Opinion ID: 3018799
Heading Depth: 3
Heading Rank: 2

Heading: Defendants Owed Plaintiffs A Fiduciary Duty.

Text: Defendants have argued that the choice of law issue is superfluous because they do not owe the Plaintiffs a fiduciary duty. We find such a suggestion preposterous. Defendants acted as counsel for all the Northerners, including the Plaintiffs: they held themselves out as the Northerners’ attorneys, they entered into agreements regarding representation of the Northerners, they signed and filed pleadings on the Northerners’ behalf, negotiated settlements for the Northerners’ claims, and collected attorneys’ fees from the Northerners. Clearly, the Defendants were acting as the Plaintiffs’ attorneys. It is well-settled law, regardless of jurisdiction, that attorneys owe their clients a fiduciary duty. Akron Bar Ass'n v. Williams, 104 Ohio St. 3d 317, 320 (Ohio 2004) (“The attorney stands in a fiduciary relationship with the client and should exercise professional judgment solely for the benefit of the client and free of compromising influences and loyalties.”); In re Tsoutsouris, 748 N.E.2d 856, 859 (Ind. 2001); Office of Disciplinary Counsel v. Monsour, 549 Pa. 482, 486 (Pa. 1997) (“This public trust that an attorney owes his client is in the nature of a fiduciary relationship involving the highest standards of professional conduct.”); Arce v. Burrow, 958 S.W.2d 239, 246 (Tex. Ct. App. 1997), rev’d on other grounds, 997 S.W.2d 229 (Tex. 1997). The duty includes undivided loyalty, candor, 31 and provision of material information. Willis v. Maverick, 760 S.W.2d 642, 645 (Tex. 1998) (provision of information material to the representation). Defendants argue that “the fiduciary duties of disclosure at issue in this case were properly assumed and performed by each plaintiff’s individually retained local counsel in Pennsylvania, Ohio, or Indiana.” The performance of the duty is a question of fact for the jury, although some acts, as a matter of law, cannot constitute performance.17 If Local Counsel did not perform their fiduciary duty, it does not matter that they assumed the duty because the fiduciary duty of co-counsel is a 17 We note that even the examples of disclosure that Defendants choose to cite in their brief are inadequate to constitute disclosure in an attorney client situation. Defendants cite a form called “Acknowledgment for Full Release/Non Malignant” that states: “You have the right to find out the terms of the Agreement . . . and a copy of same will be available for your review.” Defendants also cite a letter dated March 31, 2000, that states “Again, these may be considered aggregated settlements[,] and you are invited to schedule a time to come by our offices to see and read the entire settlement agreement as well as a list identifying the amount of money each client is being offered under this settlement.” While we recognize that additional facts in the record or that may be adduced at trial could support a finding of adequate disclosure, these statements alone do not constitute anything close to adequate disclosure. 32 joint obligation.18 Even if the duty of disclosure is itself delegable, the duty of loyalty is inherently not, and in this case disclosure was necessary to fulfill the duty of loyalty. Thus, Local Counsel’s alleged failure to fulfill the fiduciary duty of disclosure could hardly excuse the Defendants. The fiduciary duty that an attorney owes clients is not a matter to be taken lightly. The duty may not be dispensed with or modified simply for the conveniences and economies of class actions. As then Judge Cardozo observed in In the Matter of Rous, “[m]embership in the bar is a privilege burdened with conditions.” 221 N.Y. 81, 84 (1917) (Cardozo, J.). Among those conditions are the ethical obligations of giving clients full and meaningful disclosure of conflicts of interest so that the client may decide if the representation is in his or her best interest and of the terms of proposed settlement agreements, as it is the client’s, not the attorney’s, decision whether to settle a case. TEX. DISCIPLINARY R. PROF’L CONDUCT 1.03 (duty to keep client informed); 1.04(f) (fee division); 1.08(f) (disclosure of aggregate settlements). Even when clients are viewed as mere “inventory”, they are still owed the renowned “punctilio of an honor the most sensitive.” Meinhard v. Salmon, 249 N.Y. 458, 464 (N.Y. 1928) (Cardozo, J.). As the Texas Disciplinary Rules of Professional Conduct state the “obligation of lawyers 18 We note that neither Texas’ Disciplinary Rules of Professional Conduct nor the Model Rules of Professional Conduct directly address the question of allocation of professional duties in a co-counsel relationship, but in the case of duty of loyalty, its non-delegability is so patent as to be axiomatic. 33 is to maintain the highest standards of ethical conduct.” TEX. DISCIPLINARY R. PROF’L CONDUCT, Preamble. This is the cost of doing business as an attorney at law, and we will not countenance shortcuts. Disclosures to clients must be meaningful, by which we mean something beyond form disclosures, as clients must understand a conflict to give their informed consent to an intelligible waiver. Indeed, we are embarrassed to have to explain a matter so elementary to the legal profession that it speaks for itself: all attorneys in a cocounsel relationship individually owe each and every client the duty of loyalty. For it to be otherwise is inconceivable. There is no question that defendant attorneys owed Plaintiffs fiduciary duties.19 Because the District Court erred in its choice of law ruling, we will reverse the grant of summary judgment and will remand all of Plaintiffs’ claims for adjudication under applicable Texas law. Certain Parcels of Land, 144 F.2d at 630 (remand appropriate when District Court erred on choice of law).