Question: Lawyer represents an elderly client on the sale of some real estate. Client is entitled to significant proceeds from the sale. Client does not have any kind of formal diagnosis of dementia or other cognitive decline, but Lawyer has represented Client in the past on other unrelated matters and is now questioning Client’s mental capacity. Client does not have a guardian or conservator, and Lawyer asks if Lawyer is ethically required to provide the full proceeds to Client or if Lawyer is required to take other steps to secure the funds for Client given Client’s perceived mental decline by Lawyer.

Answer: Lawyer should fully consider whether Client may be in need of protections pursuant to Rule 4 dash–1.14, Client with Diminished Capacity. Rule 4 dash–1.14(a) requires Lawyer to maintain a normal client-lawyer relationship with Client as much as reasonably possible if Client’s capacity to make adequately considered decisions in connection with the representation is diminished because Client may be suffering from a mental impairment or for some other reason. See also Informal Opinions 2020 dash–27, 990095, and 2023 dash–01. Guidance is provided in Comment [1] to Rule 4 dash–1.14 that when a client is properly advised and assisted, there is a normal client-lawyer relationship, but if a client is suffering from a diminished mental capacity such that the client may no longer be able to make legally binding decisions, that relationship can be impacted.

Rule 4 dash–1.14(b) permits, but does not require, a lawyer to take protective action if the following conditions are met: (1) the lawyer has a reasonable belief that the client has diminished capacity; (2) the client is at risk of substantial physical, financial, or other harm unless action is taken; and (3) the client cannot adequately act in the client’s own interest. If these conditions are satisfied, “the lawyer may take reasonably necessary protective action, including consulting with individuals or entities that have the ability to take action to protect the client and, in appropriate cases, seeking the appointment of a next friend, guardian ad litem, conservator or guardian.” Rule 4 dash–1.14(b).

In this situation, Lawyer must make a determination as to the condition of Client and whether or not Client is suffering from diminished capacity such that Client cannot adequately act in Client’s interest and is at substantial risk of financial harm as to handling the proceeds of the sale of the real estate. Lawyer should consider that there is a distinction pursuant to Rule 4 dash–1.14 about representing a client with diminished capacity and maintaining the normal client-lawyer relationship versus dealing with a client who may have diminished capacity such that a client cannot make legal decisions and may not be competent as a matter of law, which is beyond the scope of the Rules of Professional Conduct.

Since Client does not have a guardian or conservator, Lawyer may wish to start with the least restrictive protective measures, which could include: “consulting with family members, using a reconsideration period to permit clarification or improvement of circumstances, using voluntary surrogate decision-making tools such as durable powers of attorney, or consulting with support groups, professional services, adult-protective agencies, or other individuals or entities that have the ability to protect the client. In taking any protective action, the lawyer should be guided by such factors as the wishes and values of the client to the extent known, the client’s best interests, and the goals of intruding into the client’s decision-making autonomy to the least extent feasible, maximizing client capacities and respecting the client’s family and social connections.” Rule 4 dash–1.14, Comment [5]. Lawyer “should consider and balance such factors as: the client’s ability to articulate reasoning leading to a decision, variability of state of mind, and ability to appreciate consequences of a decision; the substantive fairness of a decision; and the consistency of a decision with the known long-term commitments and values of the client. In appropriate circumstances, the lawyer may seek guidance from an appropriate diagnostician. Rule 4 dash–1.14, Comment [6].

If Lawyer does find that there is a reasonable belief as to Client’s diminished capacity, and Client cannot adequately act in Clients own interest, Lawyer must next determine if Client meets that high standard of being at substantial risk of financial harm. If all conditions are satisfied, Lawyer is permitted to take protective measures for Client if there are no other individuals or entities available to take appropriate actions on Client’s behalf, which may include “in appropriate cases, seeking the appointment of a next friend, guardian ad litem, conservator or guardian.” Rule 4 dash–1.14(b). Comment [7] to Rule 4 dash–1.14 provides guidance that “[i]n many circumstances, however, appointment of a legal representative may be more expensive or traumatic for the client than circumstances in fact require. Evaluation of such circumstances is a matter entrusted to the professional judgment of the lawyer. In considering alternatives, however, the lawyer should be aware of any law that requires the lawyer to advocate the least restrictive action on behalf of the client.”

Throughout this assessment, Lawyer must remain mindful that, pursuant to Rule 4 dash–1.14(c), information related to Client’s representation is still protected by the confidentiality provisions of Rule 4 dash–1.6. However, Rule 4 dash–1.14(c) recognizes that when Lawyer is taking protective measures pursuant to Rule 4 dash–1.14(b), Lawyer is impliedly authorized to reveal a limited amount of information to the extent reasonably necessary to protect Client’s interests in accordance with Rule 4 dash–1.6(a). See also Rule 4 dash–1.14, Comment [8].

Finally, if Lawyer does determine, in Lawyer’s professional judgment, that appointment of a guardian, conservator, guardian ad litem, or next friend is reasonably necessary to protect Client, Lawyer should not seek to be appointed as Client’s legal representative, nor should Lawyer represent another person in the action. See Rule 4 dash–1.7; Informal Opinions 2020 dash–27 and 990095.

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