The Dilemma of the Paid Fiduciary, by Gene DuBose

Published as an Ethics Article in Headnotes, the monthly publication of the Dallas Bar Association

It is curious that an attorney’s most fundamental ethical obligation is not found in the Texas Rules of Professional Conduct, although it is fleetingly adverted to. That obligation arises from the fact that our relationship with our clients is a fiduciary relationship. The rules of professional conduct deal with some of the common problems that arise in the business of being a lawyer, but they do not define the nature of the attorney-client relationship. Our role as a fiduciary, however, shapes everything we do.

Our fiduciary duty informs us that we must always act nor for our own benefit, but solely for the benefit of our client. We are, however, paid fiduciaries, and most of us are paid via an hourly rare. Our every action will cost the client. At the outset, of course, we must inform our client what our actions will cost per hour, but thereafter we must be satisfied that we are not multiplying our tasks or our client’s costs unnecessarily. The debate on how we put our obligations before our interests will in large part be an inner monologue, at least for those of us who litigate. Our clients are rarely experienced enough to perceive what is necessary and what is not. In the main, they will follow our advice. Let me pose some questions to ask ourselves about our fiduciary duties in some common situations.

Situation No. 1

Your client wants you to bring a suit to collect $15,000 for damage done to her home by a repairman. Do you tell her that she can bring her case in small claims court without a lawyer? Do you give her an estimate of what your fees will be for trying the case? Do you tell her that Texas is the most debtor-protective state in the union, and if she gets a judgment, she may not be able to collect on it? As you can see, putting all these issues before your client could lead her to decide either (1) she does not want to bring a suit or (2) she will bring her suit pro se. In this vein, are you unwilling to take a case where you perceive that your client will simply be throwing good money after bad?

Situation No. 2

Your firm has been hired to represent your client in a business matter where $150,000 is in dispute. The facts are straightforward, and the area of law is one where you are experienced. Will you bring in other members of your firm to help you on this case? If you are thinking about doing that, have you requested your client’s consent to do so? Have you explained the need for doing so? Have you brought along an associate for hearings or depositions? Have you explained to the client the need for the associate’s presence? Is your decision on staffing a case determined by the wealth of the client or by your need for assistance? Is all the work you do on a case necessary? Do you stand up to your managing attorney if he pressures you to do more billable work or to take on more lawyers than you think necessary?

Situation No. 3

For litigating attorneys whose fees are based on hourly billing, the fees stop when the case settles. Once you are involved in an active lawsuit, do you explain to your client the virtues and, for all practical purposes, the inevitability of settlement to resolve the case. Do you try to settle the case as early as possible? Do you stop discovery when you have pretty much everything you need for mediation?

In these questions about the fiscal aspects of your fiduciary responsibilities to your client, the Texas Rules of Professional Conduct are blessedly quiescent. A fee only becomes a subject for a grievance if it is illegal or unconscionable, and a fee is unconscionable only “if a competent lawyer could not form a reasonable belief that me fee is reasonable.” Rule 104(a). As you can imagine, this is a standard rarely met. In ordinary matters of drawing the line between your bills and your client’s interest, it is just up to you and your conscience.