Frank W. Streng, Esq.
McCarthy Fingar LLP
11 Martine Avenue
White Plains, NY 10606-1934
New York State Bar Association
Trusts and Estates Section
Ethical Issues for Trusts and Estates Lawyers
Introduction – Source Materials
Structure of New Code: the Bullet Points
Structure of Outline: Take us through the New Code and ethical rules and cases relevant to Surrogate’s Court practice
In general the court, in determining the justice and reasonableness of an attorney’s claim for services, should consider the time spent, the difficulties involved in the matters to which the services were rendered, the nature of the services, the amounts involved, the professional standing of the counsel, and the results obtained.
(a) A lawyer shall not knowingly reveal confidential information, as defined in this Rule, or use such information to the disadvantage of a client or for the advantage of the lawyer or a third person, unless:
(1) the client gives informed consent, as defined in Rule 1.0(j);
(2) the disclosure is impliedly authorized to advance the best interests of the client and is either reasonable under the circumstances or customary in the professional community; or
(3) the disclosure is permitted by paragraph (b).
“Confidential information” consists of information gained during or relating to the representation of a client, whatever its source, that is (a) protected by the attorney-client privilege, (b) likely to be embarrassing or detrimental to the client if disclosed, or (c) information that the client has requested be kept confidential. “Confidential information” does not ordinarily include (i) a lawyer’s legal knowledge or legal research or (ii) information that is generally known in the local community or in the trade, field or profession to which the information relates.
(b) A lawyer may reveal or use confidential information to the extent that the lawyer reasonably believes necessary:
(1) to prevent reasonably certain death or substantial bodily harm;
(2) to prevent the client from committing a crime;
(3) to withdraw a written or oral opinion or representation previously given by the lawyer and reasonably believed by the lawyer still to be relied upon by a third person, where the lawyer has discovered that the opinion or representation was based on materially inaccurate information or is being used to further a crime or fraud;
(4) to secure legal advice about compliance with these Rules or other law by the lawyer, another lawyer associated with the lawyer’s firm or the law firm;
(5) (i) to defend the lawyer or the lawyer’s employees and associates against an accusation of wrongful conduct; or
(ii) to establish or collect a fee; or
(6) when permitted or required under these Rules or to comply with other law or court order.
CPLR 4503(a) “[U]nless the client waives the privilege, an attorney . . . shall not disclose, or be allowed to disclose such communication . . . .”
CPLR 4503(b) “in any action involving the probate, validity or construction of a will, an attorney or his employee shall be required to disclose information as to the preparation, execution or revocation of any will or other relevant instrument, but he shall not be allowed to disclose any communication privileged under subdivision (a) which would tend to disgrace the memory of the decedent.”
This court is of the opinion that a fiduciary has an obligation to disclose the advice of counsel with respect to matters affecting the administration of the estate (2A Scott, Trusts § 173 [4th ed]). This is subject to the limitation that the fiduciary should have the protection of the privilege when litigation has commenced or is anticipated (2A Scott, Trusts § 173 [4th ed]); see, In re LTV Sec. Litig., 89 FRD 595). Certainly, the fiduciary is entitled to the benefit of counsel in the preparation of his defense in a contested accounting or other proceeding.
Id. at 577 (Emphasis Supplied)
Can you take a case if you will be a witness?
(a) A lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness on a significant issue of fact unless:
(1) the testimony relates solely to an uncontested issue;
(2) the testimony relates solely to the nature and value of legal services rendered in the matter;
(3) disqualification of the lawyer would work substantial hardship on the client;
(4) the testimony will relate solely to a matter of formality, and there is no reason to believe that substantial evidence will be offered in opposition to the testimony; or
(5) the testimony is authorized by the tribunal.
(b) A lawyer may not act as advocate before a tribunal in a matter if:
(1) another lawyer in the lawyer’s firm is likely to be called as a witness on a significant issue other than on behalf of the client, and it is apparent that the testimony may be prejudicial to the client; or
(2) the lawyer is precluded from doing so by Rule 1.7 or Rule 1.9.
* * * *
New Rule 3.7(a) as compared to 5-102(A) (C):
Q: May an attorney-draftsman initially represent the proponent, as the nominated executor, in a probate proceeding? If so, may he continue if SCPA 1404 exams are requested? If so, may the attorney-draftsmen continue to represent the proponent if he is one of only two witnesses to the Will? Suppose the attorney-draftsman’s law firm represents the sole residuary legatee under the Will, may he represent the proponent? Suppose objections to the Will are filed, may the attorney-draftsman continue to represent the proponent?
