Attorney Cannot Participate on Church's Legacy Committee and Provide Pro Bono Estate Planning Services to Donors

Attorney Cannot Participate on Church's Legacy Committee and Provide Pro Bono Estate Planning Services to Donors

News story posted in Ethics on 8 April 2004| 3 comments
audience: National Publication | last updated: 18 May 2011
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Summary

The Maryland Bar Association Committee on Ethics has released an opinion concluding an attorney who chairs a church's legacy committee and prepares wills on a pro bono basis for parishioners who bequeath property to the church would violate State professional conduct rules regarding conflicts of interest.

PGDC Summary:

The Maryland Bar Association Committee on Ethics has released an opinion regarding the appropriateness of an attorney who chairs a church's legacy committee preparing wills on a pro bono basis for parishioners who bequeath property to the church. The Ethics Committee ruled that parishioners taking advantage of the attorney's services, even though free, would be the attorney's clients; therefore, the attorney's continued participation on the legacy committee would constitute a conflict of interest under Maryland professional conduct rules. The Ethics Committee also believed that some parishioners would not be sophisticated enough to weigh the risks involved and therefore could not knowingly consent the attorney's representation. Therefore, the conflict could not be abrogated by waiver. The attorney would have to resign from the committee in order to represent parishioners in connection with their charitable planning.

Do you have an opinion on this ruling? Add your comment at the bottom of this page.

Full Text:

TEXT OF


MARYLAND STATE BAR ASSOCIATION, INC.


COMMITTEE ON ETHICS


DOCKET 2003-09




May an attorney who chairs his church's legacy committee, prepare, on a pro bono basis, wills for parishioners in which the parishioners bequeath property to the church?

You chair a church committee that promotes legacy giving from its parishioners (i.e., bequests in wills, charitable trusts, charitable annuities, etc.) (The "Legacy Committee"). As chair, you "explain the program" to parishioners. You have asked whether there are any conflicts of interest or other ethical considerations implicated by your proposed conduct.

Rule 1.7 of the Maryland Lawyer's Rules of Professional Conduct addresses conflicts of interest generally.1 In this context, the first issues presented by your inquiry are: "What duties are owed to your church?" and "Who is your client?"

It is unclear whether your chairmanship of the Legacy Committee necessarily encompasses the rendition of legal services to the church or the Legacy Committee. The Ethics Committee cannot, therefore, definitively determine whether the church might be your client.

While the Committee cannot conclude from the facts presented that the church is your client, the Committee does believe that those parishioners whom you might counsel would be. If there [sic] church were also your client, Rule 1.7(a) imposes restrictions upon the circumstances in which a lawyer may represent one client when such representation may be directly adverse to another client. To the extent your role might be in the nature of an intermediary between clients, Rule 2.2 imposes similar consultation and consent requirements.

However, even if the church is not your client, the Committee believes that in your role as a member and chair of the church's Legacy Committee you would have a fiduciary and/or other duties to the church. Rule 1.7(b) provides that "(a) lawyer shall not represent a client if the representation of the client may be materially limited by the lawyer's responsibilities to a third person, or by the lawyer's own interests, unless the lawyer reasonably believes the representation will not be adversely affected; and the client consents after consultation."

The Committee believes that your role as Legacy Committee chair and/or your own interest in advancing the church's financial interests would be the sorts of responsibilities to a third person and/or personal interest that are governed by Rule 1.7(b).

Under Rule 1.7(b), in order to represent your fellow parishioners, you would have to reasonably believe that your representation of such parishioners would not be "adversely affected" by your responsibilities to your church or your own interests before obtaining a parishioner's consent to such representation. It is the consensus of the Committee, which correlates to the hypothetical "disinterested attorney" referred to in the comments to Rule 1.7, that such a belief would not be reasonable, and that consequently, you cannot simultaneously serve as a member of the Legacy Committee and represent parishioners in connection with their estate planning when they may contemplate a gift or bequest to the church.

The Committee's opinion in this regard is based upon Rule 2.1 which provides that "(i)n representing a client, a lawyer shall exercise independent professional judgment and render candid advice." Similarly, Rule 5.4C provides that "(a) lawyer shall not permit a person who recommends the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services."

The Committee believes that your laudable interest in advancing your church's interests would inevitably compromise your independent professional judgment in advising practitioners regarding whether their own interests will be served by such giving in general or by bequests to your church in particular, as issues regarding the nature, magnitude, and timing of parishioners' giving might be affected by considerations relating to your church's financial needs. The Committee also has reservations regarding whether parishioners would be sophisticated enough to weigh the risks involved in order to knowingly consent to your representation.

Consequently, it is the Committee's opinion that the conflict posed by virtue of your membership on the Legacy Committee will not be able to be addressed by the consultation and consent requirements of Rule 1.7(b)(2) and (c) (and/or Rule 2.2) and that to advise parishioners as your propose, you would have to resign from the Legacy Committee.

We hope that this opinion is of assistance.

FOOTNOTES:

1 Rule 1.7. Conflict of interest: General rule.

(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless:

(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and

(2) each client consents after consultation.

(b) 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.

(c) The consultation required by paragraphs (a) and (b) shall include explanation of the implications of the common representation and any limitations resulting from the lawyer's responsibilities to another, or from the lawyer's own interests, as well as the advantages and risks involved.

[Amended Dec. 10, 1996, effective July 1, 1997.]

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Comments

conflict of interest ruling; pro bona representation

The ruling of the Ethics Committe is the correct position and based upon solid support from the Rules of Professional Conduct. It needs to be disseminated to remind well meaning lawyers of the conflicts involved in such representation. Unfortunately, in the real world these rules appear not to be uniformly observed,

Implications of case for other Financial Advisors

I'm curious if the PGDC community feel this is as "black and white" a confilct of interest for other financial advisors who may serve on legacy or planned giving committees for charities. Surely these committees are regularly populated with CPAs, tax attorneys, financial planners and investment professionals. Sometimes those folks actually have the best interests of the charity as their primary focus. Do you feel that the Maryland Bar Association's opinion on legal counsel is fully applicable to other advisors who may work with patrons in crafting their planned gifts?

Implications of case for other Financial Advisors

The Model Standards of Practice for Charitable Gift Planners (which by the statement's definition include all parties to the gift planning process: development officers, consultants and professional advisors alike), adopted by the National Committee on Planned Giving, say in part: "A Gift Planner shall not act or purport to act as a representative of any charity without the express knowledge and approval of the charity, and shall not, while employed by the charity, act or purport to act as a representative of the donor, without the express consent of both the charity and the donor." Adding: "A Gift Planner acting on behalf of a charity shall in all cases strongly encourage the donor to discuss the proposed gift with competent independent legal and tax advisers of the donor's choice." Source: http://www.ncpg.org/ethics_standards/model_stds.asp?section=7 Accordingly, ethical conduct is not the exclusive responsibility of the legal community, but a shared responsibility of all parties to the gift planning process.

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