Conflict of Interest on a Joint Retainer That Fractures Mid-File
Two siblings, Dana and Peter, retain you jointly to administer their late mother's estate. The retainer letter names both as clients and states that the firm acts for the estate. Six months in, Dana produces a handwritten note, allegedly in the mother's hand, that transfers the lake cottage to her alone. Peter says the note is a forgery and threatens to sue Dana. Dana asks you to advise her personally on whether the note is enforceable. Peter has already asked, in writing, that you confirm the firm will not act against the estate's interests. The estate's remaining assets are modest, and litigation would consume most of them. Neither sibling has paid the final account.
1. May the firm advise Dana personally on the cottage note? Identify the governing duties and the practical consequence.
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No. The firm accepted a joint retainer and also acts for the estate, so it owes each sibling and the estate a duty of loyalty, confidentiality, and equal treatment. Advising Dana on the enforceability of a note that is adverse to Peter and to the estate would place the firm in a position where its duty to one client conflicts with its duty to another, and it would likely require use of Peter's confidences.
The correct step is to explain the conflict to both clients and obtain informed consent, but consent cannot cure a conflict that is directly adverse in the same matter. Because the dispute is between the two clients over the very asset the firm administers, the firm must decline Dana's personal instruction. It may continue only in a limited, non-adversarial role if both consent and the role is clearly defined; otherwise it must withdraw from acting for both and refer them to independent counsel. The unpaid accounts do not change the analysis.
2. What should the firm do about its ongoing retainer with the estate and the two siblings?
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The firm should stop and reassess rather than drift into acting for one side. Because a dispute has arisen between joint clients, the firm cannot prefer one over the other. It should notify both clients in writing that a conflict has arisen, that it cannot act for either in the dispute, and that they should obtain independent advice.
If the estate has an independent trustee or executor, the firm may be able to continue acting for the estate in a purely administrative capacity, provided both siblings consent after disclosure and the firm does not take instructions that favour one beneficiary. If no such neutral role is feasible, the firm must withdraw from the retainer entirely and take care not to prejudice either client. Any outstanding fees should be handled separately, without using the file or confidential information as leverage.