A: All these questions were posited and decided in a decision entered by Surrogate Reitz , Putnam County, in an unpublished Decision entered January 26, 2009 in the Matter of Skolinsky.
The facts in Skolinsky led to a disqualification of the attorney-draftsman’s law firm from presenting the proponent of Mr. Skolinsky’s Will. Here, the attorney-draftsman represented the proponent in the probate proceeding and also was one of two witnesses to propounded Will. In addition, the attorney’s law firm also represented the sole residuary charitable beneficiary. Counsel for the potential objectants moved to compel certain documents from the attorney-draftsmen during a 1404 examination which pertained to the charitable beneficiary and also sought to disqualify the attorney-draftsman’s law firm from representing the proponent.
Surrogate Reitz reasoned that:
“Although it is well recognized that a party to litigation may select an attorney of his or her own choosing, this general right is not limitless, citing Green v Green, (citation omitted). Disqualification is in order where there is a reasonable probability of disclosure of confidential information obtained in a prior representation (citation omitted). Moreover, disqualification is in order when the testimony of an attorney-witness is necessary, citing S & H Hotel Ventures Limited Partnership v 777 S.H. Corp, 69 NY 2d 445-446 (1987).”
Q: May an attorney who is the executor of an estate, represent himself as the fiduciary in a discovery proceeding?
Consider the Matter of Walsh, 17 Misc 3d 407 (Surr. Ct., Bronx, 2007); Surrogate Holtzman, found that “in this SCPA 2103 discovery proceeding, the respondent moves to disqualify the petitioner, who is the executor of the estate and an attorney, from representing himself in his fiduciary capacity. The respondent contends that the advocate-witness rule mandates the petitioner's disqualification (Code of Professional Responsibility, DR 5-102 [22 NYCRR 1200.21].The novel issue presented is whether the petitioner has the same right to represent himself in his fiduciary capacity as he does individually. The court holds that he does not.” Id at 408.
The Walsh, supra, case involved an interesting clash between an individual's fundamental right to represent him or herself and the ethical proscription against an advocate also being a witness in a proceeding (DR 5-102). Walsh case involved a SCPA 2103 discovery proceeding commenced by the executor, an attorney who was representing himself as the petitioner. The respondent moved to disqualify the attorney because the respondent had consulted a lawyer friend about an issue in the proceeding and, through happenstance, the lawyer friend subsequently consulted the petitioner-lawyer who gave certain advice contrary to the position he was taking in the discovery proceeding.
In analyzing the issue, the court was required to balance the strong policy in favor of the right to counsel of one's choice and the right to represent oneself, against the code's proscription against an advocate acting as a witness. The policy behind the advocate witness rule is that the roles of an advocate and a witness are inconsistent as it is unseemly for the advocate/witness to argue his own credibility before the trier of fact.
Surrogate Hotzman held that the policy behind the advocate/witness rule trumps the right of self-representation where the advocate is not a party in his/her individual capacity.
(a) Except as provided in paragraph (b), a lawyer shall not represent a client if a reasonable lawyer would conclude that either:
(1) the representation will involve the lawyer in representing differing interests; or
(2) there is a significant risk that the lawyer’s professional judgment on behalf of a client will be adversely affected by the lawyer’s own financial, business, property or other personal interests.
(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:
(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;
(2) the representation is not prohibited by law;
(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and
(4) each affected client gives informed consent, confirmed in writing.
Comparison of the Old Code and the new rules:
Perhaps, the most notable change in the new Rule 1.7, as compared to the old Code, is the requirement that a client’s give informed consent which must be confirmed in writing. I believe this means that the lawyer must set down in a writing the potential consequences to the clients where a simultaneous or multiple party presentation is anticipated. The commentaries on the new rules (which I believe have not yet been adopted) point out that the writing does not supplant the conversation with the client. Rather, the writing confirms the oral communication.
In Roy Simon's NY Code of Professional Responsibility, [Annotated (1998 ed) with respect to DR 105] he suggested that the following points be substantially discussed with the client and confirmed in the writing:
Gary B. Friedman and John R. Morken’s Article in their NYS Bar Journal, Winter, 2001, at page 22 entitled “Estates with Multiple Fiduciaries Pose Ethical and Practical issues for Attorneys and Clients Like”, suggested that to implement these principles, some or all of the following subjects should be covered in a consent/disclosure letter when multiple fiduciaries are to be represented:
Comments: Some of these provisions might seem onerous, possibly causing the clients not to hire the attorney. However, that is precisely the point - to wit: the estate attorney should approach any multiple representations with a great deal of caution. Further, multiple representation where there are actual conflicts of interest should be avoided assiduously. In addition, when these issues have both been discussed and put in writing in the engagement letter, the clients are able to make an educated decision whether to proceed with one attorney or seek separate counsel.
