Effective October 1, 2013, we now have F.S. 732.806, a new statute effectively codifying existing ethics Rule 4-1.8(c) as part of our probate code, and making a violation of this ethics rule an automatic basis for voiding any part of a will, trust or other written instrument making an improper client gift to the drafting lawyer or a person related to the lawyer. However, like the existing ethics rule, the restrictions on gifts under the new statute do not affect:
 Gifts to a lawyer or other person if the lawyer or other person is related to the person making the gift.
 A written instrument appointing a lawyer, or other person related to the lawyer, as a fiduciary.
 Title to property acquired for value from a person who receives the property in violation of the restrictions on gifts.
This new statute changes existing Florida common law. The common law rule in Florida was that gifts made to lawyers in violation of ethics Rule 4-1.8(c) weren’t void per se, but they did trigger a rebuttable presumption of undue influence by the drafting lawyer. If lawyer couldn’t rebut the presumption, the gift was then voided (see here, here). In other words, under our prior common law improper gifts to lawyers weren’t automatically void, but they were voidable. The new statute reverses this order. Improper client gifts are now automatically void as a matter of law, which should make it less expensive and time consuming for parties contesting such gifts to have them set aside.
But no matter how just your cause may be, the expense and uncertainty of litigation is often daunting. So the new statute also contains a mandatory fee-shifting clause, which is tilted in favor of contesting parties:
In all actions brought under this section, the court must award taxable costs as in chancery actions, including attorney fees. When awarding taxable costs and attorney fees under this section, the court may direct payment from a party’s interest in the estate or trust, or enter a judgment that may be satisfied from other property of the party, or both. Attorney fees and costs may not be awarded against a party who, in good faith, initiates an action under this section to declare a gift void.
What F.S. 732.806 demonstrates is that there’s a right way and a wrong way for clients to make substantial gifts to their lawyers. The wrong way opens the door for litigation and possibly frustrating a client’s legitimate testamentary wishes. The right way makes sure the client isn’t the victim of undue influence, and just as importantly, makes it much less likely the estate will find itself embroiled in costly litigation. So what’s the right way? The Commentary to Rule 4-1.8(c) provides the following road map:
A lawyer may accept a gift from a client, if the transaction meets general standards of fairness and if the lawyer does not prepare the instrument bestowing the gift. For example, a simple gift such as a present given at a holiday or as a token of appreciation is permitted. If a client offers the lawyer a more substantial gift, subdivision (c) does not prohibit the lawyer from accepting it, although such a gift may be voidable by the client under the doctrine of undue influence, which treats client gifts as presumptively fraudulent. If effectuation of a substantial gift requires preparing a legal instrument such as a will or conveyance, however, the client should have the detached advice that another lawyer can provide and the lawyer should advise the client to seek advice of independent counsel. Subdivision (c) recognizes an exception where the client is related by blood or marriage to the donee or the gift is not substantial.
R. Regulating Fla. Bar 4-1.8, Comment
“Gifts to Lawyers.”
Bottom line, client gifts to lawyers are not illegal, but they are freighted with all sorts of baggage and litigation risks. Florida law and our ethics rules provide concrete guidance for effectuating these gifts the right way. Do it the wrong way, and you’ll now run head on into F.S. 732.806. For more on the conflict-of-interest concerns underlying new F.S. 732.806, you’ll want to read an excellent CLE presentation on the new statute prepared by William T. Hennessey of Gunster, Yoakley & Stewart, P.A. entitled Thanks, But No Thanks!: The Ethics of Client Gifts.
What about writing yourself in as a client’s trustee or personal representative?
Like our existing ethics rule, F.S. 732.806 also contains a carve out for wills and trusts in which the drafting lawyer is named as his client’s PR or trustee. However, the commentary to Rule 4-1.8(c) strongly hints there’s a potential for conflict-of-interest, and the drafting lawyer should obtain the client’s “informed consent” to such appointment.
This rule does not prohibit a lawyer from seeking to have the lawyer or a partner or associate of the lawyer named as personal representative of the client’s estate or to another potentially lucrative fiduciary position. Nevertheless, such appointments will be subject to the general conflict of interest provision in rule 4-1.7 when there is a significant risk that the lawyer’s interest in obtaining the appointment will materially limit the lawyer’s independent professional judgment in advising the client concerning the choice of a personal representative or other fiduciary. In obtaining the client’s informed consent to the conflict, the lawyer should advise the client concerning the nature and extent of the lawyer’s financial interest in the appointment, as well as the availability of alternative candidates for the position.
R. Regulating Fla. Bar 4-1.8, Comment
“Gifts to Lawyers.”
Get it in writing:
You’ll want to treat a client’s “informed consent” in this scenario as a conflict waiver, which according to ethics Rule 4-1.7 means it needs to be “confirmed in writing”. Conflict-waiver letters are high-risk documents that are never easy to draft, so starting from scratch on your own is NOT a good idea. If you don’t have a good form you’ve used in the past, you’ll find ACTEC’s sample waiver letter to be an excellent starting point. See ACTEC’s Form of a Letter Regarding the Appointment of the Lawyer as a Fiduciary.
For more on the conflict-of-interest concerns underlying wills and trusts appointing a drafting lawyer as his client’s PR or trustee, here again you’ll want to read the excellent discussion of this issue contained in the CLE presentation prepared by William T. Hennessey of Gunster, Yoakley & Stewart, P.A. entitled Thanks, But No Thanks!: The Ethics of Client Gifts.