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Fiduciary's Right to Self-Representation

New York Law Journal

In a case of first impression, Surrogate Lee L. Holzman (BronxCounty) recently ruled that a fiduciary of an estate does not have the same right to represent himself in his fiduciary capacity as he does individually. Estate of Walsh, 2007 WL 2390701; N.Y. Slip. Op. 27342. The fiduciary in question was also an attorney and the court relied on the advocate-witness rule to disqualify him. However, were the fiduciary a nonattorney, it is evident that the court would have reached the same conclusion.

Facts

The case involved a discovery proceeding under Surrogate's Court Procedure Act (SCPA) §2103 where the executor sought to recover funds that were transferred by the respondent, as the decedent's attorney-in-fact, during the decedent's lifetime. The respondent asserted that the executor's testimony was necessary to ascertain the factual circumstances surrounding the decedent's execution of the power of attorney in favor of the respondent.

Accordingly, the respondent claimed that the attorney-executor was subject to disqualification on the basis of the advocate-witness rule set forth in the Code of Professional Responsibility, DR-5-102 (22 NYCRR 1200.21), which states, in part:

A. A lawyer shall not act, or accept employment that contemplates the lawyer's acting, as an advocate on issues of fact before any tribunal if the lawyer knows or it is obvious that the lawyer ought to be called as a witness on a significant issue on behalf of the client . . .

B. Neither a lawyer nor the lawyer's firm shall accept employment in contemplated or pending litigation if the lawyer knows or it is obvious that the lawyer or another lawyer in the lawyer's firm may be called as a witness on a significant issue other than on behalf of the client, and it is apparent that the testimony would or might be prejudicial to the client.

C. If, after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that the lawyer ought to be called as a witness on a significant issue on behalf of the client, the lawyer shall not serve as an advocate on issues of fact before the tribunal . . .

D. If, after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that the lawyer or a lawyer in his or her firm may be called as a witness on a significant issue other than on behalf of the client, the lawyer may continue the representation until it is apparent that the testimony is or may be prejudicial to the client at which point the lawyer and the firm must withdraw from acting as an advocate before the tribunal. 22 NYCRR 1200.21.

There are some exceptions that will allow an attorney to testify in certain situations. See the full text of the rule for a list of those exceptions.

The rule is meant to address potential client-attorney conflict inherent in the different roles played by an advocate and a witness in the quest for truth. As noted in the Commentaries to DR-5-102, the "advocate takes the facts of a case . . . and places them in the best possible light for the benefit of his or her client [and] the witness testifies to facts without regard to their impact on either party. In short, the former argues the facts; the latter describes them." In S&S Hotel Ventures Limited Partnership v. 777 S.H. Corp., 69 NY2d 437 (1987), the Court of Appeals examined the conflicting interests of lawyers and their clients and stated that:

...the Code has rooted disqualification of a lawyer-witness in the concept that a lawyer's professional judgment should be exercised for the client's benefit, free of compromising influences and loyalties. A trial lawyer who functions also as a trial witness is thought to be more easily impeachable for interest, and thus a less effective witness for the client . . . . Recognizing that the roles of an advocate and of a witness are inconsistent, and that it is from a public image point of view "unseemly" for a lawyer in a trial also to argue his own credibility as a witness, the Code of Professional Responsibility directs that a lawyer who ought to be called as a witness on behalf of his client shall withdraw from the conduct of the trial . . . . 69 NY2d at 444.

For trust and estate practitioners, the advocate-witness rule is most commonly at play in contested probate proceedings, where the testimony of the attorney-draftsperson, now representing the proponent of the decedent's will, is necessary. The majority view is that the attorney-draftsperson will be disqualified once the matter goes to trial, but may continue representation during the pretrial stage of proceedings. See Estate of Giantasio, 173 Misc.2d 100 (Surr. Ct. Bronx Co., 1997) and cases cited therein; contra Matter of O'Malley, 141 Misc.2d 863 (Surr. Ct. Renssalaer Co., 1988) (automatic disqualification of attorney-draftsperson in contested probate proceeding).

Litigants Right to Choose Own Counsel

In Walsh, Surrogate Holzman recognized that disqualification of an attorney under the advocate-witness rule implicates the rights of litigants to representation by counsel of their own choosing and that such rights will only be overridden "where a competing, compelling public policy reason exists" or "absent a demonstration that the testimony of the attorney will be necessary." Courts have denied motions for disqualification where such a showing was not present. For example, in Estate of DiSalvo, NYLJ, May 9, 1997 at p. 35, col. 2 (Surr. Ct. Suffolk Co.), Surrogate Gail Prudenti denied a disqualification motion because the movant failed to demonstrate that the attorney's testimony was essential to a contested probate proceeding. Surrogate Prudenti stated that while the advocate-witness rule is not binding on the court, it offers guidance to the court in deciding whether disqualification is warranted. However, the court also emphasized the need to consider "the litigant's valued right to choose its own counsel" and stated that the party seeking to disqualify an attorney has the burden of establishing that "such a drastic remedy is warranted." The applicable test, according to Surrogate Prudenti, is not whether the adversary intends to call the attorney as witness, but whether the attorney's testimony is both necessary and prejudicial to his client. See also, S&S Hotel; Vecchiarelli v. Continental Ins. Co., 216 A.D.2d 909 (4th

Dept.
1995
).