Q: Does a lawyer who obtained consent to a conflict prior to the effective date of the new rules needs to obtain a new consent to the conflict?
A: In Ethics Opinion # 829, published in the NYS Bar News, May/June, 2009, Special Counsel Richard Rifkin, answered this transitional question in the negative. Rifkin opined that although the Appellate Division of the Supreme Court set the effective date of the new rules to be April 1, 2009, “there is no basis to conclude that consents given prior to the adoption of the new Rules are impaired or invalid…”
Q: May a lawyer represent a husband and wife in preparing wills and trusts and related estate planning?
A: Yes, it happens frequently. Since the enactment of the new rules, the attorney must obtain in writing the informed consent of the couple; the best practice is to insert the pertinent disclosure into the engagement letter.
Q: Should you discuss with the couple the potential conflicts?
A: Yes, consider the new Rule and its definition of the informed consent with confirmation in writing of the oral discussion about future potential conflicts. The more obvious situations where potential conflicts may arise are couples on their second and third marriages present additional complexities. For example, where couples are waiving elective shares or executing pre-nuptial agreements, an attorney should never represent both couples. A less than clear situation is when an attorney is drafting will for couples who cannot agree on the ultimate beneficiaries of the estate, or cannot agree on the choice of guardians for their minor children. In such situations, the attorney is wise to be clear with clients that their respective communications with the attorney and each spouse are open to each spouse and not considered confidential.
Q: What happens if the couple later separates or divorces? May the attorney continue with representing one spouse for estate planning matters?
A: Not likely, the attorney will need to obtain the other spouse’s waiver and consent.
Comment: In a second marriage situation, it is understandable that a lawyer may find it difficult to represent the interests of both the second wife income beneficiary and the children from the first marriage remainder persons. See Matter of Heller, 23 AD 3d 61 (2d Dep’t. 2005), aff’d, 6 NY 3d 649 (2006) which is a case dealing with a unitrust election by a trustee.
Q: May one attorney represent family members as the ‘family lawyer”?
A: Yes, says the American College of Trusts and Estates Counsel. In some instances the clients may actually be better served by such a representation, which can result in more economical and better coordinated estate plans. “… Recognition should be given to the fact that estate planning is fundamentally non-adversarial in nature…” See generally, ACTC Commentary on MRPC 1.7.
Comment: Two cases recite these principals where clients may be better served by retaining counsel to represent the family as a unit, including possible family controlled entities in the context of estate planning, administration and even litigation. See In the Matter of Brandman [NYLJ, 11/15/99, 29, col. 3]; and In the Estate of Roccesano, [NYLJ, 6/11/2002, 34, col. 1].
Contrast these principles with the argument attempted by the attorney for the executor facing a motion to disqualify him from representing a residuary legatee in the Estate of Harris [NJLJ, 8/27/2008, 34, col. 5]. The attorney argued that his law firm had been appearing on behalf of the estate, rather than the executor. The Court found that such an argument is technically incorrect. The attorney represents the personal representative of the estate, not the estate itself or the beneficiaries of the estate.
In Harris, the firm’s representation of the executor had continued for one year and the executor terminated the law firm’s representation. Thereafter, a residuary legatee of the same estate retained the same firm to commence a SCPA 711 proceeding to revoke the executor’s letters testamentary. Surrogate Feinberg held that the executor had met three conditions necessary to cause the irrebuttable presumption of disqualification to arise, to wit: the existence of an attorney-client relationship in a substantially related action; the interests of the executor and the attorney’s new client are materially adverse; and the executor is entitled to be free from apprehension that the attorney’s prior representation of him will inure to the advantage of the adversary.
Q: May a lawyer who represented co-administrators in the original petition seeking letters of administration, later represent one administrator compelling an accounting in the same estate from the other executor?
A: Not likely
Consider in Matter of Hof, 102 A.D.2d 591 (2d Dep’t 1984)], the Appellate Division, Second Department, reversed Surrogate Laurino’s decision which, without an evidentiary hearing, denied a motion to disqualify the estate attorney from representing Philip Hof, as one the administrator against Mrs. Hof, the decedent’s surviving spouse by a subsequent marriage as the other administrator.
