We often write about cases of lawyer discipline. That’s not because we enjoy relating the stories, but because they often provide guidance even to non-lawyers. For one example, many of the lawyer discipline cases involve breaches of fiduciary duty. The duties owed to an estate are the same whether the executor is a lawyer or not. Lawyer discipline cases often illustrate that duty — and the cost of a breach — in an ethics-focused discussion.
Lawyer Gene W. Allen’s Actions
When his mother’s health began to fail, North Dakota lawyer Gene W. Allen took over management of her affairs. She had signed a power of attorney naming her son as agent. He used that document to take charge of her finances after she was hospitalized.
One of the things an agent should do is to check on the principal’s estate plan. It is important to consider that plan in deciding how to prioritize bills and make payments. Mr. Allen did as he should have done: he looked for and found his mother’s existing will.
He might have been surprised when he read the will, however. It left a few small bequests to local charities, and the bulk of her estate to her granddaughter, Mr. Allen’s daughter. It did name Mr. Allen as personal representative, but left him no share of her estate.
According to Mr. Allen, he visited his mother in the hospital and discussed her existing bank accounts. She told him (he said) to change the title on her two bank accounts into joint tenancy with Mr. Allen. That meant that on her death, he would receive the balance in those accounts. Mr. Allen took the power of attorney to the bank and a few days later and changed the account titles into joint tenancy.
The probate proceedings
Mr. Allen’s mother died just a week after the changes in the account titles. He filed her will with the North Dakota probate court, and the court appointed him as personal representative. Then he simply took no significant action on the estate for almost two years.
The estate was worth about $1 million dollars, and the will directed that virtually all of that would go to Mr. Allen’s daughter. According to her, though, Mr. Allen did not even respond when she asked about the status of the estate.
Meanwhile, Mr. Allen remarried and had a new son, born seventeen months after his mother’s death. Mr. Allen wrote to his daughter and proposed dividing the estate equally between her and her new half-brother, with over $100,000 to be given as a gift to Mr. Allen himself.
His daughter declined to agree to his peculiar proposal for distribution of the estate, and instead asked for her father’s removal as personal representative. Before the probate court could act (but two years after the decedent’s death), Mr. Allen resigned as personal representative.
Even after his withdrawal from administration of the estate, Mr. Allen continued to file pleadings in the probate file. He asked the probate court to determine that the will — the same will he had initially filed with the court as his mother’s last will — was invalid. He argued that it was “fatally flawed” and that it “mistakenly omitted” Mr. Allen himself.
Mr. Allen lost his probate court challenge. His daughter was identified as the principal beneficiary of her grandmother’s estate, and the two of them settled her claims that he had taken money from the estate improperly.
The lawyer discipline process
That might have been the end of the legal case, but for the lawyer discipline process. The North Dakota State Bar filed allegations against Mr. Allen. They claimed that he had breached his fiduciary duties as his mother’s agent, as personal representative of the estate, and as attorney for the estate.
The Supreme Court found that Mr. Allen’s interests as attorney for his mother’s estate were in conflict with his interests as a potential beneficiary of her estate. He should have withdrawn as attorney for the estate (and, probably, as personal representative) once he decided to seek a share of the estate for his new-born son and for himself. Once he did step down as personal representative, he was still precluded from pursuing a claim against the estate — his former client.
When he first initiated the probate proceedings, Mr. Allen had alleged that his mother’s will was valid, was properly executed, and represented her last wishes. When he later argued that it was invalid, and “fatally flawed,” he took an inconsistent legal position. The Supreme Court criticized his actions in this regard, but determined that there was not clear and convincing evidence of his making a false statement to the probate court.
The court also ruled that Mr. Allen’s behavior as agent under his mother’s power of attorney violated his duties as an attorney. Even though the civil claims against him appeared to have been satisfied by an agreement with his daughter, the fact remained that he had violated his duties as a lawyer — who happened to be agent under a power of attorney.
The result, and some observations
Mr. Allen was suspended from the practice of law for a six-month period, and ordered to pay over $15,000 in costs for the lawyer discipline proceeding. In a separate concurring opinion, one Supreme Court Justice made the underlying point very clearly. Justice Daniel Crothers wrote that “lawyers should advisedly and cautiously accept representational positions in family-related matters where they might have a perosnl interest that is or might be adverse to the estate.” In the Matter of Disciplinary Action Against Allen, August 2, 2017.
What does Mr. Allen’s disciplinary proceeding suggest for more general use? A couple of points:
- An agent under a power of attorney is always a fiduciary. Same for a personal representative. Lawyers are almost always fiduciaries with regard to their clients. When the lawyer is also the agent or personal representative, the fiduciary duty is always there. The penalty for violations might be removal as fiduciary, but it might also be lawyer discipline — disbarment, suspension or other disciplinary outcomes.
- No agent or personal representative — lawyer or not — should try to negotiate their own self-interest. That is precisely what “conflict of interest” means.
