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Ethics Opinion

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RI-213

June 8, 1994

SYLLABUS

    A lawyer holding a county contract for appointment as public guardian or conservator may not agree to also act as legal counsel in a matter in which a ward for whom the lawyer has been appointed as guardian or conservator may have an interest which falls outside the fiduciary duties required of the lawyer pursuant to the contract of appointment.

    References: MRPC 1.2, 1.4, 1.5(c), 1.7(b), 1.14; MCR 8.121.

TEXT

A county probate court will be contracting out all its public guardians and conservators to a particular law firm. In undertaking the fiduciary duties of guardian or conservator, the law firm is paid a flat per case fee to perform duties such as investing and conserving the assets of the ward, filing annual accountings and performing other recordkeeping, periodically visiting each ward, determining living arrangements and seeing to the medical needs of the wards, and applying for medicaid, SSI, SSD or other governmental benefits to which the wards may be entitled.

From time to time, a ward may be a party in a legal action. Although the guardian/conservator has fiduciary authority to see that the legal matters are handled on behalf of the ward, the attorney fees which may be required are not part of the fiduciary's flat fee. The law firm asks whether it may undertake to provide the legal services, serving as both fiduciary guardian/conservator and as counsel to the fiduciary. If so, the law firm asks whether it may charge a contingency fee for such services, if the contingency fee is preapproved by the probate court; for domestic relations and criminal matters in which contingent fees are not ethically permitted, the law firm would ask the probate court to set an hourly rate on a case-by-case basis.

When the fiduciary responsible for maintaining the ward's assets and making decisions, including legal decisions, in the "best interest" of the ward, also has the power to conduct the legal matter in which the decisions are made, there is a likelihood that the judgment of the fiduciary as lawyer will overcome the judgment of the fiduciary as guardian/conservator. In addition, there are practical problems regarding "client consent" to conflicts of interest, disclosure of confidences and secrets, settlements, whether lawsuits should be filed, etc., where a lawyer serves as an "alter ego" of the ward on the one hand and as a "for hire" lawyer on the other.

A number of ethics opinions from other jurisdictions highlight these problems. Alabama Op 87-137, states that a lawyer may not serve as guardian and also under a power of attorney for same ward, since that would give the appearance that the lawyer seeks to obtain control of the client's estate for personal gain. Cleveland Op 89-3 states that a lawyer representing a client in a tort action should refrain from settling claim if the lawyer reasonably believes the client cannot consent to the settlement due to a disability. Arizona Op 86-13 states that a lawyer for minor in dependency proceeding who is also guardian ad litem must request that a new guardian ad litem be appointed if conflict exists between the child's wishes and child's best interests. See also, Developmental Disabilities Advocacy Center Inc v. Melton, 521 F Supp 365 (DC NH 1981), vacated and remanded on other grounds, 689 F2d 281 (CA 1 1982), which states that lawyers in an agency established by statute to advocate rights of the disabled may not act independently of their role as guardian of a purported client.

MRPC 1.2 states:

    "(a) . . . A lawyer shall abide by a client's decision whether to accept an offer of settlement or mediation evaluation of a matter. In a criminal case, the lawyer shall abide by the client's decision, after consultation with the lawyer, as to a plea to be entered, whether to waive jury trial, and whether the client will testify . . . .

    "(b) A lawyer may limit the objectives of the representation if the client consents after consultation.

    "(c) A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is illegal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good-faith effort to determine the validity, scope, meaning, or application of the law."

The comment to the rule states in part, as to scope of representation:

    "Both the lawyer and the client have authority and responsibility in the objectives and means of representation. The client has ultimate authority to determine the purposes to be served by legal representation, within the limits imposed by law and the lawyer's professional obligations. Within those limits, a client also has a right to consult with the lawyer about the means to be used in pursing those objectives. At the same time, a lawyer is not required to pursue objectives or employ means simply because a client may wish that the lawyer do so. A clear distinction between objectives and means sometimes cannot be drawn, and in many cases the client-lawyer relationship partakes of a joint undertaking. In questions of means, the lawyer should assume responsibility for technical and legal tactical issues, but should defer to the client regarding such questions as the expense to be incurred and concern for third persons who might be adversely affected.

    In a case in which the client appears to be suffering mental disability, the lawyer's duty to abide by the client's decisions is to be guided by reference to Rule 1.14."

Further comment to the rule as applicable to services limited in objectives or means states, in part:

    "The objectives or scope of the services provided by a lawyer may be limited by agreement with the client or by the terms under which the lawyer's services are made available to the client. For example, a retainer may be for a specifically defined purpose . . . . The terms upon which representation is undertaken may exclude specific objectives or means . . . .

    "An agreement concerning the scope of representation must accord with the Rules of Professional Conduct and other law. Thus, the client may not be asked to agree to representation so limited in scope as to violate Rule 1.1, or to surrender the right to terminate the lawyer's services or the right to settle litigation that the lawyer might wish to continue."

