Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Sunday, March 14, 2010

Schaefer on Zealous Advocacy

Harming Business Clients with Zealous Advocacy: Rethinking the Attorney Advisor's Touchstone, by Paula Schaefer, University of Tennessee College of Law, was recently posted on SSRN.  Here is the abstract:

Joseph Collins was a successful business lawyer, with a sophisticated practice at Mayer Brown LLP. In January 2010, Collins was sentenced to seven years in prison for his role in a massive fraud that cost investors millions and sent his client Refco, Inc. into bankruptcy. At sentencing, the judge reportedly stated, “I think this is a case of excessive loyalty to his client.” Collins’ own testimony reflects a lawyer who believed he was zealously representing his client's interests. But in reality, Collins’ conduct was not “loyal” to his client. He contributed to his client’s destruction.

With the Collins example and others, I argue that business lawyers act as zealous advocates to their own clients’ peril. I explain that professional conduct rules are central to the problem. The advisor’s duties are relegated to a single rule that provides scant direction about how to advise. In the absence of direction, lawyers fill in the gaps with zealous advocacy. After examining the problems of the zealous advocacy mantra, I suggest that “fiduciary duty” would be a preferable touchstone for attorney-advisors. While it is true lawyers are already fiduciaries, fiduciary duty is not the focus for most lawyers. I argue that it should be. Using fiduciary duty as a framework, I propose professional conduct rules that would provide direction to business lawyers that is more consistent with their clients’ interests.

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