The duty of loyalty is one of the most important duties and some authorities maintain it defines what a “lawyer” is. Cases will discuss “absolute loyalty.” The lawyer must put the interest of their client above their own interests. Therefore, if an expert witness can attest to “self-dealing” or diminished loyalty by the lawyer, often that will support a viable breach of fiduciary duty action.  Obviously, loyalty implicitly means the absence of conflicts of interest that could divert the lawyer’s attention or direction.  Some cases will discuss that loyalty must be 100% unless there is a valid client consent.          

The duty of confidentiality is another fundamental fiduciary duty inherently associated with lawyers. Note that California has the broadest duty of confidentiality in the United States. Business and Professions Code 6068(e) and Rule 1.6 of the Rules of Professional Conduct, “brooks no exception.”[1]  Although “brooks” is used in many cases in this context is means “tolerates.”  If “Tony Soprano,” the notorious fictional gangster in the television show known as the Sopranos, was really wise (as in “wise guy”), he would only have hired a lawyer licensed in California, because they are so bound in confidentiality that they could never talk.[2]

The duty of safekeeping of funds and property is another major fiduciary duty.  See Rule 1.15, which also discusses accounting methods and client trust accounts.  It is by far the quickest way of losing your license at the State Bar of California. A claim for breach of this duty could be a temporary shortfall in the client trust account. It is an easy case for State Bar prosecutors; they merely show the relevant bank records to the State Bar Court, and it could be all over for the lawyer if a State Bar audit reveals a pattern of trust account violations.

The duty to exercise “independent judgement” is another of the five fiduciary duties. This duty is difficult to define but encompasses (among other things) the absence of conflicts, and the concept that when advising a client, the lawyer should think only of that client in those circumstances.

Finally, the duty of communication is essential because if a client is owed all those other duties listed above, what good are they if the lawyer fails to communicate (Rule 1.4)? Failure to communicate is known as a “gateway” to other problems.

Breach of fiduciary duty will usually involve breach of one or more of these. Usually there is also some element of dishonesty. For example, a lawyer could simply miss a court date, or have a “failure to appear” at a hearing. Mistakes happen; that is why Clarence Darrow is reputed to have said, “that is the reason there are erasers on the ends of pencils.”[3] In California, when a lawyer realizes he or she has committed malpractice, there is a fiduciary duty to disclose this to the client. But lying to the client about the failure to appear could trigger a breach of fiduciary duty claim.[4]  Going further, the lawyer might stop billing the client, in an effort to hide the failure to appear. Also, often there is an actual act of dishonesty or conduct that “hints” at dishonesty.

For example, lawyer fails to appear, but tells the client some wild story, and that everything is fine. You have dishonesty in concealing what actually occurred, but then it becomes more suspicious because the lawyer stops billing the client (or worse, bills for the appearance that never happened).  That act suggests knowledge of the wrongdoing, which is why breach of fiduciary duty is also known as “constructive fraud.”[5]

Please make it “simple negligence.” In other words, own it, tell the client. Essentially it is a mistake, and mistakes happen.  That is why lawyers buy malpractice insurance.

One final point, these fiduciary duties are articulated in what we know as the “Rules of Professional Conduct,” until recently, in the so-called “gray book” because the outside cover of the Rules was always “gray” colored. A nice symbolic touch since so much of what we confront involves the “gray” areas. 

The gray cover is neither “black or white.” It’s unclear and that is indicative of fiduciary duties; they are often difficult to distinguish and hopefully this article will help you avoid violating them.

[1]La Sala v. American Savings and Loan Assoc et al., (1971) 5 Cal. 3d 864
[2] More specifically, the California attorney could never talk about Tony’s past acts.  Rule 1.6 has an exception for present and future criminal acts or threats to life.  But a retired Tony Soprano would have nothing to worry about.
[3]Note, this appears in a book of quotes by Irving Stone. Therefore, the author who likes the quote has always wondered because Stone is well known for his fictional books.
4] Beal Bank, SSB v. Arter & Hadden, LLP (2007) 66 Cal.Rptr.3d 52, 167 P.3d 666, 42 Cal.4th 503.
[5]Buehler v. Sbardellati (1995) 4 Cal. App. 4th 1527