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Sunday, April 28, 2013

Can a lawyer advise a relative about her will if the lawyer might be a beneficiary?

Can a lawyer represent a family member about that family member's will when the lawyer  might one day be a beneficiary? A reader recently asked me whether this is a conflict of interest. The question and my answer appear below.

"What do Canadian, and particularly Alberta, ethical guidelines have to say about a lawyer who is advising his mother-in-law executrix regarding her husband's will, and about her own will and gifts to family members? Including, of course, gifts to himself and his family. It seems like a crystal clear conflict of interest, even without evidence of wrongdoing, but we get mixed messages from the legal profession."

The reason that information from the legal profession often sounds like "mixed messages" is that there are always so many "if" factors to take into consideration. For example, let's take the question of whether or not it's okay to kill someone. No, of course it isn't. But what if they are trying to kill you and you are acting in self defence? Well then, it is okay. So you can see that the answer to every legal question depends on the facts of the specific case.

The same principle applies in the less dramatic but no less important issue of who may be represented by a lawyer.

Lawyers in Alberta must act in accordance with the Code of Professional Conduct. Every province and territory has its own equivalent set by its own Law Society, and the rules are very similar across the country. Alberta's Code can be accessed by clicking here.

The lawyer's duty with respect to conflict of interest is to his client, and not to you or other people who have not hired the lawyer. The rules get a bit complex, but basically if the client knows of the possible conflict and consents to the lawyer acting for her anyway, and if it's in the client's best interest for the lawyer to represent her, then the arrangement can continue. Let's look at that a bit more closely.

In the situation you've described, there are two different scenarios, and I disagree that either of them is a "crystal clear conflict of interest" on the surface. One is the lawyer advising his mother-in-law on her executor's duties. The other is her preparing her own will, apparently because she has been widowed and wants to update her documents.

In my view, there is no conflict or even potential conflict when the lawyer advises his mother-in-law about her husband's estate. The will already exists and there isn't anything the lawyer could do, even if he wanted to, to gain any advantage there by being her lawyer. If the will is typical, everything goes to the deceased's wife. I don't see any problem with the lawyer facilitating that. If he charges a fee for his service (which he may not) this is not a conflict; his mother-in-law would have to pay an unknown lawyer a fee too.

The situation in which a lawyer advises a client on a will that potentially leaves something to him or his wife is more likely to be seen as a conflict. The Code of Conduct describes a conflict of interest as follows:

"A conflict of interest exists when there is a substantial risk that a lawyer’s loyalty to or representation of a client would be materially and adversely affected by the lawyer’s own interest or the lawyer’s duties to another client, a former client, or a third person. A substantial risk is one that is significant and, while not certain or probable, is more than a mere possibility."

So there has to be more than a mere possibility that the lawyer would be likely to put his own interest (say, a larger share of the mother-in-law's estate) ahead of properly advising his mother-in-law. Is simply being related to each other in this way more than a mere possibility? This issue is the reason you get conflicting messages when you ask your question.

A lawyer whose client makes a will which leaves something to him is likely going to ask another lawyer to draft the actual document and take care of the signing of it. That way the client gets to speak to someone independent. I suggest that although this is not necessarily a requirement, it's the best way to avoid any appearance of conflict. (I once had an elderly, widowed client who wanted to leave me her estate because she said I'd been nicer to her than her own kids had been, and she was pretty upset with me when I refused to make this will. She chased me down the hall of her long term care facility yelling "come back here and make my %&$@ will!" when I left).

If the lawyer should act as a witness, the will itself would be valid but any gift to the lawyer or his wife would fail, so the lawyer and his wife would not be able to inherit. As you can see, our system has some safeguards built in.

Keep in mind the rules I mentioned above about awareness, consent and the client's best interest. Obviously the mother-in-law is aware that if she leaves some of her estate to her daughter, the daughter's husband (the lawyer) could one day benefit. Theoretically, this means the lawyer might be tempted to somehow influence his mother-in-law to give a larger share or some other advantage to his wife, and by extension, to him. Being aware of this conflict, she has the choice of consenting to the son-in-law representing her, which it appears she has done. She apparently does not believe that there is more than a mere possibility that he might not represent her properly.

This brings us to the question of whether using her son-in-law as a lawyer is in her best interest. Maybe it is. She may feel vulnerable and overwhelmed at the loss of her husband and wish to deal with someone she knows well and trusts. She may wish to keep her financial affairs private and within the family.

The Code does give one other guideline that might be relevant here. It says that every lawyer has the obligation to withdraw from a matter if his or her impartiality is impaired and he or she can't fairly represent the client. Though it goes against the prevailing lawyer-bashing bandwagon, I can tell you that not many of us lawyers are so dazzled by the possibility of our spouse one day inheriting more than their siblings that we can't keep ourselves together long enough to counsel a relative.

Those of us who work in wills and estates talk to our families and friends about their legal affairs all the time. I advised my parents in great detail, though I made sure their wills were drawn up by someone else to avoid any appearance of conflict (I'm from quite a large family). I advise my siblings, relatives, friends and daughter because I want them to be aware of their options and of potential pitfalls.

In my opinion, just the fact that this client is consulting a lawyer who happens to be her son-in-law is not in itself a conflict of interest.  

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