In an article recently posted on SSRN.com, I explain why the law requires agents to act with single-minded devotion to their principals. For example, a lawyer must do what is best for a client and may not subordinate a client’s interest to that of anyone else. This is true even when a lawful act beneficial to a client would subject a third party to serious harm. When representing a landlord who wants a derelict tenant evicted, for example, a lawyer must prosecute the eviction expeditiously even if the tenant has nowhere else to go.
In the parlance of legal ethics, the requirement to represent a client zealously within the bounds of the law is known as the ethic of zeal. It has other names too, including the duty of loyalty, the fiduciary duty, and the partisanship principle. In recent decades, many law professors and philosophers have criticized lawyers for honoring the ethic. They contend that the commitment to zealous representation requires lawyers to act immorally by forcing them to ignore the harms their actions inflict on non-clients. When assessing the morality of an eviction, for example, it matters that the tenant may wind up on the street. But, as long as the eviction is legal, a lawyer who represents a landlord cannot recognize the tenant’s plight as a reason for changing course. The lawyer must do what is best for the landlord, regardless. Believing that, when it comes to moral responsibility, a license to practice law is not a “Get out of jail free” card, philosophers and law professors have argued that lawyers should “do the right thing,” even when this means disserving clients or disobeying clear orders.
The controversy over the ethic of zeal has implications for lawyers in all practice areas and for other fiduciaries who, although not attorneys, manage businesses or other assets for the benefit of others. All such persons are normally said to be required to pursue solely the interests of their entrustors. If it is wrong to evict a tenant who has nowhere to go, then this is as true for the managers of the business that owns the apartment building as it is for the lawyer they hire to handle the legal proceeding. If it is unpatriotic or otherwise immoral for an American drug company to benefit its owners by means of an “inversion” merger with a foreign manufacturer that enables it to avoid domestic taxes, then the company’s officers and directors deserve condemnation every bit as much as the lawyers they retain to paper the deal. The debate over the ethic of zeal really raises questions about the desirability of loyalty to entrustors by fiduciaries of all types, regardless of the nature of the endeavors in which they happen to engage.
Given this, it is important to note that, at least insofar as lawyers are concerned, the critics are gaining ground. To see this, it is enough to compare the ABA’s Model Rules of Professional Conduct to its predecessor, the Model Code of Professional Responsibility. The Model Code endorsed zealous representation without qualification. Canon 7 stated plainly that “a lawyer should represent a client zealously within the bounds of the law.” The Model Rules are less enthusiastic. No commitment to zealous representation appears in its black letter provisions. Instead, it encourages zeal in a comment to the rule that requires lawyers to be diligent, and the endorsement that appears there is immediately tempered by remark that “[a] lawyer is not bound … to press for every advantage that might be realized for a client.” Instead of requiring lawyers to do their utmost for clients, the Model Rules give them “professional discretion” to let up on the gas. Support for the ethic of zeal is flagging.
The critics’ success is surprising. The fiduciary duty is older than dirt. Its roots in the common law extend back to the Middle Ages. It is also the subject of a sizeable academic literature to which scholars on both sides of the Atlantic have contributed. One might therefore have expected lawyers to understand the duty’s normative justification and to have used that knowledge to swat the moral objection aside.
But they did not, for reasons that are uncertain. One contributing factor was probably the failure of professors who teach legal ethics to develop a general account of the fiduciary duty, by which I mean an account that applies to lawyers in all areas of practice. The late Monroe Freedman, the ethic of zeal’s most steadfast and successful proponent, defended the ethic on grounds that apply with the greatest force to lawyers who represent clients in criminal cases. The critics dealt with him by conceding criminal defense lawyers wide latitude to ignore adverse effects on third parties, while continuing to argue that lawyers with other types of practices are morally required to consider harms to non-clients when deciding what to do.
A more important factor may have been the widespread loss of interest in agency law. Although the subject was once a vibrant field of doctrinal scholarship and a course taught in many law schools, in the mid-1900s it ceased to be either. Today, it is hard to find law professors who know more than the basics of legal agency, and students typically encounter bits and pieces of the subject when studying torts, business associations, and professional responsibility. Rare indeed is the professor or lawyer who possesses a coherent view of the whole.
But when one studies agency law, one learns that common law judges did not pluck the fiduciary duty out of thin air. They refined it over centuries to rein in disloyal actions that rendered agents unreliable and that also undermined the law’s moral grounding in principal’s consent. The problem of unreliability is obvious and requires no further discussion, other than to note that the potential of the division and specialization of labor to generate wealth depends on agents to serve principals well.
