[WSBAPT] Representing a fiduciary who is also a beneficiary

[Roger Hawkes]

Thanks, Phil.  Please retain the right to publish your article and do so on this listserve.

Roger Hawkes, WSBA # 5173
Hawkes Law Firm, P.S. and Sky Valley Lawyers, PLLC
Office: 19944 Ballinger Way NE
              Shoreline, WA 98155
                         And
               423 Main, Sultan, WA 98294

               Voice: 206 367 5000
                Fax:    206 367 4005
                www.hawkeslawfirm.com

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Philip N. Jones
Sent: Wednesday, March 27, 2019 4:54 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Representing a fiduciary who is also a beneficiary

The question of whether one attorney can represent one client who is both a fiduciary (PR or trustee) and also a beneficiary is oft-debated.  Down here in Oregon, the fact that the personal representative is also one of the beneficiaries does not require that person to retain two attorneys, one to represent the person as PR, and one to represent the person as a beneficiary.  That one person needs only one attorney, and the attorney will not have a conflict of interest simply because the one client has a conflict of interest, or plays two conflicting roles.  In Formal Opinion No. 2005-119 Formal Opinion No. 1991-119, the Oregon State Bar ruled:

It follows that when Lawyer A represents Widow as an individual and Widow in her capacity as personal representative, Lawyer A has only one client.  Alternatively stated, the fact that Widow may have multiple interests as an individual and as a fiduciary does not mean that Lawyer A has more than one client, even if Widow's personal interests may conflict with her obligations as a fiduciary.  Representing one person who acts in several different capacities is not the same as representing several different people.  Consequently, the current-client conflict rules in Oregon RPC 1.7, do not apply to Lawyer A's situation. (Citations omitted)

The same result is reached by Formal Opinion No. 1991-119.
Think about the number of times you have represented a surviving spouse who is both the PR and a beneficiary.  Happens all the time.  Or sometimes the PR is also a claimant.  Or the PR is a beneficiary and is also a claimant.  So the fiduciary might wear two or three hats.
The law in Washington is essentially unknown.  An article in the most recent RPPT newsletter (Winter 2019) suggests that the client in that situation needs two attorneys, one to represent the person as a fiduciary and one to represent the beneficiary.  Two Washington cases are cited in support of that view, but those were malpractice cases (not ethics cases) where a beneficiary tried to sue the attorney for the fiduciary, and the courts correctly held that the attorney represented only the fiduciary and not the beneficiary.  In those cases, the fiduciary and the beneficiary were two different people.  I submit that those cases do not suggest the answer to the question of what if those two roles were filled by only one person.
It is important to note that RPC 1.7 prohibits conflicts of interest brought about by clients (plural) with conflicts of interest, not one client (singular) who fills two conflicting roles.  The Oregon interpretation of that rule does not recognize a conflict of interest when only one client fills two roles.  In that situation, one attorney can advise the one client on how to balance the two conflicting roles.  Two attorneys are not needed to do that.  If two attorneys are hired, and they give the one client conflicting advice, what is the client to do?  Hire a third attorney to break the tie?  Of course not.
The problem is that there is virtually no Washington authority on point.  (If you know of any, please speak up.)  The two cited Washington cases do not discuss this issue, or even hint at an answer.  The RPC suggests that two clients (plural) are needed to create a conflict, but it does not come right out and say that one client (singular) cannot create a conflict, but in my opinion that is the answer, and the RPC by referring to clients (plural) does suggest that that is the answer.
I concede that hiring two attorneys is a conservative answer.  But I suggest that it is too conservative.  The other alternative suggested by the article is to enter into an engagement agreement that recites that the attorney represents only the fiduciary, and not the beneficiary.  I feel that that is also too conservative, but until Washington tells us what the law of Washington is with respect to this ethical issue, I cannot offer an iron-clad answer.
I raise this point for two reasons:

  1.   I practice both in Oregon and Washington, and it would be nice to have a rule that applies in both states, and I think the Oregon rule is the right answer.  And I think that Washington does not have a rule.  I think it should get one, hopefully the Oregon rule.
  2.   Karen Boxx and I have written an article on this subject, to be published in a forthcoming issue of the ACTEC Law Journal, which debates the pros and cons of both sides of this issue.  Cases from many states are cited, and the holdings of those cases run the gamut from A to Z.  Watch for it on your local newsstands. Another good source of information on the RPCs and how they relate to estate planners (and on the case law around the country) are the ACTEC Commentaries on the Model Rules of Professional Conduct.  The fifth edition came out in 2016, and Prof. Boxx was one of the co-reporters.  That fifth edition comments on RPC 1.7 and says basically that the answer depends on the nature and extent of the client's actual conflict with the other beneficiaries.
Thanks for listening to my sermon,
Phil Jones
Portland, OR

Philip N. Jones |Duffy Kekel LLP
111 SW 5th Ave, Suite 1500, Portland OR 97204
(503) 226-1371 (main)| (503) 226-3574 (fax)
pjones at duffykekel.com<mailto:pjones at duffykekel.com>

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