You may wonder on what basis did the Surrogate deny the motion to disqualify the estate attorney? Judge Laurino relied upon Matter of Dix (11 A.D.2d 555). The Dix case involved dual representation in a probate proceeding. The party seeking disqualification, the decedent's widow, Mrs. Dix, had originally joined in seeking probate of the will as a coexecutrix, then withdrew as a co-petitioner and contested probate. The appellate division in Dix reasoned, there was no representation of a conflicting interest or potential for use of confidential information. Surrogate Laurino also relied upon the well recognized holding by the Court of Appeals in 1979, articulated in Green v Greene [47 NY2d 447] that a party to litigation may select an attorney of his or her own choosing. In Hof, however, the Appellate Division noted Philip was not a party to the appeal, and the record below was devoid of evidence indicating Philip’s choice of attorney. Mrs. Hof’s motion to disqualify the attorney was held not to be a litigation strategy. Rather, the Appellate Division reasoned that the attorney’s
“[C]ontinued representation under the circumstances would tend to inflame the atmosphere of distrust extant between the co-administrators, impede the cooperation between their counsel and the free flow of information between them, resulting in the prolongation of the final settlement of the estate to the detriment of all the distributees. Further representation of Philip Hof could tend to taint that testimony and further the appearance of impropriety.” Id at 598.
Q: May a lawyer for a grantor also represent the trustee?
A: Rule 1.7(a)(1) provides that a lawyer may not represent a client “if the representation will involve the lawyer in representing differing interests.”
Q: Do grantors and trustees have differing or directly adverse interests?
A: The answer may depend on the facts and circumstances in each case.
Consider the case of In Matter of Ruth Harmon, [NYLJ, Oct. 16, 2006, p 42, col. 6 (Surr. Ct., Suffolk)]. The settlor of an inter vivos trust sought to remove the trustees and obtain the trust's assets. The settlor then moved to disqualify the attorney for the trustees on the ground that he had been the settlor's attorney in drafting the trust indenture, citing DR 5-108. The trustees' attorney argued in opposition that, following the creation of the trust, the settlor had hired two other attorneys to set the trust aside, and that he had represented the trustees since inception without objection from the settlor.
The Surrogate in Ruth Harmon, supra, began by setting forth the requirements for disqualification:
A party seeking disqualification of opposing counsel must satisfy three criteria in order for the court to conclude that there is an irrebuttable presumption of disqualification:
(1) the existence of a prior attorney-client relationship between the moving party and opposing counsel;
(2) that the matters involved in both representations are substantially related, and
(3) that the interests of the present client and the former client are materially adverse.
In Ruth Harmon, the court ruled that the settlor had failed to meet this test based on the papers submitted and scheduled a hearing 'before summarily disqualifying a party's chosen counsel.'
Q: May a lawyer cure a potential violation with informed consent?
A: Informed consent is defined in Rule 1.0(j):
“Informed consent” denotes the agreement by a person to a proposed
course of conduct after the lawyer has communicated information
adequate for the person to make an informed decision, and after the
lawyer has adequately explained to the person the material risks of
the proposed course of conduct and reasonably available alternatives.
Q: May the grantor’s lawyer also represent the beneficiaries?
A: Conflicting interests between grantors and beneficiaries may arise. The grantor’s wishes may not necessarily be in the best interests of the beneficiaries.
Q: May a lawyer represent the interests of the trustee and the beneficiaries?
Q: May a lawyer represent co-executors, where one is a corporate fiduciary and the other an individual where there is an allegation involving the Prudent Investor Act?
A: It depends.
Yes, if the decision about investing funds is supported by both executors. EPTL 10-10.7 provides that a joint power conferred upon two fiduciaries may be exercised jointly by both such fiduciaries. In general, a joint power is one which requires the exercise of discretion and in addition, that they act unanimously, (Fritz v. City Trust Co., 72 App Div 532, aff'd 173 NY 622; See also Scott on Trusts, [4th ed.] § 194).
No, if they do not appear to be aligned as in the following case.
