatible with the clients' best interests, that each client will be able to make adequately informed decisions in the matter and that there is little risk of material prejudice to the interests of any of the clients if the contemplated resolution is unsuccessful; and (3) the lawyer reasonably believes that the common representation can be undertaken impartially and without improper effect on other responsibilities the lawyer has to any of the clients.

(b) While acting as intermediary, the lawyer shall consult with each client concerning the decisions to be made and the considerations relevant in making them, so that each client can make adequately informed decisions. (c) A lawyer shall withdraw as intermediary if any of the clients so requests, or if any of the conditions stated in paragraph (a) is no longer satisfied. Upon withdrawal, the lawyer shall not continue to represent any of the clients in the matter that was the subject of the intermediation. Comment [1] A lawyer acts as intermediary under this Rule when the lawyer represents two or more parties with potentially conflicting interests. A key factor in defining the relationship is whether the parties share responsibility for the lawyer's fee, but the common representation may be inferred from other circumstances. Because confusion can arise as to the lawyer's role where each party is not separately represented, it is important that the lawyer make clear the relationship. [2] The Rule does not apply to a lawyer acting as arbitrator or mediator between or among parties who are not clients of the lawyer, even where the lawyer has been appointed with the concurrence of the parties. In performing such a role the lawyer may be subject to applicable

26



codes of ethics, such as the Code of Ethics for Arbitration in Commercial Disputes prepared by a joint Committee of the American Bar Association and the American Arbitration Association. [3] A lawyer acts as intermediary in seeking to establish or adjust a relationship between clients on an amicable and mutually advantageous basis; for example, in helping to organize a business in which two or more clients are entrepreneurs, working out the financial reorganization of an enterprise in which two or more clients have an interest, arranging a property distribution in settlement of an estate or mediating a dispute between clients. The lawyer seeks to resolve potentially conflicting interests by developing the parties' mutual interests. The alternative can be that each party may have to obtain separate representation, with the possibility in some situations of incurring additional cost, complication or even litigation. Given these and other relevant factors, all the clients may prefer that the lawyer act as intermediary. [4] In considering whether to act as intermediary between clients, a lawyer should be mindful that if the intermediation fails the result can be additional cost, embarrassment and recrimination. In some situations the risk of failure is so great that intermediation is plainly impossible. For example, a lawyer cannot undertake common representation of clients between whom contentious litigation is imminent or who contemplate contentious negotiations. More generally, if the relationship between the parties has already assumed definite antagonism, the possibility that the clients' interests can be adjusted by intermediation ordinarily is not very good. [5] The appropriateness of intermediation can depend on its form. Forms of intermediation range from informal arbitration, where each client's case is presented by the respective client and the lawyer decides the outcome, to mediation, to common representation where the clients' interests are substantially though not entirely compatible. One form may be appropriate in circumstances where another would not. Other relevant factors are whether the lawyer subsequently will represent both parties on a continuing basis and whether the situation involves creating a relationship between the parties or terminating one. Confidentiality and Privilege [6] A particularly important factor in determining the appropriateness of intermediation is the effect on client- lawyer confidentiality and the attorney-client privilege. In a common representation, the lawyer is still required both to keep each client adequately informed and to maintain confidentiality of information relating to the representation. See Rules 1.4 and 1.6. Complying with both requirements while acting as intermediary requires a delicate balance. If the balance cannot be maintained, the common representation is improper. With regard to the attorney-client privilege, the prevailing rule is that as between commonly represented clients the privilege does not attach. Hence, it must be assumed that if litigation eventuates between the clients, the privilege will not protect any such communications, and the clients should be so advised. [7] Since the lawyer is required to be impartial between commonly represented clients, intermediation is improper when that impartiality cannot be maintained. For example, a lawyer who has represented one of the clients for a long period and in a variety of matters might have difficulty being impartial between that client and one to whom the lawyer has only recently been introduced. Consultation [8] In acting as intermediary between clients, the lawyer is required to consult with the clients on the implications of doing so, and proceed only upon consent based on such a consultation. The

27



consultation should make clear that the lawyer's role is not that of partisanship normally expected in other circumstances. [9] Paragraph (b) is an application of the principle expressed in Rule 1.4. Where the lawyer is intermediary, the clients ordinarily must assume greater responsibility for decisions than when each client is independently represented. Withdrawal [10] Common representation does not diminish the rights of each client in the client- lawyer relationship. Each has the right to loyal and diligent representation, the right to discharge the lawyer as stated in Rule 1.16, and the protection of Rule 1.9 concerning obligations to a former client.”

* * *

from http://www.abanet.org/cpr/mrpc/rule_8_4.html

Model Rules of Professional Conduct MAINTAINING THE INTEGRITY OF THE PROFESSION

RULE 8.4 MISCONDUCT

“It is professional misconduct for a lawyer to: (a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another; (b) commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects; (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; (d) engage in conduct that is prejudicial to the administration of justice; (e) state or imply an ability to influence improperly a government agency or official or to achieve results by means that violate the Rules of Professional Conduct or other law; or (f) knowingly assist a judge or judicial officer in conduct that is a violation of applicable rules of judicial conduct or other law.”