To understand the threat that disloyal acts pose to the law’s moral grounding, one must first understand that the law attributes agents’ actions to principals. When a lawyer or other agent signs a contract for a client, receives a notice for a client, or speaks for a client in negotiations or in court, the law treats the matter as though the client had acted directly. In other words, the law attributes the lawyer’s conduct to the client. This is a noteworthy departure from the usual view of the private law, which is that people act only for themselves. For example, you can bind yourself to a contract, but you cannot bind me; and the same goes for me as regards you. But agents bind principals to contracts every day, and they also alter principals’ legal rights and obligations in other ways.
Obviously, the power to change others’ legal rights and obligations is potentially dangerous. If I held this power over you, you might wake up tomorrow and discover that I’d transferred all of your retirement savings to my account. Attribution must therefore be subjected to principles and carefully constrained. Less obvious but equally true is the fact that attribution involves legal coercion. When a court requires a principal to honor a contract negotiated by an agent, the power of the law is brought to bear to the principal’s disadvantage. The law’s power would also be invoked if the principal were to use the same contract to extract a payment from another, although this time the principal would be the beneficiary. On the usual view that legal coercion requires a moral justification, attribution must have a moral basis too.
And it does. Principals’ consent to representation provides the moral basis for allowing agents to alter principals’ legal status. For this to be true, however, an agent’s action and a principal’s consent to representation must fit together in the right way. For example, suppose that a client hired a lawyer to resolve a dispute over the ownership a vessel. If, after resolving the dispute, the lawyer were to sell the vessel, the sale would be unauthorized and the client would not be bound to it. Because the lawyer’s commission did not include the sale of the ship, the client’s consent to representation would not provide a moral basis for attributing the lawyer’s action to the client.
The core principles that govern the actual authority of agents to bind principals have a singular (and singularly important) purpose: They help ensure that attribution occurs when and only when principals’ consent to representation provides a moral basis for it. In other words, they are agency law’s Due Process Clause. By ensuring that principals are bound only when agents do what they want, the principles that regulate actual authority make it unlikely that the law’s coercive power will be deployed arbitrarily.
This is where the fiduciary duty comes in. A core principle of agency law, it requires agents to take only actions that are reasonably calculated to make principals better off. It also subjects disloyal agents to serious punishments. Because principals normally hire agents with the sole object of benefiting themselves, the fiduciary duty preserves the moral basis for attribution by encouraging agents to do what their employers want. It is by design, not by accident, that a lawyer hired to dislodge a delinquent tenant must give the landlord single-minded devotion. By doing anything less—here, by delaying the process out of concern for the tenant’s wellbeing—the lawyer would undermine the moral basis for attributing the lawyer’s actions to the principal.
The preceding assumes that the landlord wants the eviction to proceed after being fully informed about relevant matters, including the tenant’s plight. Nothing prevents a lawyer from discussing moral concerns with a client, and a tenant’s predicament is something about which a landlord might want to know. The point is just that there is a good reason for forbidding a lawyer or other agent from deviating from a client’s preferred course, once the client’s mind is made up. The reason is that, otherwise, the law’s coercive power would be applied arbitrarily.
In sum, the fiduciary duty wasn’t plucked out of thin air. Common law judges insisted on loyalty because they understood the need to preserve agency law’s moral grounding in principals’ consent. This is also why the duty should be neither jettisoned nor qualified to their point where lawyers have professional discretion to act to clients’ disadvantage. No moral basis exists for binding clients to lawyers’ disloyal behaviors.
The division and specialization of labor contributes enormously to the production of wealth in capitalist economies, as Adam Smith explained in The Wealth of Nations. Agency law facilitates the division and specialization of labor by enabling principals to rely on agents to do what they want. Although it is certainly true that reliable action can have consequences that are unfortunate and deserving of moral condemnation in some cases, it is no less obvious that agency law makes an enormous utilitarian contribution to society when taken as a whole. The call to reform a core legal doctrine should therefore be met with a healthy skepticism, and with the clear-eyed understanding that no general system of rules, however useful, will produce desirable consequences in every imaginable case.
The preceding post comes to us from Charles Silver, the Roy W. and Eugenia C. McDonald Endowed Chair in Civil Procedure at the School of Law at the University of Texas at Austin. The post is based on his article, which is entitled “A Private Law Defense of the Ethic of Zeal” and available here.