LEGAL ETHICS

Legal Ethics

Legal Ethics encompasses an ethical code governing the conduct of persons engaged in the practice of law and persons more generally in the legal sector

In the United States

“Legal ethics” in the United States is generally understood to primarily apply to lawyers, while codes of professional responsibility also apply in a derivative sense (indirectly) to non-lawyers who work with lawyers, such as paralegals or private investigators.

In the United States, the practice of law is regulated by the governments of the individual states and territories.

As a whole, federal law does not control legal ethics

Legal Ethics

Each state or territory has a code of professional conduct dictating rules of ethics

These may be adopted by the respective state legislatures and/or judicial systems

The American Bar Association has promulgated the Model Rules of Professional Conduct which, while formally only a recommendation by a private body, have been influential in many jurisdictions.

Legal Ethics

The Model Rules address many topics which are found in state ethics rules, including the client-lawyer relationship, duties of a lawyer as advocate in adversary proceedings, dealings persons other than clients, law firms and associations, public service, advertising, and maintaining the integrity of the profession

Legal Ethics

Respect of client confidences,

candor toward the tribunal,

truthfulness in statements to others,

and professional independence are some of the defining features of legal ethics.

Legal Ethics

Law schools in the United States are required to offer a course in professional responsibility, which encompasses both legal ethics and general matters of professionalism that do not present ethical concerns

Enforcement

Every state in the United States has a regulatory body (usually called a state bar association) that polices lawyer conduct

When lawyers are licensed to practice in a state, those lawyers subject themselves to this authority

Overall responsibility often lies with the highest court in a state (such as state supreme court)

The state bar associations, often in consultation with the court, adopt a set of rules that set forth the applicable ethical duties

Enforcement

Lawyers who fail to comply with local rules of ethics may be subjected to discipline ranging from private (non-public) reprimand to disbarment

LEGAL MALPRACTICE

Legal Malpractice

Legal Malpractice is the term for negligence, breach of fiduciary duty, or breach of contract by an attorney that causes harm to his or her client

In order to rise to an actionable level of negligence, the injured party must show that the attorney’s acts were not merely the result of poor strategy, but that they were the result of errors that no reasonable attorney would make

Legal Malpractice

Furthermore, legal malpractice requires the showing of an injury that would not have happened had the attorney not been negligent

If the injury would have occurred despite different (non-negligent) actions by the attorney, no cause of action will be permitted

Legal malpractice can also occur when an attorney breaches a fiduciary duty to his or her client

This occurs when attorneys act in their own interest instead of their client’s, to the detriment of their client

Legal Malpractice

A claim for legal malpractice may also arise when an attorney breaches the contract they sign with their client

A common basis for a legal malpractice claim arises where an attorney misses a deadline for a filing of a paper with the court, such as a statue of limitations, and this error is related to the loss of the client’s cause of action

FIDUCIARY

Fiduciary

A fiduciary duty is a legal or ethical relationship of confidence or trust between two or more parties, most commonly a fiduciary and a principal.

One party, for example a corporate trust company or the trust department of a bank, holds a fiduciary relation or acts in a fiduciary capacity to another, such as one whose funds are entrusted to it for investment

In a fiduciary relation one person, in a position of vulnerability, justifiably reposes confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter

Fiduciary

In such a relation good conscience requires one to act all times for the sole benefit and interest of another, with loyalty to those interests

Fiduciary

“A fiduciary is someone who has undertaken to act for and on the behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.”

Fiduciary

A fiduciary duty is the highest standard of care at either equity or law.

A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the “principal”);

He must not put his personal interests before the duty,

And he must not profit from his position as a fiduciary,

Unless the principal consents.

RELATIONSHIPS

Relationships

The most common circumstances where a fiduciary duty will arise is between a trustee, whether real or juristic, and a beneficiary

The trustee to whom property is legally committed is the legal – i.e., common law – owner of all such property

The beneficiary, at law, has no legal title to the trust; however, the trustee is bound by equity to suppress his own interests and administer the property only for the benefit of the beneficiary

Relationships

In this way, the beneficiary obtains the use of property without being its technical owner

Others, such as corporate directors, may be held to a fiduciary duty similar in some respects to that of a trustee

This happens when, for example, the directors of a bank are trustees for the depositors,

The directors of a corporation are trustees for the stockholders

Possible Relationships

Joint ventures, as opposed to business partnerships, are not presumed to carry a fiduciary duty

Husbands and wives are not presumed to be in a fiduciary relationship; however, this may be easily established

Similarly, ordinary commercial transactions in themselves are not presumed to but can give rise to fiduciary duties, should the appropriate circumstances arise

ELEMENTS OF DUTY

Elements of Duty

A fiduciary, such as the administrator , executor or guardian of an estate, may be legally required to file with a probate court or judge a surety bond, called a fiduciary bond or probate bond, to guarantee faithful performance of his duties

One of those duties may be to prepare, generally under oath, an inventory of the tangible or intangible property of the estate, describing items or classes of property and usually placing a valuation on them

ACCOUNTABILITY

Accountability

A fiduciary will be liable to account if proven to have acquired a profit, benefit or gain from the relationship by one of three means:

1. In circumstances of conflict of duty and interest

2. In circumstances of conflict of duty to one person and duty to another person

3. By taking advantage of the fiduciary position

NO PROFIT RULE

No Profit Rule

A fiduciary must not profit from the fiduciary position

This includes any benefits or profits which, although unrelated to the fiduciary position, came about because of an opportunity that the fiduciary position afforded

It is unnecessary that the principal would have been unable to make the profit;

If the fiduciary makes a profit, by virtue of his role as fiduciary for the principal, then the fiduciary must report the profit to the principal

No Profit Rule

Secret commissions, or bribes, also come under the no profit rule

The bribe shall be held in constructive trust for the principal

The person who made the bribe cannot recover it, since he has committed a crime

Fiduciary duties are an aspect of equity and, in accordance with the equitable principles, or maxims, equity serves those with clean hands

Therefore, the bribe is held on constructive trust for the principal, the only innocent party

PROFESSIONAL RESPONSIBILITY

Professional Responsibility

Professional Responsibility is the area of legal practice that encompasses the duties of attorneys to act in a professional manner, obey the law, avoid conflicts of interest, and put the interests of clients ahead of their own interests

VIOLATIONS IN GENERAL

Violations in General

Conflicts of interest

Incompetent representation

Mishandling of client money

Fee-splitting arrangements

Disclosure of confidential information

Communication with represented parties

Improper solicitation and advertising