* * *

Model Rules of Professional Conduct MAINTAINING THE INTEGRITY OF THE PROFESSION

RULE 8.4 MISCONDUCT

Comment

“[1] Lawyers are subject to discipline when they violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so or do so through the acts of another, as when they request or instruct an agent to do so on the lawyer's behalf. Paragraph (a), however, does not prohibit a lawyer from advising a client concerning action the client is legally entitled to take.

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[2] Many kinds of illegal conduct reflect adversely on fitness to practice law, such as offenses involving fraud and the offense of willful failure to file an income tax return. However, some kinds of offenses carry no such implication. Traditionally, the distinction was drawn in terms of offenses involving "moral turpitude." That concept can be construed to include offenses concerning some matters of personal morality, such as adultery and comparable offenses, that have no specific connection to fitness for the practice of law. Although a lawyer is personally answerable to the entire criminal law, a lawyer should be professionally answerable only for offenses that indicate lack of those characteristics relevant to law practice. Offenses involving violence, dishonesty, breach of trust, or serious interference with the administration of justice are in that category. A pattern of repeated offenses, even ones of minor significance when considered separately, can indicate indifference to legal obligation. [3] A lawyer who, in the course of representing a client, knowingly manifests by words or conduct, bias or prejudice based upon race, sex, religion, national origin, disability, age, sexual orientation or socioeconomic status, violates paragraph (d) when such actions are prejudicial to the administration of justice. Legitimate advocacy respecting the foregoing factors does not violate paragraph (d). A trial judge's finding that peremptory challenges were exercised on a discriminatory basis does not alone establish a violation of this rule. [4] A lawyer may refuse to comply with an obligation imposed by law upon a good faith belief that no valid obligation exists. The provisions of Rule 1.2(d) concerning a good faith challenge to the validity, scope, meaning or application of the law apply to challenges of legal regulation of the practice of law. [5] Lawyers holding public office assume legal responsibilities going beyond those of other citizens. A lawyer's abuse of public office can suggest an inability to fulfill the professional role of lawyers. The same is true of abuse of positions of private trust such as trustee, executor, administrator, guardian, agent and officer, director or manager of a corporation or other organization.” ABA Model Rules of Professional Conduct, 2003 Edition (©ABA/BNA 2003).

Appendix __: “First You Say You Will, and Then You Won’t” SBOT/AEPPC June 5, 2003©2003, Janis Reinken and Texas Lawyers’ Insurance Exchange

Statistics* Published by AmericansforDivorceReform,[email protected] www.divorcereform.org/txdivorces.html

020000400006000080000

100000120000140000160000180000200000

1968 1970 1980 1981 1982 1990 1998

Pop Filed -100's

Granted

Denied

Dissmissed

*Selected years


Marriages1 Divorces3

StateNumber (1,000) Rate per 1,000

populationNumber (1,000) Rate per 1,000 population

1990 1995 2001 1990 1995 2001 1990 1995 2001 1990 1995 2001US4 2,443.0 2336.0 2,327.0 9.8 8.9 8.4 1,182.0 1,169.0 NA 4.7 4.4 4.0

Illinois 97.1 83.2 89.8 8.6 7.0 7.3 44.3 38.8 38.7 3.8 3.3 3.2New York 169.3 147.4 145.5 8.6 8.1 7.9 57.9 56.0 54.1 3.2 3.1 3.0

Texas 182.8 188.5 194.9 10.5 10.1 8.4 94.0 99.9 85.4 5.5 5.3 4.1

1Data are counts of marriages performed, except noted. 3Includes annulments.4U.S. Totals for the number of divorces is an estimate which includes states notreporting (CA, CO, IN, and LA).

Source: US National Center for Health Statistics, Vital Statistics of the UnitedStates, annual; National Vital Statistics Reports (NVRS) (formerly Monthly VitalStatistical Report).

From http://www.census.gov/prod/2003pubs/02statab/vitistat.pdf

No. 111 Marriages and Divorces-Number and Rate by State: 1990 to 2001

U.S. Census Bureau, Statistics Abstract of the United States: 2002[2443.0 represents 2,443,000. By place of occurrence]


Number of Claims by Area of Law (Excerpt)

American Bar Association 1996-199936,844 Total Claims 1999 ( 8.67 %) 19,158 Total Claims 1995 ( 7.59 %)29,227 Total Claims 1985 ( 6.97 %)

3196

3734

14541750

2038 2303

1999 Study 1995 Study 1985 Study

Estate TrustProbate

Family Law

Profile of Legal Malpractice Claims 1996-1999 American Bar Association April 2001,

Table No. 1, page 5


Figure 35. Probability of remarriage within 10 years of divorce by race/ethnicity and age at divorce. United States, 1995

Vital and Health Statistics Series 23, Number 22 July 202

81

68

8372

All Races Non-Hispanic White

Under 25 Years

25 Years andover

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