Blurred Lines: Analyzing an Attorneys Duties to a Fiduciary-Clients Beneficiaries

Table of ContentsI. Introduction 2610II. The Range of Duties and Liability Exposure 2613A. Attorney's Liability Exposure to Fiduciary-Client 26131. Attorney's Duty of Care and Professional Negligence 26142. Attorneys' Fiduciary Duties to Clients 26153. Blurred Distinctions Between the Duty of Care and Fiduciary Duties 2617B. Fiduciary-Client's Liability Exposure to Beneficiaries 2618III. One Approach: Attorney Owes Some Form of Duty to Fiduciary-Client's Beneficiaries 2621A. Imposition on Attorneys of Duties Owed to Clients' Beneficiaries 2621B. Differing Duties an Attorney May Owe to Beneficiaries 2628IV. The Traditional Approach: Attorneys Owe NoDuties to Beneficiaries 2631A. Cases Supporting the Traditional Approach 2631B. State Statutes and ABA Formal Opinion 94-380 2638C. Attorney's Duties to Third Parties Generally 2642V. Advantages and Disadvantages of EachApproach 2645A. Advantages of Imposing Duties 2645B. Disadvantages of Imposing Duties 2647C. Advantages of Applying the Traditional Approach 2650D. Disadvantages of Applying the Traditional Approach 2651VI. Recommendation 2652VII. Conclusion 2656I. IntroductionLegal scholarship commonly expresses that attorneys must provide zealous advocacy and diligent representation to their clients.1 What happens, however, when an attorney's client owes a similar duty to give priority to and protect the interests of third parties?2 In cases which an attorney represents a fiduciary, the attorney must consider what duties, if any, he owes to third-party beneficiaries.3 The issue of what special obligations an attorney may owe beneficiaries arises most commonly when an attorney represents a trustee or personal representative of an estate, which is the focus of this Note.4It is imperative that an attorney hired to represent a trustee or estate representative understand whom he represents and to whom he owes duties.5 This is often unclear because of the various individuals involved handling trust and estate matters, each having distinct interests.6 Fiduciaries' attorneys should beware of the potential liability that exists if they fail to exercise care and loyalty towards beneficiaries' interests.7Current authorities acknowledge that confusion riddles this subject.8 The Model Rules of Professional Responsibility comment that in estate administration the identity of the client may be unclear under the law of a particular jurisdiction.9 Rules of professional responsibility and existing case law can be contradictory.10 In describing the relationship between an attorney and beneficiaries, courts and ethics committees sometimes create uncertainty over whether and to what extent an attorney owes any duty to beneficiaries.11 In jurisdictions recognizing that an attorney owes fiduciary duties to beneficiaries, it is not clear if the duties differ from those the attorney owes the client.12 When hiring an attorney, is the fiduciary also an agent contracting on behalf of the beneficiaries? Alternatively, are the fiduciary and beneficiaries joint-clients of the attorney? The current confusion surrounding this issue can result an attorney's misunderstanding of to whom he owes duties, which may create potential liability.13Legal authority this setting is scant. The authority that exists tends to focus on fee disputes, evidentiary privileges, and malpractice issues raising the question of whether beneficiaries have the right to sue an attorney.14 This Note will focus on the latter issue of whether beneficiaries have the right to bring claims against the fiduciary's attorney for breach of fiduciary duty or professional negligence. This Note analyzes the issue assuming that the attorney and fiduciary have not entered into an agreement regarding an attorney's duties to beneficiaries.15Part II of this Note examines the scope of duties an attorney owes a client. …