In the PHL the scenario below would raise conflict of interest issues.
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In addition to these statutory restrictions, there are also significant ethical issues involved when an attorney takes on the role of trustee. Because the attorney owes a duty of fidelity to the client, “all business dealings between an attorney and client whereby the attorney benefits are closely scrutinized for any unfairness on the attorney’s part.” Magee v State Bar (1962) 58 C2d 423, 430, 24 CR 839. This scrutiny is justified by the attorney’s dual obligations to avoid taking advantage of the client and to provide the client with services that are in the client’s best interests, regardless of the attorney’s involvement.
Although accepting a trusteeship may appear to benefit the client, the position actually benefits the attorney, who has an opportunity to earn compensation. Because the attorney’s self-interest is involved once he or she is named trustee, the attorney may not be able to give the disinterested advice that the client deserves.
The attorney must also determine whether, in holding the position, he or she can comply with the requirement of Cal Rules of Prof Cond 3-300 to avoid adverse interests. The attorney’s acceptance of the role of trustee is explicitly covered by that rule because to agree to serve as trustee of a client’s trust is to “enter into a business transaction” with the client.
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