Opinion 2008-9 (August 2008)

The inquirer represents the executrix of a decedent’s estate. The decedent died in August 2005. At that time, inquirer believed the estate’s assets totaled approximately $300,000.00. According to the facts provided, the administration of those assets involved a will contest which was resolved pursuant to a settlement that was approved by the Orphans’ Court. In June 2008, the inquirer learned about the existence of U.S. bonds in the decedent’s name totaling $360,000.00 and accompanied the executrix to City Hall to collect the bonds. After leaving City Hall, the executrix abruptly left with the bonds saying she would contact the inquirer the next day. After not hearing from her, the inquirer called and wrote to her continually urging her to meet with inquirer in order to administer the additional bond assets in accordance with both Pennsylvania law and the Orphans’ Court settlement agreement. However she failed to respond to those letters and phone calls. The inquirer asks what responsibilities, if any, the inquirer has as a result of this situation.

Pennsylvania Rule of Professional Conduct (the “Rules”) 1.6 Confidentiality of Information provides in part that:

(b) A lawyer shall reveal such information if necessary to comply with the duties stated in Rule 3.3.

(c) A lawyer may reveal such information to the extent that the lawyer reasonably believes necessary:

(2) to prevent the client from committing a criminal act that the lawyer believes is likely to result in substantial injury to the financial interests or property of another;

(3) to prevent, mitigate or rectify the consequences of a client’s criminal or fraudulent act in the commission of which the lawyer’s services are being or had been used;

Rule 1.16. Declining or Terminating Representation provides in part that:

(a) Except as stated in paragraph (c), a lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if:

(1) the representation will result in violation of the Rules of Professional Conduct or other law; …

Rule 3.3. Candor Toward the Tribunal provides in part that:

(b) A lawyer who represents a client in an adjudicative proceeding and who knows that a person intends to engage, is engaging or has engaged in criminal or fraudulent conduct related to the proceeding shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal.

(c) The duties stated in paragraphs (a) and (b) continue to the conclusion of the proceeding, and apply even if compliance requires disclosure of information otherwise protected by Rule 1.6.

The central issue raised is one of confidentiality under Rule 1.6. Specifically, would the inquirer’s disclosure of the executrix’s failure to administer the additional assets of the estate violate the duty of confidentiality to her under Rule 1.6? The Committee believes that Rule 1.6 permits the inquirer to reveal information about the executrix’s conduct concerning the bonds. Specifically, Rule 1.6(c)(2) the Rule permits an attorney to reveal such information as is necessary “…to prevent the client from committing a criminal act that the lawyer believes is likely to result in substantial injury to the financial interests or property of another.” In addition, Rule1.6(c)(3) permits revealing confidential information “…that the lawyer reasonably believes necessary to prevent, mitigate or rectify the consequences of a client’s criminal or fraudulent act in the commission of which the lawyer’s services are being or had been used.” The executrix’s ongoing failure to respond to the inquirer’s numerous letters and telephone calls in which she is urged to come forward with the bonds so that they can be properly administered (i.e. accounted for and distributed per the 2006 settlement agreement approved by the Court) is sufficient basis for the inquirer to infer that she intends to retain those assets illegally. As a result, Rule 1.6(c)(3) clearly permits disclosure. However, prior to making such disclosures, the inquirer should advise the client confidentially that he will be taking such action if the client continues with her refusal to come forth with the bonds.

Having determined that the Rules permit the inquirer to reveal information about the additional assets, the next question is whether the Rules require such disclosure. See Rule 1.6(b). Under Rule 3.3(b), which involves candor toward the tribunal, we believe that the inquirer is required to take action if any of the following has occurred:

• the filing of an Inventory with the Register of Wills;
• the filing of a Status Report with the Register of Wills indicating that the estate administration is complete;
• the filing of an accounting or any other document with the Orphans’ Court, wherein the executrix set forth the assets and value of the estate.

Although the inquiry states that prior to receiving the bonds, the other assets of the estate were “fully administered,” it is important to note that the receipt of new assets reopens estate administration and the duties attendant thereto. Under Rule 3.3(b), “a lawyer who represents a client in an adjudicative proceeding and who knows that a person intends to engage, is engaging or has engaged in criminal or fraudulent conduct related to the proceeding shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal.” All of the above listed actions involve substantive representations regarding the value and/or administration of the estate to either the Register of Wills or the Orphans’ Court and therefore trigger the disclosure requirement of Rule 3.3.

In addition, Pennsylvania case law appears to require disclosure of the bond situation to the other beneficiaries. A 1995 Montgomery County Orphans’ Court decision (issued by Judges Ott and Taxis), held that although an attorney representing an estate fiduciary need not consider the beneficiaries of the estate to be clients, the attorney nevertheless has a duty of care to those beneficiaries known as “derivative duties” that is similar to the duty of care owed to the fiduciary. Pew Trust, 16 Fiduc.Rep.2d 73 (Montg. 1995).

To summarize, Rule 1.6 permits disclosure to the other beneficiaries in this instance and the Pew case may actually require that such disclosure be made. In addition, assuming that one or more of the actions triggering Rule 3.3 has occurred, in order to comply with the duties under that Rule, the inquirer must first remonstrate with the client confidentially, advise her of the inquirer’s duty to the beneficiaries and duty of candor toward the tribunal and urge her to come forward with the bonds so that they can be properly administered. If she fails to do so within a time limit set by the inquirer in writing, the inquirer is then obligated under Rule 3.3(b) to disclose the situation with the bonds to the Register of Wills and/or Orphans’ Court. The inquirer will also be required to withdraw as her counsel because continued representation under those circumstances would result in a violation of the Rules. See Rule 1.16(a)(1).

CAVEAT: The foregoing opinion is advisory only, and is based upon the facts presented in the inquiry, and any assumptions set forth therein. This opinion is not binding on the Office of the Disciplinary Counsel or any court, and is only entitled to such weight as any such entity would choose to give it.