Jurors in a Fort Lauderdale courtroom were unable to come to unanimous agreement on a legal malpractice count in a July 2022 trial involving conflict of interest in estate planning. In light of our recent discussions about the potential for malpractice in the context of a lawyer’s ethical duties related to clients with conflicting interests, Scott v. Rosen raises important questions, despite the case ending in a mistrial after two months.
The dispute
Dr. Steven Scott and his wife Rebecca Scott became multimillionaires through their sale of two medical services businesses. They retained estate planning attorney Carl Rosen to set up many trusts to channel their money to charitable causes and to Dr. Scott’s mother as well as equally to their children and grandchildren. Rosen handled their estate planning matters for years for which they paid handsomely.
While some details are in dispute, Rosen apparently also agreed to represent Robert Scott, the oldest child. Rosen set up a separate trust for him that was ultimately decanted (transferred) into another trust in Nevada. The Scott’s asserted that for Rosen to also represent Robert created an unethical conflict of interest and that the second trust for Robert stood in conflict with their instructions that the kids get equal shares of the family fortune.
Rosen asserted that Robert’s trust was justified because Steven wanted Robert to get more money for managing one of the companies.
Even when a conflict arises between an attorney’s clients, they can agree to the representation with full understanding of the risks that would come with that arrangement. They must sign a knowing waiver of their right to object to representation of the conflicted client. Rosen attempted to do this through a vaguely written, retroactive waiver letter that would seek to cover his tracks for past transgressions, according to the complaint, which also accuses him of sliding the waiver letter into a stack of other papers to sign without explaining the nature of the conflicts.
This only scratches the surface of the complicated, lengthy allegations. (The Second Amended Complaint is available on Westlaw at 2021 WL 9037248.)
Conflicts of interest in estate planning
According to an article in Forbes, conflicts of interest are the most common in the legal practice area of estate planning. People may think of their children, spouses and other relatives as part of the process if they may get transfers or bequests of money or property, so it makes sense to bring them to appointments with lawyers. However, people can get greedy or emotional and do unexpected things that are not consistent with the testator’s (person making the will or trust) wishes.
If the same lawyer has agreed to also represent others in the family circle, things may go smoothly until they do not – it does not get more contentious than who gets what of family fortunes, beloved homes or heirlooms. At this point, the lawyer’s conflict of interest in representing both related parties is obvious – the attorney cannot be loyal to both and advocate fully for both of their interests.