Consider the Estate of Iskyan, (NYLJ, 10/12/1994, p. 28, col. 3, Surrogate Court, Nassau County), where Surrogate Radigan found that the duty to invest funds is one which requires the exercise of judgment and discretion and accordingly requires that the trustees act jointly, and in the case of two, since there are only two, unanimously. Hence, the Court concluded that:
“While the prayer for relief requests that the bank alone be authorized to make investments, the cases indicate the proper relief may include a direction to exercise the power or where the refusal to join in the exercise of a power is unreasonable, the trustees removal (Scott on Trusts [4th ed.] § 194).” Id.
Q: May a lawyer represent both the income beneficiaries and the remainder persons?
A: Trust litigation case law highlights many of the conflicts that can arise between income beneficiaries and remainder persons. However, are these conflicts so pervasive that a lawyer can never represent both interests under Rule 1.7?
Comment: As a practical matter, a lawyer may find it difficult to obtain informed consent from both parties.
For example, consider the case of Margesson v. Bank of New York, 291 A.D.2d 694 (3d Dep’t 2002)
“She [the administrative officer] had no conversation with
[the investment officer] regarding this sale or the plaintiff’s
need as income beneficiary. [The investment officer] has a
responsibility to communicate with [the administrative
officer]... to ensure his understanding of the investment
objectives.” Id at __.
Conceptually the new rule is similar to DRs 5-108 (A) (1) but the new rule combines disqualification and imputation into a single subparagraph and applies the concepts to prospective clients. However, Rule 1.18(c) disqualifies a lawyer from opposing a former prospective client in a substantially related matter only “if the lawyer received information from the prospective client that could be significantly harmful to that person in the matter.” Id. There are exceptions created by Rule 1.18(d). The Harris case, discussed earlier, is a good example of this rule.
A lawyer may accept a gift from a client if the transaction meets general standards of fairness. If a client offers the lawyer a gift, paragraph (c) does not prohibit the lawyer from accepting it, although such a gift may be voidable by the client. Before accepting a gift offered by a client, a lawyer should urge the client to secure disinterested advice from an independent, competent person who is cognizant of all of the circumstances. In any event, due to concerns about overreaching and imposition on clients, a lawyer may not suggest that a gift be made to the lawyer or for the lawyer’s benefit.
Almost needs no introduction: It started with an attorney, in which, in 1931, the Court of Appeals held that, in the absence of an acceptable explanation, a jury would be justified in drawing an inference of undue influence as to a bequest drafted by the drafting attorney to the drafting attorney. Court advised: have someone else draw the Will under these circumstances.
There may be circumstances which can justify a lawyer’s conduct in offering his services as executor. Principally, those circumstances must be such as support a firm conviction that the client would request his lawyer to serve in that capacity if he were aware of the lawyer’s willingness to accept the responsibility. Not only should the lawyer have enjoyed a long-standing relationship with the client, but it must also appear that the client is experiencing difficulty in selecting other persons qualified and competent to serve as executor.
(The paragraphs below are reprinted with permission from McQuaid, Streng and LaPiana, NEW YORK WILLS AND TRUSTS (3rd Ed. Lexis, 1998))
Persons who are in a confidential relationship to a testator, and who receive legacies or other benefits under a will, have a special burden to explain the circumstances leading to such benefit. The principle leading to this rule was enunciated by the Court of Appeals in 1931 in Matter of Putnam,21 in which the Court said: "Attorneys for clients who intend to leave them or their families a bequest would do well to have the will drawn by some other lawyer. Any suspicion which may arise of improper influence used under the cover of the confidential relationship may thus be avoided."22
Under the Putnam Rule, a legacy in favor of a person who is in a confidential relationship to the testator may be excised from a will if the Surrogate finds that the legacy was the product of undue influence. While the Putnam Rule is an offspring of the objection of undue influence,23 the Surrogate can allow the probate of the will but expunge the legacy.24 In applying the rule, the court either requires the submission of an affidavit or schedules a hearing to explore the circumstances that led to the legacy.
