Lawyers need to look gift horse in the mouth

Lawyers who don’t look a gift horse in the mouth could end up bitten, as the subject of a Law Society of British Columbia disciplinary hearing found out recently.

Penticton lawyer Charles Albas has been ordered to pay a fine of $7,000 and hearing costs of $1,736.25 to the LSBC for professional misconduct resulting from a conflict of interest when he failed to advise a client, who wanted Albas and his wife to share in her estate, to seek independent legal advice.

“There is no evidence that he exerted pressure on his client or that the proposed gift to himself was anything other than her true testamentary wishes,” the disciplinary hearing ruling said.

Albas had dealings with the client “FC” over a number of years. He had known her common-law husband, who before he died in 2003, asked Albas to “look in” on FC from time-to-time. FC remarried GZ in 2006 and Albas acted for them in numerous matters including drafting a will that gave half of FC’s estate to GZ or alternatively his son and one-half to the Shriners’ Temple. The will was never executed as GZ died in 2007 and Albas handled the estate. After the death, Albas was in contact with FC about once a month.

In 2008, FC advised she wanted a new will, which still gave half to the Shriners’ Temple but the other half to Albas. It was never signed. A year later, she advised she wanted further estate changes. Albas had noted on the file that the client “wants to give me the residue and would like to sign the Will today but no Power of Attorney.” He prepared the will under those terms; it was executed by FC and witnessed.

In 2013, it came to Albas’ attention that the new Code of Professional Conduct for British Columbia prohibited a lawyer from preparing a will where he or she was a beneficiary or received a gift. Rule 3.4-38 states: “Unless the client is a family member of the lawyer or the lawyer’s partner or associate, a lawyer must not prepare or cause to be prepared an instrument giving the lawyer or an associate a gift or benefit from the client, including a testamentary gift.”

Albas then advised his client she would have to do another will and FC indicated that if naming Albas in the will was a problem, she would leave it to his wife. Albas drafted a new will and left it with a lawyer with whom he shared office space to prepare. Albas picked up the will and dropped it off to FC who never signed it. FC was committed under the Mental Health Act in July 2013 and Albas wrote a letter, which had her released. FC retained a new lawyer in September 2013 who wrote Albas asking him not to contact FC further.

The discipline committee found that in the preparation of both wills Albas stood to gain and he had not advised FC to seek independent advice. The situation placed Albas in a conflict of interest with his client contrary to Rule 3.4-26.1.

“There is value in reminding the profession that although a client might wish to provide a lawyer with a gift, the lawyer cannot accept a gift unless that client is independently represented,” said the LSBC disciplinary committee ruling.

The situation where individuals want to leave something to their lawyer is not common, say lawyers, but not unheard of. Mike Beishuizen, principal of Westcoast Wills and Estates in North Vancouver, has come across it several times, once personally, and once hearing of a will where a lawyer was mentioned. It’s a situation that makes him wary. His advice, even to family members mentioning him in the will, is to seek independent legal advice.

“I have always played it safe and told them to get independent legal advice — go to another lawyer for independent advice. That should be done in all cases,” he said.

Such a “best practice” prevents any conflict of interest charges later arising. Beishuizen said lawyers can save friends or family members some costs by drafting a will, which outlines what they want, but the final document should be drawn up by an independent source outside the firm when the individual has received independent legal advice.

Beishuizen said even if the rules are followed “a perception of conflict” can arise.

Estate lawyer Frank Baily has never had anyone leave him part of their estate but if the situation arose, “I would tell them to get another lawyer to do the will.”

He also favours independent relationships in drafting wills for family members.  He compares it to being in a business venture with a client where the lawyer receives a percentage of the venture and documents need to be drawn up.

“It is embarrassing if you are on the witness stand with your hand on the Bible and as they examine you and you can’t say you told them to get their own advice and you were not a party to it,” he said.

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