The trust and estate lawyer and the closely held corporation

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A trust and estate lawyer is not usually retained as the attorney for a business entity, but an estate planning lawyer may sometimes represent both an organization and one or more of its constituents in the following contexts, which could give rise to conflicts of interest.

  1. Current clients are in the process of forming a business organization and ask the attorney to represent them.
  2. The attorney is preparing a buy-sell (buy-out) agreement to be executed by the business organization and its constituents.
  3. One of the constituents of the organization wishes his or her interest to be part of the estate plan.
  4. The lawyer represents the fiduciary who has a controlling interest in the organization

While the attorney can pursue joint representation, the usual ethics rules, especially Rule 1.7 of the California Rules of Professional Conduct apply.

In a closely held family owned corporation considerable overlap may exist between the interests of one or several constituents and the interests of the corporation. One or more constituents may have been working with the lawyer for estate planning purposes. To avoid confusion, the estate planning lawyer must clarify who is represented and who is not. For example, if the interests of the client represented for estate planning purposes are at odds with the interests of the entity, joint representation is not possible. Moreover, even if the attorney never agreed to represent the entity, the constituents may claim that they reasonably believed that such an attorney client relationship existed. This could give rise to liability claims against the attorney, lead to disqualification, and be relevant to the creation, protection and disclosure of confidential attorney-client information. See also

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