The Putnam Rule has its most obvious application to an attorney- drafter, but it has been applied to individuals who share different confidential relationships with the testator, including, but not limited to, relatives of the attorney-drafter,25 doctors,26 nurses,27 nursing home personnel,28 accountants and financial advisors,29 and clergy.30 If another attorney is selected to prepare a will in which the testator's primary attorney, or a member of his or her family, is a beneficiary, the attorney who is selected must be independent of the control or interest of the initial attorney.31
In a developing area of the law, the Putnam Rule has been used by Surrogates to review the propriety of the designation of an attorney- drafter as an executor or trustee under the will. In Matter of Weinstock,32 the Court of Appeals reinstated a Surrogate's decree in which letters testamentary had been denied to attorneys, a father and a son, who were named as executors in a will prepared by the father, but who had had no previous professional relationship with the testator. Noting that the attorneys were aware of the testator's intention to avoid executor's commissions, the Court held that the testator's confidential relationship with the attorneys required that the attorneys disclose the effect of a joint designation to the testator.33
The designation of attorneys as fiduciaries, which is illustrated by Weinstock , has led to close supervision by Surrogate's Courts over compensation to the attorney-fiduciary for both legal services and statutory commissions. In Matter of Laflin ,34 the Appellate Division, Second Department, held that objections to multiple executors' commissions may be made by the beneficiaries in the final accounting proceeding. And in view of the "fact that an attorney draftsman of a will is uniquely situated to selfishly gain additional employment"35 as counsel for a testator's estate, Surrogates generally are giving strict scrutiny to attorney fees for the attorney-fiduciary.36
(a) A lawyer should provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.
(b) A lawyer shall not handle a legal matter that the lawyer knows or should know that the lawyer is not competent to handle, without associating with a lawyer who is competent to handle it.
(c) A lawyer shall not intentionally:
(1) fail to seek the objectives of the client through reasonably available means permitted by law and these Rules; or
(2) prejudice or damage the client during the course of the representation except as permitted or required by these Rules.
(a) When a client’s capacity to make adequately considered decisions in connection with a representation is diminished, whether because of minority, mental impairment or for some other reason, the lawyer shall, as far as reasonably possible, maintain a conventional relationship with the client.
(b) When the lawyer reasonably believes that the client has diminished capacity, is at risk of substantial physical, financial or other harm unless action is taken and cannot adequately act in the client’s own interest, the lawyer may take reasonably necessary protective action, including consulting with individuals or entities that have the ability to take action to protect the client and, in appropriate cases, seeking the appointment of a guardian ad litem, conservator or guardian.
(c) Information relating to the representation of a client with diminished capacity is protected by Rule 1.6. When taking protective action pursuant to paragraph (b), the lawyer is impliedly authorized under Rule 1.6(a) to reveal information about the client, but only to the extent reasonably necessary to protect the client’s interests.
“A lawyer serving as a client’s attorney-in-fact may not petition for the appointment of a guardian without the client’s consent unless the lawyer determines that the client is incapacitated; there is not practical alternative, through the use of the power of attorney or otherwise, to protect the client’s best interests; and there is no one else available to serve as petitioner. Subject to conflict of interest restrictions, if the lawyer petitions for the appointment of a guardian, the client does not oppose the petition, and the lawyer will not be a witness in a contested hearing, the lawyer may represent him-or herself in the proceeding.”
(a) Prohibition Against Commingling and Misappropriation of Client Funds or Property.
A lawyer in possession of any funds or other property belonging to another person, where such possession is incident to his or her practice of law, is a fiduciary, and must not misappropriate such funds or property or commingle such funds or property with his or her own.
(b) Separate Accounts.
(1) A lawyer who is in possession of funds belonging to another person incident to the lawyer’s practice of law shall maintain such funds in a banking institution within New York State that agrees to provide dishonored check reports in accordance with the provisions of 22 N.Y.C.R.R. Part 1300. “Banking institution” means a state or national bank, trust company, savings bank, savings and loan association or credit union. Such funds shall be maintained, in the lawyer’s own name, or in the name of a firm of lawyers of which the lawyer is a member, or in the name of the lawyer or firm of lawyers by whom the lawyer is employed, in a special account or accounts, separate from any business or personal accounts of the lawyer or lawyer’s firm, and separate from any accounts that the lawyer may maintain as executor, guardian, trustee or receiver, or in any other fiduciary capacity; into such special account or accounts all funds held in escrow or otherwise entrusted to the lawyer or firm shall be deposited; provided, however, that such funds may be maintained in a banking institution located outside New York State if such banking institution complies with 22 N.Y.C.R.R. Part 1300 and the lawyer has obtained the prior written approval of the person to whom such funds belong specifying the name and address of the office or branch of the banking institution where such funds are to be maintained.
(2) A lawyer or the lawyer’s firm shall identify the special bank account or accounts required by Rule 1.15(b)(1) as an “Attorney Special Account,” or “Attorney Trust Account,” or “Attorney Escrow Account,” and shall obtain checks and deposit slips that bear such title. Such title may be accompanied by such other descriptive language as the lawyer may deem appropriate, provided that such additional language distinguishes such special account or accounts from other bank accounts that are maintained by the lawyer or the lawyer’s firm.
