Major Issues Encountered in Legal Capacity Counseling

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1 Major Issues Encountered in Legal Capacity Counseling Presented by: Catherine Anne Seal, CELA November 6, 2013

2 LEGAL CAPACITY COUNSELING Catherine Anne Seal, JD, LLM, CELA Follow me on Twitter

3 Legal Capacity Counseling Capacity is a complex issue Capacity to do what?

4 Ethical Rule Governed by Rule 1.14 MRPC Basic guideline: Conduct as normal a client relationship as possible Leaves more questions than answers

5 Rule 1.14 (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 normal client-lawyer relationship with the client.

6 Rule 1.14 (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.

7 Rule 1.14 ( 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.

8 Rule 1.14 Plain English - As much as possible maintain a normal attorney-client relationship - May consult with others; May petition for guardianship / conservatorship - May reveal otherwise privileged information

9 Questions What kind of client? Individual? Entity? Corporate officer? Fiduciary? Beneficiary/fiduciary? What kind of case? - Representation due to diminished capacity? New client? Existing client? Litigation? Criminal? Transactional?

10 From the Beginning Places burden on the attorney to determine the diminished capacity and to what extent May be the result of watching the client over time May be the initial reaction to the client May be an initial reaction based on input from others (spouse, adult child, others) BUT: the lawyer is not a trained professional in assessing diminished capacity

11 Diminished Capacity A lack of sufficient capacity to communicate or to make adequately considered decisions in connection with the representation Incapacitated person : An individual other than a minor, who is unable to effectively receive or evaluate information or both or make or communicate decisions to such an extent that the individual lacks the ability to satisfy essential requirements for physical health, safety, or self-care, even with appropriate and reasonably available technological assistance

12 Types of Capacity Reality is there are many levels of capacity, and many levels needed to form an attorney client relationship For estate planning, testamentary capacity is generally the needed level of capacity Contractual capacity is a higher level?

13 Determining Capacity A sliding scale What issues What complexity What time of day The lawyer is not alone Rule 1.14 contemplates attorney may seek professional assistance

14 Comment 6, Rule 1.14 In determining the extent of the client s diminished capacity, the lawyer should consider and balance such factors as: the client s ability to articulate reasoning leading to a decision; variability of state of mind and ability to appreciate consequences of a decision; the substantive fairness of a decision; and the consistency of a decision with the known long-term commitments and values of the client. In appropriate circumstances, the lawyer may seek guidance from an appropriate diagnostician.

15 Comment 6 No guidance as to HOW to perform such analysis Performing a professional evaluation is discouraged through such tools as MMSE

16 Rule 1.14 MRPC Burden in on attorney to determine diminished capacity and whether attorney client relationship exists OK? So, who died and left you in charge of this determination?

17 Definitions: Diminished Capacity Lack of sufficient capacity to communicate or to make adequately considered decisions in connection with the representation. R comment (5)

18 Definitions: Incapacitated Person an individual other than a minor, who is unable to effectively receive or evaluate information or both or make or communicate decisions to such an extent that the individual lacks the ability to satisfy essential requirements for physical health, safety, or self-care, even with appropriate and reasonably available technological assistance. CRS (5)

19 Lack of Capacity Finding of lack of capacity can only be made by a court of competent jurisdiction upon meeting the state standards Unless a power of attorney or similar document designates another method

20 Examples of Other Standards RLT that permits trustee to ask doctors for determination letters LLC Operating agreement that says when managing member can be replaced Power of Attorney that defines when principal is incapacitated

21 Rule 1.14 MRPC a as far as reasonably possible maintain normal attorney client relationship b if lawyer reasonably believes diminished capacity, or substantial physical, financial or other harm, take reasonably necessary protective actions, including consulting with others

22 Rule 1.14 Problems What is reasonable? What is normal? What level of harm? Who are these others?

23 How to Make a Determination No guidance ABA/APA pamphlet: Assessment of Older Adults with Diminished Capacity: a Handbook for Lawyers/Judges/Psychologists

24 Pitfalls of Speaking with Others Logical persons to speak with Spouse Business partner Siblings/children But: - what if getting divorced? - what if there are buyout/removal provisions based on incapacity? - what if plan is uneven or unfavorable?

25 Rule 1.14 Withdrawal If you can t keep an attorney client relationship you are permitted/required to withdraw BUT: client is now legally naked you may be revealing important information to the other side

26 Unintended Results Attorneys who become self appointed guardian ad litems You are NOT permitted to substitute judgment with the client

27 Rule 1.14 Comment 9 Comment 9 permits, in an emergency, presume attorney client relationship to take actions to preserve status quo Does not permit continuing actions Must the attorney be court appointed?

28 Capacity For What To hire you? To understand the transaction they are hiring you for estate planning real estate transaction business matter divorce

29 Testamentary capacity Know the natural objects of their bounty Understand the nature and extent of their property Understand they are making a plan to give away their property after they die

30 Donative capacity Add one factor You understand that the gift is irrevocable and that it will reduce your estate understand the consequence of the gift on your financial security

31 Contractual Capacity Must be able to understand the nature and effect of the act and the nature of the business being transacted The more complex the act or business, the higher the level of understanding needed

32 Capacity to Convey Real Property Must understand the nature and effect of the act at the time the conveyance is made

33 Capacity to Execute a Durable POA Capacity to contract or testamentary capacity?

34 Decisional Capacity in Health Care An individual s ability to understand the significant benefits, risks, and alternatives to proposed health care and to make and communicate a health care decision

35 Capacity to Mediate Person understands the nature of the mediation process who the parties are the role of the mediator parties relationship to the mediator and the issues at hand Also can the party access options and make and keep an agreement

36 A Diagnosis Does Not Always Preclude Planning Early on, the individual may retain sufficient capacity to execute complex documents