Clients with diminished capacity (Rule 1.14)

Special Coverage

PROPOSED RULES OF PROFESSIONAL CONDUCT

For many years, lawyers in California have struggled with what to do when a client has diminished capacity. Indeed, many of these clients are in urgent need of legal services, due to the peril presented by the diminished capacity itself, or perhaps by health and life expectancy issues. Though they may be impaired, the consensus is that they must be allowed to continue to make their own decisions and maintain their autonomy to the extent possible. There are situations, however, when many feel that the client's best interests would be served by allowing the lawyer to consult with third parties as a protective measure. California is now considering a Rule of Professional Conduct that would address these difficult situations.

The American Bar Association has had a rule addressing these issues for many years. ABA Model Rule 1.14 allows a lawyer who reasonably believes that a client has diminished capacity, and who is at risk of substantial physical, financial or other harm, to take "reasonably necessary protective action."

As explained in the ABA's Annotated Model Rules of Professional Conduct, a lawyer may have difficulty maintaining an ordinary attorney-client relationship when the client is a minor or suffers from some sort of diminished mental capacity. However, the ABA notes that, nevertheless, a client with diminished capacity often has the ability "to understand, deliberate upon, and reach conclusions about matters affecting his or her own well-being." As one example, ABA points to situations where minor children can give testimony and opinions that are entitled to weight in legal proceedings concerning their own custody.

The ABA also correctly recognizes that the fact that a client suffers from a disability does not diminish the lawyer's obligations to the client. The lawyer must still treat the client with attention and respect, and maintain as normal of an attorney-client relationship as possible. However, the ABA standard explicitly recognizes that there may be circumstances where the best interest of the client may be served by the lawyer taking protective action, such as consultation with family members, utilization of voluntary surrogate decision-making tools such as durable powers of attorney, and involvement of professional services and adult protective agencies.

The Rules Revision Commission of the State Bar of California - tasked with proposing changes and additions to the existing Rules of Professional Conduct - took a close look at Model Rule 1.14, and decided to propose a California version. The RRC was not, however, able adopt the ABA standard that permits unilateral "protective action," due to the strictures of Business and Professions Code Section 6068(e). That code section requires a lawyer to "maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client." In other words, California lawyers cannot currently take information learned in the course of the confidential relationship with the impaired client and utilize it in the course of discussions with third parties who may be able to help protect the client.

Accordingly, the RRC structured Proposed Rule 1.14 in such a way that, in certain circumstances, a California lawyer who fears for a client with diminished capacity may try to obtain the client's consent to take protective action, while at the same time taking all steps to preserve confidentiality. It also allows lawyers to obtain advance informed written consent for the protective action, while the client still has full capacity. The proposed California rule is centered around the concept of client consent, unlike ABA Model Rule 1.14.

Many people and groups commented on Proposed Rule 1.14. Several attorneys who submitted feedback gave their total support to the rule, stating that it was indeed time that lawyers who encounter financial elder abuse are allowed take protective action. Others commented that the rule does not go far enough, since it may be difficult to obtain the consent from the impaired client, especially in situations of imminent danger. And yet others applauded the fact that the California version protects the sanctity of the attorney-client confidential relationship, unlike the ABA version.

One commentator pointed to the "Guide to the California Rules of Professional Conduct for Estate Planning, Trust and Probate Counsel" (Third Ed.), in which the Section specifically asked for legislation "to allow trusts and estates practitioners to take those steps necessary to protect their mentally impaired clients from fraud and undue influence without substantially eroding the duties of confidentiality and loyalty that are cornerstones of the California legal system." In other words, even before Proposed Rule 1.14, this age-old problem and potential solutions were being actively discussed in California.

In March, the Board of Trustees adopted Proposed Rule 1.14, as recommended by the RRC, for transmittal to the state Supreme Court and it was subsequently so submitted. The proposed rules do not become operative unless and until they are approved by the Supreme Court.

On a practical level, the proposed rule has its obvious challenges. How does a lawyer determine if a client has diminished capacity? Capacity is presumed under Probate Code Section 810, but it is a rebuttable presumption. It may be necessary to involve medical professionals. Even assuming the lawyer can figure it out, how does the lawyer get consent from an incapacitated person? The comments to the proposed rule suggest that the client with diminished capacity may not be able to make decisions to protect himself, but may still have the ability to recognize that it is a good idea to consent to the lawyer seeking assistance. Finally, what does "protective action," as utilized in Proposed Rule 1.14, really mean? Is California going to adopt the same standards for protective action as set forth in the ABA commentary? It is unclear whether California courts and disciplinary authorities will approve the specific forms of action permitted under the ABA rule.

All attorneys who represent clients who have diminished capacity, whether because of minority, mental impairment or some other reason, will want to closely follow the progress of this rule through the Supreme Court. The adoption of this rule could have a substantial impact on trust and estate practitioners in particular.

Rule 1.14 Client with Diminished Capacity

(Proposed rule adopted by the board March 9, 2017)

(a) Duties Owed Client with Diminished Capacity. 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 lawyer-client relationship with the client.

(b) Taking Protective Action on Behalf of a Client With Significantly Diminished Capacity.

