The Lawyer-fiduciary Gino Dal Pont Professor, Faculty of Law, University of Tasmania Ethics Column Fiduciary law has long characterised the lawyer–client relationship. Yet its practical application in this context has seen intensification from the final quarter of the twentieth century. Even so, it cannot be assumed that all lawyers are sufficiently familiar with its implications. It will be no revelation to readers that the law superimposes fiduciary obligations upon the lawyer–client relationship. These infuse the very nature of that relationship, one traditionally assumed to be characterised by notions of especial trust and confidence, vulnerability and/or inequality. Equity intervened to safeguard against the abuse of that trust and confidence, vulnerability or inequality, by proscribing lawyers (together with other fiduciaries) from engaging in dealings punctuated by conflicting interests and duties, and from making unauthorised profits from their positions. The foregoing in turn function to constrain the retainers that lawyers can accept, and in some instances dictate the need to withdraw from representation. Moreover, fiduciary law underscores lawyers’ dealings with client funds — after all, the archetypal fiduciary relationship involves the holding of property on trust — and has been utilised as a vehicle to address abuses in charging legal fees.1 And while the duty of confidentiality cannot be equated to that emanating from fiduciary law, a common genesis speaks of some confluence here. The same may be said of the intersection between fiduciary law and relationships that trigger a presumption of undue influence (as does that between lawyer and client). Given the permeation of fiduciary incidents
within the lawyer–client relationship, it is unsurprising to find judicial statements of some antiquity acknowledging the fiduciary nature thereof. For instance, in 1862 Lord Westbury LC surmised that ‘there is no relation known to society, of the duties of which it is more incumbent upon a court of justice strictly to require a faithful and honourable observance, than the relation between solicitor and client’. His Lordship used this remark as a springboard for the fiduciary notion that ‘the solicitor is not permitted to make a gain for himself at the expense of his client’ and that ‘[t]he client is entitled to the full benefit of the best exertions of the solicitor’.2 Yet for much of the first three-quarters of the twentieth century, the fiduciary concept (and its ramifications) vis-à-vis the lawyer–client relationship witnessed only limited application in the case law. More generally, one of the reasons why the 1977 publication of Dr Finn’s book Fiduciary Obligations3 proved so influential was that it functioned to fill a gap in writing in the field. Only the year before, the New South Wales Court of Appeal handed down its judgment in the ‘modern’ seminal lawyer–client fiduciary duty / breach case, namely Law Society of New South Wales v Harvey.4 There clients lent moneys to three companies of which the respondent solicitor was a director and shareholder. Street CJ, who delivered the judgment of the court, found that the solicitor had used his fiduciary position to channel client money to fund substantial speculation in land and recklessly disregarded the need to protect the clients’ property in failing to provide adequate securities. The clients were inexperienced in matters of investment and business, and trusted the solicitor to make investments on their behalf, without being told of the above details. This represented a breach of fiduciary duty, justifying the broader
proposition that ‘a solicitor who does act as a loanbroker ought to regard himself as precluded, by the very relationship between him and his client, from commending to his client a loan to a company, or for a venture, in which the solicitor has an interest’.5 The fact that the respondent in Harvey saw nothing inherently wrong in his behaviour, but instead sought to justify it by reference to the financial benefit accruing to the clients, suggests that the impact of fiduciary law in this context had been insufficiently developed or at least not well understood. That the decision prompted the Council of the New South Wales Law Society to issue as a special bulletin to disseminate the impact of the decision6 reveals an essentially reactive approach to the issue. There nonetheless remains among some within the profession a lack of understanding of fiduciary law and its implications, despite it going to the core of legal practice. Only months ago a South Australian practitioner was suspended from practice for preparing two wills for a client despite being a major beneficiary thereunder. Being ‘inexcusably ignorant of his fiduciary and ethical obligations’, the Court of Appeal remarked, led the practitioner to overlook ‘the obvious conflict between the duty of undivided loyalty owed to his client and his own personal financial interest’.7 It seems, therefore, that a timely reminder of fiduciary law as between lawyer and client does not go astray.
End notes 1 See, for example, Re Morris Fletcher & Cross’ Bill of Costs [1997] 2 Qd R 228.. 2 Tyrell v Bank of London (1862) 10 HL Cas 26 at 44. 3 P D Finn, Fiduciary Obligations, Lawbook Co, 1977. 4 [1976] 2 NSWLR 154. 5 Ibid at 172. 6 No 2 of 1979. 7 Legal Profession Conduct Commissioner v Cleland [2021] SASCA 10 at [71] per Livesey JA.
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