Under the facts of the Walsh case, the decedent's attorney-in-fact transferred cash belonging to the decedent into joint bank accounts held in the name of the decedent and his attorney-in-fact. The attorney-executor was claiming that the decedent lacked the capacity to execute the power of attorney in favor of the respondent, under which the respondent made the transfers. In his petition seeking turnover of the assets, the attorney-executor attached copies of correspondence between himself and the decedent's friend indicating that the attorney-executor may have suggested the transfers and was aware that the decedent executed the power of attorney. Based on that information, it is evident that the attorney-executor's testimony was essential to the proceeding and that his testimony could be prejudicial to the interests of the estate beneficiaries; hence, disqualification was warranted.

The Holding

The crux of Surrogate Holzman's decision was not, however, the test of necessity and prejudice under the advocate-witness rule; rather, it was whether the public policy allowing litigants to represent themselves should apply to fiduciaries. In Walsh, the attorney was representing himself as executor. Surrogate Holzman acknowledged the general public policy reasons for granting parties the right to self-representation and stated that " . . . where attorneys are themselves parties to litigation, . . . the right of litigants to represent themselves usually trumps disqualification under the advocate-witness rule with the result that the attorney-litigants may represent themselves pro se, . . . notwithstanding that they will testify at the trial." However, Surrogate Holzman emphasized that the right of attorneys to represent themselves at trials where they will testify is a narrow exception to the strong public policy requiring disqualification under the advocate-witness rule.

How are the competing policies reconciled? The answer lies in a "real party in interest" analysis. The common notion of a pro se litigant is an individual representing his or her own interests and the "rationale for the right to self-representation is that litigants have a right to advocate on their own behalf where their own freedom or property interests are at stake." Id. Accordingly, attorneys, just by reason of being attorneys, won't be denied the same rights as nonattorneys to self-representation, so long as they are advocating their individual interests. Generally, however, a fiduciary of an estate is not acting in an individual capacity, but in a representative capacity and the interests at stake are those of the estate beneficiaries. Surrogate Holzman looked to a number of statutory provisions for support of his holding that an estate fiduciary is merely a nominal party and the real parties in interest are the estate beneficiaries.1 For example, fiduciaries are not liable on contracts entered into in their fiduciary capacity unless they fail to reveal they are acting in their fiduciary capacity (EPTL §11-4.7(a)); estates cannot sue or be sued in their own name and must instead appear through their fiduciaries (EPTL §11-4.1); wrongful death actions may only be brought by the fiduciary (EPTL §5-4.1) but the damages recovered are solely for the benefit of the decedent's distributees (EPTL §5-4.4(a)).

Thus, Surrogate Holzman, "weighing the public policy reasons for disqualification of an attorney under the advocate-witness rule against the public policy reasons for granting parties the right to self-representation," ruled that "the former must prevail where the attorney is not a party, individually, but instead, is a party as the personal representative of an estate." Had the executor in the Walsh case been a nonattorney, the court would still have disallowed self-representation, not under the advocate-witness rule, but under the proscription against practicing law without a license. Had the attorney-executor in Walsh been the sole beneficiary of the estate, it is probable that the court would have ruled otherwise,2 since the fiduciary's individual interests are at stake.

Conclusion

Attorneys who find themselves acting as estate fiduciaries should be mindful of the advocate-witness rule and, if litigation ensues, must assess whose interests are at stake before they (or their firms) continue representation.

FOOTNOTES

  1. Surrogate Holzman found the analysis in Heath v. Teich, 2007 WL 1501727 (Ohio Ct. of App.) compelling. That case involved an administrator of an estate seeking to represent herself individually and her two minor children, who were all the persons entitled to share in any recovery of a wrongful death action brought by the administrator. The Ohio Court of Appeals, determining that the real parties in interest are the estate beneficiaries, prohibited the administrator (a nonattorney) from representing the interests of her children.
  2. See Heath v. Teich, supra; but see, Gasoline Expwy, Inc. v. Sun Oil Co. of Pennsylvania, 64 A.D.2d 647 (2d Dept. 1978), where the Appellate Division disqualified an attorney in her representation of a closed corporation under the advocate-witness rule, notwithstanding that the attorney was the sole shareholder of the closed corporation.