Statutory reporting requirements for reporting adult and child abuse, neglect, or exploitation place lawyers in the difficult position of determining how to preserve client confidentiality without violating the law when representing abused clients. KBA Ethics Opinion E-439 (9/16/2016) provides guidance for this issue by addressing these questions:
- What should an attorney do when the attorney has reason to believe that an elderly or special needs client is or has been abused, neglected, or exploited?
- What should an attorney do when the attorney has reason to believe that a client is or has abused, neglected, or exploited a person to whom the client owes a fiduciary duty?
The majority of KBA E-439 deals with the Kentucky statutes requiring reporting of abuse. This analysis is thorough, but does not lend itself to an abstract in newsletter format. The Committee concluded that:
In the opinion of the Committee, Kentucky’s mandatory reporting requirements would not be construed by the Kentucky Supreme Court to require that an attorney reveal confidential client information in order to make a report of abuse, neglect or exploitation to or by the attorney’s client.
E-439 is a must read for Kentucky lawyers. In addition to addressing statutory reporting requirements the opinion offers helpful guidance on applying Kentucky Rule of Professional Conduct (KRPC) SCR3.130 (1.14) Client with Diminished Capacity.
Managing the Risk
Risk management of clients who are elderly, appear to have diminished capacity, or are minors require the recognition of the enhanced professional responsibility duties lawyers owe these vulnerable clients. In these representations a lawyer often needs to go much further than in other similar representations to assure that the client is protected from family, friends, business people, and scammers. What follows is a gloss of our risk management advice from prior articles on representations involving diminished capacity.
- Involvement of family members: Family members may become involved in the representation of a client with diminished capacity in three ways. First, the client may ask for family members to participate in the matter. Second, a lawyer may consult family members in taking protective action. The third way in which family members can become involved in a representation is by paying the lawyer’s fees. See KRPC 5.4(c). Rule 1.14, Comment (3) provides helpful guidance for managing family member involvement.
- Letter of engagement (LOE): Always use a letter of engagement in diminished capacity client representations that clearly identifies who the client is, the scope of the engagement, the fee agreement, and any special instructions. In the scope paragraph cover specifically what will be done and what will not be done for the client. An example of a special instruction is client consent to reveal confidential information. It will usually be necessary to modify the language of a standard LOE to an easy to read/easy to understand format tailored to the ability of the client to comprehend.
- Minors: In Branham v. Stewart (307 S.W. 3d 94 (2010) the Kentucky Supreme Court held “that an attorney pursuing a claim on behalf of a minor does have an attorney-client relationship with the minor. And that relationship means that the attorney owes professional duties to the minor, who is the real party in interest.” Lawyers must take care not to let the influence of other interested parties to override the professional duties owed to minors.
- Fee Agreement: Do all that can be done in the LOE to avoid fee issues. Ask for a substantial “evergreen” retainer at the inception of the representation. Charge a fixed fee collected in advance, if that is feasible. Keep in mind that withdrawing from representing a diminished capacity client is problematic. Withdrawing and suing the client for fees carries a great risk of both a malpractice claim and a bar complaint – a losing proposition for a lawyer when the adversary is client with diminished capacity that the lawyer has dropped.
- Conflicts of Interest and Prohibited Transactions: The risk of a conflict of interest in representing clients with diminished capacity is high when compared to other representations. It is beyond the scope of this article to do more than flag the primary danger areas. They are intergenerational conflicts that typically center on preservation of assets; spousal conflicts in estate planning and divorce matters; and fiduciary conflicts when a lawyer represents a fiduciary or is a fiduciary. KRPC 1.8, Conflicts of Interest: Prohibited Transactions, includes three rules that have extra sensitivity when representing diminished capacity clients:
- 1.8(a) concerns entering into a business transaction with a client. It contains strict disclosure requirements prior to consummating the transaction.
- 1.8(b) concerns using information relating to representation of a client to the disadvantage of the client.
- 1.8(c) prohibits a lawyer from preparing an instrument giving the lawyer a substantial gift under most circumstances.
- Withdrawal: A lawyer’s fiduciary duty of loyalty when representing a client with diminished capacity requires that the lawyer not consider withdrawing except under the most extreme cases of a breakdown in the relationship. ABA Formal Opinion 96-404 offers this helpful analysis of the issue:
- [W]hile withdrawal in these circumstances solves the lawyer’s dilemma; it may leave the impaired client without help at a time when the client needs it most. The particular circumstances may also be such that the lawyer cannot withdraw without prejudice to the client. For instance, the client’s incompetence may develop in the middle of a pending matter and substitute counsel may not able to represent the client effectively due to the inability to discuss the matter with the client. Thus, without concluding that a lawyer with an incompetent client may never withdraw, the Committee believes the better course of action, and the one most likely to be consistent with Rule 1.16(b)[Declining or Terminating Representation], will often be for the lawyer to stay with the representation and seek appropriate protective action on behalf of the client. (footnotes omitted)
- Discharge: Clients with diminished capacity may discharge their lawyer. The main ethics consideration for a discharged lawyer is covered in Comment (6) to KRPC 1.16, Declining or Terminating Representation:
- If the client has severely diminished capacity, the client may lack the legal capacity to discharge the lawyer, and in any event the discharge may be seriously adverse to the client’s interests. The lawyer should make special effort to help the client consider the consequences and may take reasonably necessary protective action as provided in Rule 1.14.
- Document the file: Meticulously document the file. It is always prudent to follow up with a letter after a difficult issue consultation with a client that includes what was discussed, advice given, and the client’s decision or instructions. With diminished capacity clients consider going one step further and sending a letter after every consultation tailored to the client’s ability to understand. At a minimum document for the file every consultation with the client.
- Make a comprehensive review of the matter just before filing suit: It is always difficult to withdraw from representation of a diminished capacity client, but even more so once a suit is filed. Just prior to filing suit carefully review the situation to resolve any issues such as whether the client’s condition has progressed to the point that a guardian ad litem should be appointed, whether the relationship has deteriorated to the point that the lawyer cannot adequately represent the client, and any shortfall in the payment of agreed fees.
- Don’t forget to check for substantive law requirements applicable to the representation.
- Use the KBA Ethics Hotline: Many of the decisions necessary to adequately represent a diminished capacity client involve close ethical questions. The KBA Ethics Hotline is a readily available source of sound advice for Kentucky lawyers and especially suitable for ethics questions concerning clients with diminished capacity.
For a comprehensive review of Rule 1.14 read the Bench & Bar article The Delicate Ethical Requirements of Representing a Person With Diminished Capacity available on Lawyers Mutual’s website.