Finally, comment to the rule as applicable to illegal, fraudulent, and prohibited transactions, states in part:

    "Where the client is a fiduciary, the lawyer may be charged with special obligations in dealings with a beneficiary . . . ."

Clearly, MRPC 1.2 contemplates a system of checks and balances in the lawyer-client relationship. It contemplates full participation by the client in the decision-making process as it applies to rights and responsibilities of the client and conduct of the lawyer where the individual whose rights and responsibilities are to be affected is under a disability, such as those involved in this inquiry, the client is not able to participate, and the checks and balances are lost, and MRPC 1.2 is rendered ineffectual.

Further guidance is provided by MRPC 1.14 and its comments. MRPC 1.14 states:

    "(a) When a client's ability to make adequately considered decisions in connection with the representation is impaired, whether because of minority or mental disability or for for other reason, the lawyer shall, as far as reasonably possible, maintain a normal client-lawyer relationship with the client.

    "(b) A lawyer may seek the appointment of a guardian or take other protective action with respect to a client only when the lawyer reasonably believes that the client cannot adequately act in the client's own interest."

The comment to the rule states in part:

    "The normal client-lawyer relationship is based on the assumption that the client, when properly advised and assisted, is capable of making decisions about important matters. When the client is a minor or Bummers from a mental disorder or disability, however, maintaining the ordinary client-lawyer relationship may not be possible in all respects. In particular, an incapacitated person may have no power to make legally binding decisions . . . .

    "If a legal representative has already been appointed for the client, the lawyer should ordinarily look to the representative for decisions on behalf of the client. If a legal representative has not been appointed, the lawyer should see to such an appointment@ where it would serve the client's best interests. Thus, if a disabled client has substantial property that should be sold for the client's benefit, effective completion of the transaction ordinarily requires appointment of a legal representative.In many circumstances, however, appointment of a legal representative may be expensive or traumatic for the client. Evaluation of these considerations is a matter of professional judgment on the lawyer's part.

    "If the lawyer represents the guardian as distinct from the ward, and is aware that the guardian is acting adversely to the ward's interest, the lawyer may have an obligation to prevent or rectify the guardian's misconduct. See Rule 1.2(c) . . . ."

The thrust of MRPC 1.14 and comment is that if a lawyer believes a client cannot act in a legal matter, the lawyer should seek the appointment of someone who would be authorized to act for the client. If a representative has been appointed, the lawyer should look to the representative for instruction as to the legal matter. In those cases where the representative is acting contrary to the interests of the ward, the lawyer may have an obligation to rectify the representative's conduct. In other words, the scheme contemplated in MRPC 1.14 is that there are two distinct individuals assisting the client or ward, and each acts as a check on the other. In the arrangement proposed in this inquiry, there is no check on the authority of the lawyer who serves as both legal counsel and as guardian/conservator for the ward.

When a guardian/conservator has been appointed for a ward, problems of client identity arise, for the lawyer by hypothesis cannot communicate with the ward where the view is that it is the guardian, not the disabled client, that is the actual client of the lawyer. Under that circumstance, there are checks and balances because the guardian/conservator and lawyer are not one and the same person.

Where the guardian/conservator is viewed as the primary client and the disabled person as the derivative client, the lawyer then has a person with whom full communication can occur. Also, the position of guardian/conservator is such that it is normally viewed that what the guardian/conservator wants from the lawyer is what the disabled person wants as well. The lawyer is then free, except in circumstances where the guardian/conservator might be abusing the position, to follow the guardian/conservator's instructions. The burden of determining what is in the best interests of the disabled person is then lifted from the lawyer's shoulders, allowing the lawyer to perform more traditional lawyer functions in an objective environment.

The requirements of MRPC 1.4 provide further emphasis on the need for a ward to be protected by the checks and balances provided when two independent persons are involved:

    "(a) A lawyer shall keep a client reasonably informed about the status of a matter and comply promptly with reasonable requests for information. A lawyer shall notify the client promptly of all settlement offers, mediation evaluations, and proposed plea bargains.

    "(b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation period."

Comment to MRPC 1.4 discloses that:

    "The client should have sufficient information to participate intelligently in decisions concerning the objectives of the representation and the means by which they are to be pursued to the extent the client is willing and able to do so. For example, a lawyer negotiating on behalf of a client should provide the client with facts relevant to the matter, inform the client of communications from another party, and take other reasonable steps that permit the client to make a decision regarding an offer from another party. A lawyer who receives an offer of settlement or a mediation evaluation in a civil controversy, or a proffered plea bargain in a criminal case, must promptly inform the client of its substance. See Rule 1.2(a). Even when a client delegates authority to the lawyer, the client should be kept advised of the status of the matter.

