Any estate planner worth his or her salt knows by now that the commonly accepted practice of representing both a husband and wife in estate planning is fraught with potential conflict-of-interest issues. The best way to get your arms around this ethics minefield is to read the Florida Bar’s Advisory Opinion 95-4, and two excellent follow up Florida Bar Journal articles entitled Joint Representation of Spouses in Estate Planning: The Saga of Advisory Opinion 95-4 and Multiple Representation in Estate Planning: Beyond Advisory Opinion 95-4, Part 2.

These are not abstract, esoteric ethics questions. If you’re not careful, they can come back to bite you in a very big way. In a story reported here, a well established Texas estate-planning attorney and his firm are reported to have been hit with a judgment for $1 million in damages for breach of fiduciary duty to “Husband,” plus $2 million in punitive damages. The Texas attorney represented a couple. His firm also represented the wife’s mom. After drafting estate planning documents providing that all assets went to the surviving spouse (thus taking full advantage of the unlimited estate tax marital deduction), wife’s mom asked lawyer to rewrite will cutting husband out and making mom the beneficiary of wife’s estate (presto! no more estate tax marital deduction). Lawyer rewrote wife’s will, wife signed new will, no one ever said anything to husband (who was also lawyer’s client), wife dies, husband sues: lawyer gets slammed.

Here are a few excerpts from the linked-to story:

“A [Comal County, Texas] jury Tuesday slapped a $3 million judgment on one of New Braunfels’ oldest and most prestigious law firms in a lawsuit claiming gross negligence and malpractice.

If the verdict and jury award stands against attorney John Dierksen and his firm, Reagan, Burrus, Dierksen, Lamon and Bluntzer, it will be the largest ever in a Comal County court.

Jurors unanimously ruled the law firm and specifically Dierksen were grossly negligent, that the negligence injured Llano businessman Robert Maxwell — a New Braunfels native — and his businesses, Maxwell Marine and Meyer-Maxwell Properties, Ltd., among others, and that the law firm failed to meet its fiduciary duty to Maxwell — costing him more than $1 million.

Along with the $1 million from failure to meet fiduciary duty, jurors set exemplary or punitive damages of $1.5 million against Dierksen and $500,000 against the law firm for a total of just over $3 million.”

Source: Wills, Trusts & Estates Prof Blog

  • Jeff Goethe

    Florida’s ethic’s opinion 95-4 reached the conclusion that the duty of confidentiality outweighed the duty to disclose information to the other joint client. I think under Florida law, the attorney should have declined to make the changes, but also would have been obligated to terminate his representation of both parties. If the wife’s mother requested the change, wasn’t confidentiality lost, and disclosure required to the husband, or at least permitted?

  • Jeff,

    If this were a Florida case, I don’t think lawyer’s duty of confidentiality was necessarily waived/lost when wife’s mother entered the picture. According to ethic’s opinion 95-4 “[i]t is important to note that the ethical duty of confidentiality is broader than the evidentiary attorney-client privilege.” As such, perhaps wife waived the evidentiary attorney-client privilege when her mother became involved in the matter, and as such perhaps her attorney could have been compelled to testify regarding his communications with her, but I don’t think including mom in the discussion necessarily means lawyer’s ethical duty of confidentiality to wife was waived.

    Juan.