Ethics Opinion

Opinion No. 94-3

March 1994

Summary: A lawyer who is holding funds belonging to an estate and who has reason to believe that his client, the administratrix of the estate, intends to divert funds from those entitled by law to receive them should seek instructions from the Probate Court before disbursing the funds.
Lawyers from the same law firm may not simultaneously represent the administratrix of an estate and serve as sureties on her bond.

Facts: A law firm represented an individual in his claim for damages for personal injuries. The claim was settled and the individual signed a release. He then died and his wife was appointed administratrix of the estate. At her request, the law firm handled the probate of the estate and two of its lawyers signed as personal sureties on the administratrix's bond. The settlement check was subsequently issued in the name of the wife as administratrix and she demanded that the funds be turned over to her. The attorney handling the estate believed that the administratrix would not apply the funds to satisfy the lawful debts of the estate, but would use them to pay current expenses of herself and her minor children. He inquired whether he was obligated to turn the check over to the administratrix or, on the contrary, to take steps to insure payment of the lawful debts of the estate. He further inquired whether the sureties could prevent the check from being turned over to the administratrix and insist on the payment of the lawful debts of the estate.

Discussion: DR 7-102(A)(7) provides that a lawyer shall not "[c]ounsel or assist his client in conduct that the lawyer knows to be illegal or fraudulent." Accordingly, if the lawyer has reason to believe that the administratrix will divert the funds from those who are entitled by law to receive them in violation of applicable law or in a manner which would constitute a fraud on them or on the court, he may not counsel or assist her in doing so. The lawyer states that he believes that the administratrix wishes to use the funds to pay current expenses of herself and her minor children. He should in the first instance advise the administratrix as to the existence of any available bases for seeking court permission to apply funds of the estate for that purpose. If no such alternative is available and the administratrix persists in demanding that the settlement funds be paid over to her, the lawyer should seek instructions from the Probate Court as to disposition of the funds. In seeking such instructions, the lawyer should avoid revealing client's confidences without consent, if possible, but it may become necessary to reveal some confidential information to prevent client from committing a crime. DR 4-101(C)(3).
The questions posed as to the obligations of the law firm and, in particular, of the sureties are questions of substantive law. The rules of the committee do not permit the committee to give advice about matters of substantive law. We note, however, that, as illustrated by the facts presented in this case, there is grave risk that a lawyer's professional judgment may be affected where members of a law firm simultaneously represent an estate and act as sureties on the bond of the administratrix. In the committee's view, this risk gives rise to an impermissible conflict of the interest. DR 5-101(A) provides that a lawyer "shall not accept employment if the exercise of his professional judgment on behalf of his client will be or reasonably may be affected by his own financial ... interests" absent full disclosure to the client and consent of the client. The committee has recognized that there may be extreme cases where the lawyer's personal interests are so potentially adverse to the client's interests that consent may not be sufficient. Opinion 86-1. The committee believes that the potential for conflict between the interests of the administratrix and the sureties precludes a law firm from serving in both capacities in the situation presented by the inquiry notwithstanding the consent of the client. This inquiry does not present the situation where the lawyer asked to be a surety is a relative of the decedent or of the beneficiaries, and we do not express an opinion as to the situation.

Permission to publish granted by the Board of Delegates on January 14, 1994. As stated in the Rules of the Committee on Professional Ethics, this advice is that of a committee without official governmental status.