    "Adequacy of communication depends in part on the kind of advice or assistance involved. For example, in negotiations where there is time to explain a proposal, the lawyer should review all important provisions with the client before proceeding to an agreement. In litigation, a lawyer should explain the general strategy and prospects of success and ordinarily should consult the client on tactics that might injure or coerce others. On the other hand, a lawyer ordinarily cannot be expected to describe trial or negotiation strategy in detail. The guiding principle is that the lawyer should fulfill reasonable client expectations for information consistent with the duty to act in the client's best interests and consistent with the client's overall requirements as to the character of representation.

    "Ordinarily, the information to be provided is that appropriate for a client who is a comprehending and responsible adult. However, fully informing the client according to his standard may be impracticable, for example, where the client is a child or suffers from mental disability. See Rule 1.14 . . . ."

When the same person is both guardian/conservator and lawyer, there is no communication, and there are no checks and balances. The ward is essentially at the mercy of his single representative.

In the circumstances which are the subject of this inquiry, it is contemplated that a judge of a probate court will provide a degree of supervision of the guardian/conservator/lawyer. That supervision will not and cannot rise to the level anticipated in the MRPC. Additional problems then arise.

MRPC 1.7(b) states:

    "A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:

      "(1) the lawyer reasonably believes the representation will not be adversely affected; and,

      "(2) the client consents after consultation . . . . Emphasis added.

Under the facts presented, the lawyer has undertaken guardian/conservator duties to the ward, and as fiduciary owes certain reporting duties to the court, which in a particular case may materially limit the lawyer's ability to represent the ward in legal matters. The decision-making ability of the lawyer as guardian/conservator regarding the conduct of the legal matter may be overshadowed by the fiduciary's judgment as counsel of record.

Also, where the judge of the probate court appoints the lawyer as both guardian/conservator and as legal representative of the ward, the lawyer is close to becoming an "employee" of the court. The extent of supervision by the judge may well be compromised by the judge's ethical obligations as well as those of the lawyer. JI-50 and portions of its text highlight the problem. Its Syllabus states:

    "The chief judge of a probate court, who serves as "employer" of all persons working for the court, may hire a lawyer as an employee of the court to represent juveniles in delinquency and in neglect proceedings or parents in neglect proceedings, only if (1) the judge does not interfere with the independent professional judgment of the lawyer or with the lawyer-client relationship; (2) the judge avoids ex parte contacts concerning matters undertaken by the lawyer; and (3) the judge takes steps to minimize any appearance of bias.

    "In representing any client, the lawyer employed by the court must exercise independent professional judgment regarding the representation, preserve all client confidences, disclose to the client the lawyer's relationship to the judge and the court and obtain client consent after consultation. A lawyer may limit the scope of the representation only if the client consents after adequate consultation about the practical implications of the limitation period. A materials limitation is permitted only if a disinterested lawyer would conclude that the client would be adequately represented in light of the limitation. If the lawyer's duties to the judge-employer or the lawyer's own interests in continued employment materially limit the lawyer's representation of a particular client, the lawyer should decline that representation."

As pointed out in the text of JI-50:

    "A person employed by the court to represent a substantial number of clients before that court would be more economically dependent upon that source of income than a private lawyer assigned to a specific case. For a full-time court employee, there would be a complete economic dependence on the judge for the lawyer's earned income. Thus, when a judge before whom a lawyer practices is that individual's employer and can limit pay raises or even terminate the employment, the risks of violating MRPC 1.7(b) are far greater than for private counsel. A lawyer too concerned about pleasing the person who pays or employs that lawyer also runs the risk of violating MRPC 1.8(f), which establishes the conditions under which a lawyer may accept payment for legal services from someone other than the client. When a judge can determine a lawyer's future employment and future salary increases, there can arise subtle and tacit pressures, even if based on misperceptions by the lawyer, that can jeopardize the independence of counsel and the lawyer's loyalty to the client. These risks are enhanced in an age of greater scarcity in public funds and greater administrative attention to judicial efficiency and case load statistics."

Although, in the circumstances presented by our inquiry, the lawyer does not contemplate being a true employee of the court, the facts presented place the lawyer economically in a position quite similar in nature, thus, giving rise to the pitfalls of such a relationship.

Although no facts of a particular case have been presented to allow the Committee to determine whether any of the dangers noted above are present in a particular case, and we are willing to admit to the possibility that in a particular case no conflict of interest may arise, the Committee is nonetheless convinced that a plan which approves a dual role of fiduciary and lawyer as proposed is improper. The probate court's approval of a particular fee arrangement does not vitiate the impact of ethics rules concerning conflicts of interest, confidentiality,-,and independent professional judgment. Therefore, the lawyer guardian/conservator may not agree by contract to also act as legal counsel in matters in which wards may have an interest.

Having decided that the dual role as proposed is improper, the issue as to whether a contingency fee arrangement is proper or not is moot.

 
     

 

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