(3) Funds reasonably sufficient to maintain the account or to pay account charges may be deposited therein.
(4) Funds belonging in part to a client or third person and in part currently or potentially to the lawyer or law firm shall be kept in such special account or accounts, but the portion belonging to the lawyer or law firm may be withdrawn when due unless the right of the lawyer or law firm to receive it is disputed by the client or third person, in which event the disputed portion shall not be withdrawn until the dispute is finally resolved.
(c) Notification of Receipt of Property; Safekeeping; Rendering Accounts; Payment or Delivery of Property.
A lawyer shall:
(1) promptly notify a client or third person of the receipt of funds, securities, or other properties in which the client or third person has an interest;
(2) identify and label securities and properties of a client or third person promptly upon receipt and place them in a safe deposit box or other place of safekeeping as soon as practicable;
(3) maintain complete records of all funds, securities, and other properties of a client or third person coming into the possession of the lawyer and render appropriate accounts to the client or third person regarding them; and
(4) promptly pay or deliver to the client or third person as requested by the client or third person the funds, securities, or other properties in the possession of the lawyer that the client or third person is entitled to receive.
(d) Required Bookkeeping Records.
(1) A lawyer shall maintain for seven years after the events that they record:
(i) the records of all deposits in and withdrawals from the accounts specified in Rule 1.15(b) and of any other bank account that concerns or affects the lawyer’s practice of law; these records shall specifically identify the date, source and description of each item deposited, as well as the date, payee and purpose of each withdrawal or disbursement;
(ii) a record for special accounts, showing the source of all funds deposited in such accounts, the names of all persons for whom the funds are or were held, the amount of such funds, the description and amounts, and the names of all persons to whom such funds were disbursed;
(iii) copies of all retainer and compensation agreements with clients;
(iv) copies of all statements to clients or other persons showing the disbursement of funds to them or on their behalf;
(v) copies of all bills rendered to clients;
(vi) copies of all records showing payments to lawyers, investigators or other persons, not in the lawyer’s regular employ, for services rendered or performed;
(vii) copies of all retainer and closing statements filed with the Office of Court Administration; and
(viii) all checkbooks and check stubs, bank statements, prenumbered canceled checks and duplicate deposit slips.
(2) Lawyers shall make accurate entries of all financial transactions in their records of receipts and disbursements, in their special accounts, in their ledger books or similar records, and in any other books of account kept by them in the regular course of their practice, which entries shall be made at or near the time of the act, condition or event recorded.
(3) For purposes of Rule 1.15(d), a lawyer may satisfy the requirements of maintaining “copies” by maintaining any of the following items: original records, photocopies, microfilm, optical imaging, and any other medium that preserves an image of the document that cannot be altered without detection.
(e) Authorized Signatories.
All special account withdrawals shall be made only to a named payee and not to cash. Such withdrawals shall be made by check or, with the prior written approval of the party entitled to the proceeds, by bank transfer. Only a lawyer admitted to practice law in New York State shall be an authorized signatory of a special account.
(f) Missing Clients.
Whenever any sum of money is payable to a client and the lawyer is unable to locate the client, the lawyer shall apply to the court in which the action was brought if in the unified court system, or, if no action was commenced in the unified court system, to the Supreme Court in the county in which the lawyer maintains an office for the practice of law, for an order directing payment to the lawyer of any fees and disbursements that are owed by the client and the balance, if any, to the Lawyers’ Fund for Client Protection for safeguarding and disbursement to persons who are entitled thereto.
(g) Designation of Successor Signatories.
(1) Upon the death of a lawyer who was the sole signatory on an attorney trust, escrow or special account, an application may be made to the Supreme Court for an order designating a successor signatory for such trust, escrow or special account, who shall be a member of the bar in good standing and admitted to the practice of law in New York State.
(2) An application to designate a successor signatory shall be made to the Supreme Court in the judicial district in which the deceased lawyer maintained an office for the practice of law. The application may be made by the legal representative of the deceased lawyer’s estate; a lawyer who was affiliated with the deceased lawyer in the practice of law; any person who has a beneficial interest in such trust, escrow or special account; an officer of a city or county bar association; or counsel for an attorney disciplinary committee. No lawyer may charge a legal fee for assisting with an application to designate a successor signatory pursuant to this Rule.
