Wednesday, July 29, 2020

Will Power

A violation of Rule 1.8(c) drew a 90-day suspension from a hearing panel of the Michigan Attorney Discipline Board

Suspension - 90 Days, Effective July 24, 2020.

After proceedings in accordance with MCR 9.115 and based on the evidence presented by the parties at the hearings held in this matter, the hearing panel found that respondent committed professional misconduct by preparing multiple estate plan instruments on behalf of the decedent through which respondent and respondent’s children were to receive substantial gifts from the trust estate when neither respondent nor his children were related to the donor.

The panel found that respondent violated MRPC 1.8(c) which states, a lawyer shall not prepare an instrument giving the lawyer or a person related to the lawyer as a parent, child, sibling, or spouse any substantial gift from a client including a testamentary gift, except where the client is related to the donee. The panel also found that respondent violated MCR 9.104(2) and (3).

The related Michigan Supreme Court decision is described on the Estate & Trust Litigation Blog

The opinion found the presumption of undue influence when an attorney drafts a will by which he or his family benefits to be a rebuttable one 

One of the underlying purposes and policies of EPIC [the Estates and Protected Individuals Code] is “[t]o discover and make effective a decedent’s intent in distribution of the decedent’s property,” MCL 700.1201(b) (emphasis added), but this purpose long predates EPIC and is entrenched deeply within the history of this state’s probate law. Discovering and giving effect to this intent has been viewed as the foundational standard of probate law for centuries.

...the focus of the will contest is to determine the decedent’s intention and not to judge and discipline the attorney’s conduct. Id. at 178 (“The forum in which to test unprofessional conduct of an attorney in this State is adequately supplied in the State Bar grievance procedure. The forum in which not to test it is a jury trial determining testamentary capacity and undue influence.”). Thus, that an attorney drafted a will giving a gift in his or her own favor only affects the will contest insofar as that is relevant to the rebuttable presumption of undue influence and the determination by the fact-finder whether such influence had been exerted.

Impact of the ethical rule

a breach of the MRPC merely constitutes grounds for invoking the attorney disciplinary process. The rules of professional conduct promulgated by this Court should neither overrule nor give rise to substantive law. Therefore, the adoption of MRPC 1.8(c), which occurred before the Legislature enacted the current probate framework of this state under EPIC, has no effect on either governing law in this case or on the proper resolution of this matter.

Justice McCormack dissented

The ethical code that governs every member of the State Bar of Michigan categorically forbids a lawyer from drafting a will for a client that leaves the lawyer a substantial gift. Yet this Court’s outdated precedent enables a lawyer to do so anyway. To be sure, that precedent requires the lawyer to show no undue influence was applied to his client. But that showing is required after the client has passed away, giving the lawyer a consequential evidentiary advantage.

The affirming opinion’s decision to affirm this precedent leaves clients vulnerable, rewards unscrupulous attorneys, encourages costly litigation, and moreover does not account for the important shifts of the past half-century in our ethics rules, probate law, and evidentiary presumptions. Not all undue influence is equally pernicious: A lawyer who drafts a testamentary instrument that leaves the lawyer a substantial gift in flagrant violation of the professional code of ethics is unique among conflicted beneficiaries in will contests, as she is both an author and beneficiary of the will. To respond, an effective tool is needed.

I would overturn In re Powers Estate, 375 Mich 150; 134 NW2d 148 (1965), to the extent that it held that courts should apply a mere presumption of undue influence to a will contest where an attorney has drafted a testamentary document that names himself as a beneficiary. That particular equitable remedy may have been sufficient before significant changes to our ethics code, the law of probate, and our approach to presumptions. But it is no longer sufficient to protect the public. I would therefore replace it with a per se rule of undue influence that voids substantial testamentary gifts to attorney-drafters. Those who draft wills should not benefit from them.

We owe the public better.

The dissent notes the arc from the aspirational Canons to bright-line Rules and favors an irrebuttable presumption on policy grounds

A rebuttable presumption forces the parties into a messy undue influence battle in probate court. Inefficiencies multiply when a party aggrieved by the lawyer’s misconduct seeks restitution in a parallel grievance proceeding. The result is nasty, poor, brutish, and long. This case illustrates the point: litigation has been ongoing since February 2012, roughly one dozen law firms have been involved so far, and its documentary record fills five-and-a-half boxes and spans many thousands of pages.  Although the parties dispute whether Mardigian intended to leave his estate to his family or his attorney, surely he did not intend to create that acrimony. But acrimony is inevitable given the current conflicting rules. And so contests become Dickensian parody.

And concludes

Over a century ago this court recognized that an attorney who drafts a client’s will leaving himself a substantial gift presented a special problem for a court whose job it is to protect the testator’s intent. In my view, changes in the law and in the rules governing the conduct of lawyers make the historical remedy this court adopted to handle this problem—a rebuttable presumption of undue influence—no longer sufficient to protect the public. Yes, lawyers who violate their ethical duties to clients can be punished in the disciplinary process. But that only solves part of the problem. Because I agree with the affirming opinion that testator intent is paramount, I would update our equitable remedy to ensure that intent is respected. Our equitable remedy can and should reflect the updates to the relevant substantive law and ethics rules.

In not doing so, the court protects compromised lawyers over the public

(Mike Frisch)

https://lawprofessors.typepad.com/legal_profession/2020/07/the-michigan-supreme-court-decision-the-michigan-supreme-court-affirmed-the-appellate-divisions-ruling-that-an-attorney-was.html

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