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NOTE: This opinion was withdrawn by the Ethics Committee on January 20, 2007. See C.R.S.§ 15-12-721. The Ethics Committee is undertaking a review of the ethical issues.
Comment
Opinion No. 21 was first adopted August 11, 1961, and appeared in the November-December 1961 issue of Dicta (Vol. XXXVIII, p. 369). The Committee subsequently clarified that Opinion, and it appears below in its final form.
Syllabus
Persons associated in the same law firm may not ethically charge separate fees as an estate fiduciary and attorney for their respective services to the estate.
Facts
A and B are members (or associates) of the same firm practicing law in Colorado. A client of the firm dies, leaving a will naming A as executor, and A retains B as attorney for the estate. May they ethically charge and receive both an executor's fee and an attorney's fee in connection with the administration of this estate?
Opinion
In Doss v. Stevens (1899) 13 Colo. App. 535, 59 Pac. 67, our court held that an administrator who is an attorney cannot be allowed compensation for his professional services to an estate as an attorney. The rule of law has never been altered. The court quoted with approval an Illinois case (Willard v. Basset, 27 Ill. 37) stating unequivocally:
The authorities are uniform that this (dual compensation) should not be allowed, and every principal of sound policy forbids it. . . . To allow him to become his own client, and charge for professional services for his own case, although in a representative or trust capacity, would be holding out inducements for professional men to seek such representative places to increase the professional business, which would lead to most pernicious results. This is forbidden by every sound principle of professional morality, as well as by the policy of the law.
In Opinions 49 and 72 the American Bar Association Committee has held:
The relations of partners in a law firm are such that neither the firm nor any member or associate thereof may accept any professional employment which any member of the firm cannot properly accept.
Lawyer A cannot be his own client in the sense that he both takes a fiduciary fee and pays himself another fee for legal service rendered to himself. That which is thus improper for Lawyer A alone is likewise improper for Lawyer B under the instant facts, namely, any arrangement by which Lawyer A both takes a fiduciary fee and claims an allowance from the estate for another fee for Lawyer B for legal services rendered to him. Either alternative is, in our opinion, an improper pyramiding of fees.
This Opinion neither sanctions nor condemns as a matter of professional ethics the apparently widespread practice by which Lawyer A waives any fiduciary fee for himself and (with court approval) either claims an attorney fee for himself for handling the estate affairs, both administrative and legal, or seeks only an allowance for Lawyer B for legal services to the fiduciary. The Committee refrains from passing upon any problems posed by a direction in a Will whereby a testator authorizes his executor, and attorney, to be allowed not only his fee as executor, but also a further fee as attorney for the executor if he acts as his own lawyer (See, for example, In Re Thompson's Estate, 50 Cal. 2d 613, 328 P.2d 1, 65 A.L.R. 2d 805).
1995 Addendum
This Opinion was based upon the Canons of Professional Ethics, the predecessor to the Code of Professional Responsibility. The Colorado Rules of Professional Conduct became effective on January 1, 1993, replacing the Code of Professional Responsibility. While the language of the Rules is somewhat different from the Code and the Canons, the Ethics Committee considers this Opinion to continue to provide guidance to attorneys in this area. Attorneys are cautioned to review The Colorado Code of Professional Responsibility (found in the Colorado Ethics Handbook), to update the research contained in this Opinion and to conduct any independent research necessary.
Relevant provisions of the Colorado Rules of Professional Conduct, which should be examined together with this Opinion, are Rule 1.5(a) (regarding reasonableness of fees); Rule 1.10(a) (regarding imputed disqualification); and Rule 1.16(a)(1) (relating to the duty of loyalty and the lawyer's personal interests). Consideration should also be given to problems that might arise under Rules 5.1 and 5.2, relating to the responsibilities of lawyers in a firm for the conduct of other lawyers in the same firm.
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