(3) The Supreme Court may designate a successor signatory and may direct the safeguarding of funds from such trust, escrow or special account, and the disbursement of such funds to persons who are entitled thereto, and may order that funds in such account be deposited with the Lawyers’ Fund for Client Protection for safeguarding and disbursement to persons who are entitled thereto.
(h) Dissolution of a Firm.
Upon the dissolution of any firm of lawyers, the former partners or members shall make appropriate arrangements for the maintenance, by one of them or by a successor firm, of the records specified in Rule 1.15(d).
(i) Availability of Bookkeeping Records: Records Subject to Production in Disciplinary Investigations and Proceedings.
The financial records required by this Rule shall be located, or made available, at the principal New York State office of the lawyers subject hereto, and any such records shall be produced in response to a notice or subpoena duces tecum issued in connection with a complaint before or any investigation by the appropriate grievance or departmental disciplinary committee, or shall be produced at the direction of the appropriate Appellate Division before any person designated by it. All books and records produced pursuant to this Rule shall be kept confidential, except for the purpose of the particular proceeding, and their contents shall not be disclosed by anyone in violation of the attorney-client privilege.
(j) Disciplinary Action.
A lawyer who does not maintain and keep the accounts and records as specified and required by this Rule, or who does not produce any such records pursuant to this Rule, shall be deemed in violation of these Rules and shall be subject to disciplinary proceedings.
 Portions of the witness advocacy discussion of the outline that follows was prepared by Nancy J. Rudolph, Esq., a partner of Bleakley, Platt & Schmidt LLP and used with her permission.
 Portions of the conflicts of interest discussion of the outline that follows was prepared by Nancy J. Rudolph, Esq., a partner of Bleakley, Platt & Schmidt LLP and used with her permission.
 I acknowledge the assistance of Michael H. Friedman, Esq., a partner of the firm of Kurzman, Eisenberg, Corbin & Lever, LLP, who contributed portions of the outline on SCPA 2307-a.
21 257 NY 140, 177 NE 399 (1931).
22 Id at 143, 177 NE at 400. See also New York State Bar Association Code of Professional Responsibility EC 5-5 (1975). See generally Groppe, Putnam/Weinstock Revisited: Problems Facing the Attorney/Legatee/ Fiduciary, 7 Newsletter of General Practice Section NYSBA (1986).
23 See generally Children's Aid Socy v Loveridge, 70 NY 387 (1877).
24 Matter of Lawson, 75 AD2d 20, 428 NYS2d 106 (4th Dept 1980); Matter of Eckert, 93 Misc 2d 677, 403 NYS2d 633 (1978).
25 Matter of Hayes, 49 Misc 2d 152, 267 NYS2d 452 (1966).
26 Matter of Satterlee, 281 AD 251, 119 NYS2d 309 (1st Dept 1953).
27 Matter of McCarthy, 269 AD 145 54 NYS2d 591 (1st Dept 1945), affd , 296 NY 987, 73 NE2d 566 (1947).
28 Gordon v Bialystoker Center, 45 NY2d 692, 385 NE2d 285, 412 NYS2d 593 (1978); Matter of Burke, 82 AD2d 260, 441 NYS2d 542 (2d Dept 1981).
29 Matter of Collins, 124 AD2d 48, 510 NYS2d 940 (9th Dept 1987).
30 Marx v McGlynn, 88 NY 357 (1882) (a precursor to Putnam , in which it is cited, Matter of Putman, 257 NY 140, 144, 146, 177 NE 399, 400-01 (1931)).
31 Matter of Guidi, 259 AD 652, 20 NYS2d 240 (1940).
32 40 NY2d 1, 351 NE2d 647, 386 NYS2d 1 (1976).
33 Id at 5, 351 NE2d at 648, 386 NYS2d at 3.
34 111 AD2d 924, 491 NYS2d 35 (2d Dept 1985).
35 Matter of Stalbe, 130 Misc 2d 725, 727, 497 NYS2d 237, 240 (1985).
36 See, e.g., Matter of Harris, 123 Misc 2d 247, 473 NYS2d 125 (1984). Some Surrogate's Courts require the probate petition to disclose whether an attorney-fiduciary or a member of the firm is a drafter of the will, and if so the drafter is required to prepare and file an affirmation setting forth the facts and circumstances surrounding the testator's selection of the drafter as a fiduciary of the estate. These affirmations, which are sometimes required to be filed in probate and accounting proceedings, are apparently being used to determine the reasonableness of commissions and attorney fees for an attorney-fiduciary.