Earlier in Law Tips, our faculty contributor, Sean Obermeyer, offered an important observation for all estate planning lawyers: “A lawyer should not assume that, simply because he or she is an “ethical” person, his or her conduct will comport with the Rules of Professional Conduct in every given situation. Nor should a lawyer assume that the relatively non-adversarial nature of an estate planning practice makes detailed knowledge of the Rules unnecessary.”
Among the issues that Sean raises in his CLE presentation is the ethical quandary that may arise in undertaking representation of multiple business owners. I am pleased to offer his advice in that area:
Business Owners and Businesses
Before undertaking a representation of multiple business owners (or of a business that has multiple owners) in connection with succession planning, a lawyer should perform a conflicts analysis, especially if the lawyer represents (or formerly represented) any of the owners in connection with estate planning or other matters. Much like a spousal or multi-generational representation, the lawyer should proceed with the representation of all of the owners only where it is clear that the owners’ interests are closely aligned (i.e., that they are in agreement about the terms of the business succession plan).
Even where it appears that the owners’ interests are closely aligned, a lawyer should advise all of the owners in writing of the possibility of a conflict arising between the owners in the future and obtain all of the owners’ consent to the engagement, confirmed in writing. The lawyer should make it clear to all of the owners at the outset that the lawyer cannot and will not keep confidences as between the owners.
If the owners do not agree about the terms of the business succession plan or it appears likely that the owners may not agree about the terms of the business succession plan, each owner should seek separate counsel. In that event, it would be best if a lawyer represents one owner in connection with estate planning or other matter.
If a lawyer represents multiple business owners in connection with business succession planning and the owners later get “sideways” with one another (for example, if one of the owners later breaches the buy-sell agreement that was created as a part of the business succession plan or otherwise attempts to challenge the business succession plan), the lawyer may not represent either side in connection with the subsequent breach or challenge, unless the party who will no longer be represented by the lawyer first gives informed consent, confirmed in writing.
Thanks again to Sean Obermeyer for sharing these specific insights into ethical quandaries that might cause concerns in your estate practice. In closing, Sean offers the following summation:
“It sometimes can be difficult to apply the Rules to many common situations faced by estate planning lawyers. Nevertheless, it is important to become and remain familiar with the Rules, to think critically about their application in the estate planning realm and, to the maximum extent possible, to use that knowledge and critical thinking to avoid or mitigate ethical issues before they become a problem for the lawyer.”
About our Law Tips Faculty Member:
Sean Obermeyer is an associate with Taft, Stettinius & Hollister, LLP, Indianapolis. He practices in the Private Client Practice Group, concentrating in the areas of estate planning, probate, guardianships, and trust administration. He also assists clients with estate, gift and generation-skipping transfer tax matters, formation and operation of family business entities and private foundations, and planning for children with special needs. Mr. Obermeyer earned his bachelor’s degree from Hanover College, and his law degree from Indiana University Robert H. McKinney School of Law. Prior to law school, Mr. Obermeyer was an assistant vice president and branch manager for PNC Bank.
About our Law Tips blogger:
Nancy Hurley, Law Tips blogger, has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We plan to utilize her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook page, Twittering and other places her legal experience lends itself.
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