The Internal Limits on Fiduciary Loyalty

Abstract

Abstract: In the abstract, the limits on a lawyer’s loyalty obligations could take several forms. For example, constraints on a fiduciary’s loyalty obligations may be derived from a correct understanding of that fiduciary’s loyalty itself. Indeed, violations might count as a form of disloyalty to the client. Alternatively, such constraints could stem from obligations owed to parties other than a lawyer’s client, or even something more abstract like the rule of law. Notably, such constraints could be derived from legal principles that have nothing to do with fiduciary law. Each of these options is a conceptual possibility, contingent on the choices made by a given legal system. Constraints on a loyalty obligation that are implications of that loyalty obligation itself are defined here as internal. Constraints imposed from outside a given fiduciary loyalty obligation are defined as external. This paper seeks to deepen our understanding of a particular type of fiduciary loyalty (the loyalty owed by lawyers) by focusing on the role of such internal constraints, and in the process to elaborate on the scope of loyalty obligations more generally. This paper will also indicate why we should care about the internal/external distinction. Among other things, this distinction helps determine whether lawyers are better seen as private or public fiduciaries, and in practice it may bear on both judicial reasoning and legal compliance.