(1) Except where the lawyer represents a minor, a client in a criminal matter, or a client who is the subject of a conservatorship proceeding or who has a guardian ad litem or other person* legally entitled to act for the client, the lawyer may, but is not required to, take protective action, provided the lawyer has obtained the client's consent as provided in paragraph (c) or (d), and the lawyer reasonably believes* that:

(i) there is a significant risk that the client will suffer substantial* physical, psychological, or financial harm unless protective action is taken,

(ii) the client has significantly diminished capacity such that the client is unable to understand and make adequately considered decisions regarding the potential harm, and

(iii) the client cannot adequately act in the client's own interest.

(2) Information relating to the client's diminished capacity is protected by Business and Professions Code § 6068(e)(1) and rule 1.6. In taking protective action as authorized by this paragraph, the lawyer must:

(i) act in the client's best interest, and

(ii) disclose no more information than is reasonably* necessary to protect the client from substantial* physical, psychological, or financial harm, given the information known* to the lawyer at the time of disclosure.

(c) Obtaining Consent to Take Protective Action.

(1) Before taking protective action as authorized by paragraph (b), a lawyer must take all steps reasonably* necessary to preserve client confidentiality and decision-making authority, which includes:

(i) explaining to the client the need to take protective action, and

(ii) obtaining the client's consent to take the protective action.

(2) In seeking the consent of a client to take protective action under paragraph (b), the lawyer may obtain the assistance of an appropriate person* to assist the lawyer in communicating with the client. In obtaining such assistance, the lawyer must:

(i) act in the client's best interest;

(ii) disclose no more information than is reasonably* necessary to protect the client from substantial* physical, psychological, or financial harm, given the information known* to the lawyer at the time of disclosure; and

(iii) take all reasonable* steps to ensure that the information disclosed remains confidential.

(d) Obtaining Advance Informed Written Consent* to Take Protective Action. A lawyer may obtain a client's advance informed written consent* to take protective action in the event the circumstances set forth in paragraphs (b)(1)(i) -- (iii) should later occur. The advance consent must be in a separate writing* signed by the client and must include the following written* disclosures:

(1) the authorization to take protective action is valid only when the lawyer reasonably believes* that the circumstances set forth in (b)(1)(i) -- (iii) are present; and

(2) the client retains the right to revoke or modify the advance consent at any time.

(e) Restrictions on Lawyer's Actions. This rule does not authorize the lawyer to take:

(1) any action that is adverse to the client, including the filing of a conservatorship petition or other similar action;

(2) any action on behalf of a person* other than the client that the lawyer would not be permitted to take under rule 1.7 or 1.9; or

(3) any action that would violate the client's right to due process of law under the United States or California Constitutions, or the California Probate Code.

(f) Definitions. For purposes of this rule:

(1) "Protective action" means to take action to protect the client's interests by:

(i) notifying an individual or organization that has the ability to take action to protect the client, or

(ii) seeking to have a guardian ad litem appointed.

(g) Discipline. A lawyer who does not take protective action as permitted by paragraph (b) does not violate this rule.

Comment

[1] The purpose of this rule is to allow a lawyer to act competently on behalf of a client with significantly diminished capacity, to further the client's goals in the representation, and to protect the client's interests.

[2] A client with significantly diminished capacity, such that the client cannot make adequately considered decisions regarding potential harm, may have the ability to understand, deliberate upon, express preferences concerning, and reach conclusions about matters affecting the client's own well-being, including the ability to provide consent. (See Prob. Code § 810.)

[3] In determining whether a client has significantly diminished capacity such that the client is unable to make adequately considered decisions, a lawyer should consider the factors in Probate Code §§ 811 and 812. A lawyer may also seek information or guidance from an appropriate diagnostician or other qualified medical service provider. In doing so, the lawyer may not reveal client confidential information without the client's authorization or except as otherwise permitted by these rules. See Business and Professions Code § 6068(e)(2) and rule 1.6(b).

[4] Where it is reasonably* foreseeable that a client may suffer from significantly diminished capacity in the future such that the client will likely be unable to make adequately considered decisions, the lawyer may have an obligation to explain to the client the need to take measures to protect the client's interests, including using voluntary surrogate decision-making tools such as durable powers of attorney and seeking assistance from family members, support groups and professional services with the client's informed written consent.* See rule 1.4.

[5] In taking protective action as permitted by paragraph (b), a lawyer may not substitute his or her own judgment in deciding what is in the client's best interest but must abide by the client's expressed interests and decisions concerning the objectives of the representation. Paragraph (b) does not apply if the lawyer is unable to ascertain the client's expressed interests and objectives.

[6] In obtaining the assistance of another person* such as a trained professional to assist in communicating with and furthering the interests of the client pursuant to paragraph (c), the lawyer must look to the client, and not the other person,* for authorization to take protective measures on the client's behalf. See Evidence Code § 952. The lawyer must advise the person* who assists the lawyer that the person* is not authorized to disclose information protected by Business and Professions Code § 6068(e)(1) and rule 1.6 to any third person.*

[7] Paragraph (b) does not apply in the case of a client who is (i) a minor, (ii) involved in a criminal matter, (iii) is the subject of a conservatorship; or (iv) has a guardian or other person* legally entitled to act for the client. The rights of such persons* are regulated under other statutory schemes. See Family Code § 3150; Penal Code § 1368 et seq.; Lanterman-Petris-Short Act, Welfare and Institutions Code Division 5, Part 1, § 5000-5579; Probate Code, Division 4, Parts 1-8, § 1400-3803; and Code of Civil Procedure §§ 372-376.