Attorneys representing trustees, personal representatives, guardians and other fiduciaries operating in Florida have long had to deal with the common-law “fiduciary exception” to the attorney-client privilege. The basic rule is that if the attorney-client communication had to do with normal administration issues the beneficiaries of the trust or estate were entitled to the information, and the trustee, PR, guardian, etc., couldn’t claim the privilege. If the communication had to do with the fiduciary’s own self interests, for example, if he or she is being sued for malfeasance, then the communications were privileged. I wrote here about the application of this rule in the context of a contested guardianship proceeding.
This ambiguous rule created uncertainty for fiduciaries and their attorneys, inhibiting the free flow of information between client and attorney, which is bad news for all concerned. To get a sense of the kind of trouble this ambiguity can lead to you’ll want to read the US Supreme Court’s recent discussion of the rule in U.S. v. Jicarilla Apache Nation, — S.Ct. —-, 2011 WL 2297786 (U.S. Jun 13, 2011).
 New Statutory Attorney-Client Privilege Protection: F.S. 90.5021:
The Florida Bar’s Probate & Trust Litigation Committee has been working on getting rid of the rule by statute since 2005. Well, those efforts have borne fruit: under new F.S. 90.5021 the “fiduciary exception” to the attorney-client privilege is now history in Florida.
Here’s how the new attorney-client privilege legislation is explained in Florida House of Representative’s Staff Analysis of CS/HB 325:
Section 90.502(1)(c), F.S., provides that a communication between lawyer and client is confidential if it is not intended to be disclosed to a third person. Section 90.502(2), F.S., provides that a client has a privilege to refuse or prevent another party from disclosing those communications.
There has been some issue as to whether the attorney-client privilege applies to a trustee or guardian who employs an attorney in connection with his or her duties as trustee or guardian. The Florida Second District Court of Appeal has addressed both situations.
In Jacob v. Barton, the trustee was being sued by the beneficiary. The issue before the court was whether the attorney client privilege applied to the trustee or the beneficiary. The court ruled that the privilege applied if the work being done was on behalf and for the benefit of the trustee, but if the ultimate benefit was for the beneficiary, the privilege would not apply since the beneficiary was the “real client.” The court in Tripp v. Salkovitz, furthered this reasoning to a guardian. The guardian employed an attorney to assist in the duties of administrating the guardianship. The guardian was later sued for mismanagement by a beneficiary after the ward’s death. The court ruled that the privilege applies only if the attorney was representing the interests of the guardian and not the ward. In both cases, the court mandated that the lower court conduct an in camera review of the records in question and determine which, if any, fell under the attorney-client privilege.
Effect of the Bill (Section 1, Section 8, Section 11)
The bill creates s. 90.5021, F.S., which provides that, for purposes of this section, a client acts a fiduciary when serving as a personal representative, a trustee, an administrator ad litem, a curator, a guardian or guardian ad litem, a conservator, or an attorney-in-fact. The bill also provides that a communication between a client, acting as a fiduciary, and the client’s lawyer is privileged and protected pursuant to s. 90.502, F.S., and that nothing in this section affects the crime-fraud exception to the lawyer-client privilege set forth in s. 90.502(4)(a), F.S.
The bill also amends s. 733.212(2)(b), F.S., to provide that a notice be included on the notice of administration regarding the fiduciary lawyer-client relationship.
The bill amends s. 736.0813, F.S., to require the trustee of a trust to include a notice regarding the fiduciary lawyer-client relationship in various statutory mandated notices to the beneficiaries of the trust.
In order to make sure trust and estate beneficiaries don’t get caught by surprise by this turn of events, the new legislation also creates new reporting requirements for ALL trustees and personal representatives. The new legislation amends F.S. 733.212(2)(b), to provide that a notice be included on the notice of administration regarding the fiduciary lawyer-client relationship, and F.S. 736.0813, to require the trustee of a trust to include a notice regarding the fiduciary lawyer-client relationship in various statutory mandated notices to the beneficiaries of the trust.