If you ever felt like sharpening up your knowledge of the law of fiduciaries, now is as good a time as any. Actions against lawyers for breach of fiduciary duty are clearly on the rise, and there is no reason to expect a downward turn.

Numerous cases hold a fiduciary relationship is created where one reposes confidence and trust in another, who thereby gains a resulting influence and superiority. This, of course, is the very nature of the attorney-client relationship and why lawyers, as a matter of law, stand as fiduciaries in relation to their clients.

Lawyers know they have been tagged with the label of "fiduciary;" but they do not always have a specific understanding of what that means. What is and what is not a fiduciary duty often is a matter of some confusion. For example, does a lawyer owe the client a fiduciary duty to act with reasonable care in handling the legal matter entrusted to him or her?

There are only two fiduciary duties. They are: 1) confidentiality, and 2) undivided loyalty.

So, does a lawyer owe his client a fiduciary duty of reasonable care? The answer is no. In fact, one can exercise extraordinary care and still breach a fiduciary duty. Legally speaking, the manner in which one breaches a fiduciary duty often goes only to the issue of mitigation or aggravation.

In other words, a breach of fiduciary duty is a breach of fiduciary duty whether it is accidental or intentional, although the latter is likely to carry more wallop in the end.

The fiduciary duty of confidentiality can be stated easily. With few exceptions, a lawyer may not, during or after termination of the professional relationship with the client, reveal or use a confidence or secret of the client. More often than not, a breach of the fiduciary duty of confidentiality occurs in connection with a breach of the fiduciary duty of undivided loyalty.

The duty of undivided loyalty usually comes in two flavors. First, there is the duty to avoid representing clients with conflicting interests. At the risk of oversimplification, this entails two prohibitions: A lawyer cannot take a matter directly adverse to an existing client; and a lawyer cannot take a matter adverse to a former client if that matter is substantially related to the former representation.

The fiduciary duty of undivided loyalty also means the lawyer cannot advance his own interests above those of his client. Most often this encompasses usurpation of a client opportunity or acquisition of an asset from a client or an interest in a client asset.

In almost every jurisdiction, an action for breach of fiduciary duty is considered a tort. Whether it is a tort in Illinois, however, is open to debate. At least one case holds an action for breach of fiduciary duty is not a tort, but rather a genre of action arising out of contract, agency and equity.

Consequently, rights of contribution may not exist if one is sued for breach of fiduciary duty.

Whether or not an action for breach of fiduciary duty against a lawyer is a tort, its elements closely parallel those of a traditional action for legal malpractice. The plaintiff must plead and prove facts giving rise to the existence of a fiduciary duty, a breach of that duty, causation and damages.

While the action resembles one for legal malpractice, oftentimes it is considerably more dangerous. First and foremost, due care may not be a defense. Other traditional defenses such as judgmental immunity also may be unavailable. In some instances the burden of proof is shifted to the lawyer. Finally, actions for breach of fiduciary duty always entail alleged violations of the Rules of Professional Conduct. Obviously, the suggestion of unethical conduct can be inflammatory.

Make sure you understand your fiduciary duties, especially those related to conflicts of interest. A small miscalculation of innocent mistake can give rise to an enormous civil liability.

This publication has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.