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POA Weekly – Week 16: Can Conflicts of Interest Arise When a Client’s Capacity is at Issue?

“Conflict of Interest” is defined in the Rules of Professional Conduct as meaning:

the existence of a substantial risk that a lawyer’s loyalty to or representation of a client would be materially and adversely affected by the lawyer’s own interest or the lawyer’s duties to another client, a former client, or a third person. The risk must be more than a mere possibility; there must be a genuine, serious risk to the duty of loyalty or to client representation arising from the retainer.[1]

Rule 3.4 deals with a duty to avoid conflicts of interest and 3.4-1 states “a lawyer shall not act or continue to act for a client where there is a conflict of interest, except as permitted under the rules in this Section”.

Rule 3.4-2 provides that a “lawyer shall not represent a client in a matter when there is a conflict of interest unless there is consent which must be fully informed and voluntary after disclosure, from all affected clients and the lawyer reasonably believes that he or she is able to represent each client without having a material adverse effect upon the representation of or loyalty to the other client.”

Rule 3.2-9 of the Rules of Professional Conduct, “Client with Diminished Capacity” provides:

When a client’s ability to make decisions is impaired because of minority, mental disability, or for some other reason, the lawyer shall, as far as reasonably possible, maintain a normal lawyer and client relationship.

The commentary that accompanies this Rule states as follows:

A lawyer and client relationship presuppose that the client has the requisite mental ability to make decisions about his or her legal affairs and to give the lawyer instructions.  A client’s ability to make such decisions, however, depends on such factors as his or her age, intelligence, experience, and mental and physical health, and on the advice, guidance, and support of others.  Further, a client’s ability to make decisions may change, for better or worse, over time.

When a client is or comes to be under a disability that impairs his or her ability to make decisions, the impairment may be minor or it might prevent the client from having the legal capacity to give instructions or to enter into binding legal relationships.  Recognizing these factors, the purpose of this rule is to direct a lawyer with a client under a disability to maintain, as far as reasonably possible, a normal lawyer and client relationship.

A lawyer with a client under a disability should appreciate that if the disability of the client is such that the client no longer has the legal capacity to manage his or her legal affairs, then the lawyer may need to take steps to have a lawfully authorized representative appointed, for example, a litigation guardian, or to obtain the assistance of the Office of the Public Guardian and Trustee or the Office of the Children’s Lawyer to protect the interests of the client.  In any event, the lawyer has an ethical obligation to ensure that the client’s interests are not abandoned.

The Rule requires that we presuppose a client has the requisite mental ability to make decisions about his or her legal affairs and to give us instructions.

Notably, legal representation of an incapable person under Section 3(1) of the SDA (referred to as, “Section 3 Counsel”) provides:

3(1) Counsel for person whose capacity is in issue – If the capacity of a person who does not have legal representation is in issue in a proceeding under this Act,

    • the court may direct that the Public Guardian and Trustee arrange for legal representation to be provided for the person; and
    • the person shall be deemed to have capacity to retain and instruct counsel.

Another very difficult issue is keeping focused on who the client is, and what the client wants in POA retainers.  Often family and\or friends become involved in an attempt to assist an individual\grantor of a POA, and may attempt to persuade a lawyer to act in a way which is not actually in accordance with a client’s wishes.

Quite often, a lawyer will be called by one of many siblings of the grantor of a POA who may explain that the grantor is having problems with the particular attorney.  In these circumstances you must consider whether, or, not, it is appropriate to meet with the sibling, or whether or not the meeting is with the grantor of the POA.

(7)       Narrowing the Communication Gap Between Grantor and Attorney

It is important to recognize that the grantor of a POA may not appreciate the extent to which the attorney may be liable at law for actions taken on the grantor’s behalf.  It is important that the grantor recognize the standard of accountability expected of an attorney.  It is prudent to advise a client that having a discussion with the proposed attorney about the appointment is wise.

Failing receipt of a client’s instructions in this regard, and your recommendations that the grantor discuss such issues with the attorney, it is not permissible for a lawyer to communicate with the attorney in respect of the POA document for reasons of privilege and confidentiality.

Potential negligence issues which may arise out of drafting POA documents will be minimized if a lawyer takes into consideration some of the suggestions made with respect to issues of capacity, and by ensuring the client is informed and understands the nature of the POA document itself.  Often a lawyer is limited in the amount of information that can be conveyed to a client by reasons that importantly include the cost of drafting, preparing and advising on the scope of the POA regime.  If, as a lawyer, you are placed in the position of not being able to fully advise, and it is anticipated that problems may occur in the future, it may be prudent to do a reporting letter to the client accompanying the documents which states the extent to which the lawyer was retained, or engaged and specifically speaks to the items which were not discussed for which the lawyer is prepared to advise on if the client wishes to proceed.

[1] Rules of Professional Conduct, Rule 1.1.

This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

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