Breach Of Fiduciary Duty

In a bar discipline case where the attorney had been charged with breach of fiduciary duty, conflict of interest, “giving something of value to a judge without charging any fee” and not disclosing the gift to opposing counsel and neglect of a probate estate, the Illinois Review Board rejected the Administrator’s argument for a two-year suspension and recommended a suspension of six months. The lawyer had been admitted in 1967 and was a county public defender in addition to his private practice.

The alleged misconduct involved a client who sought a will and to forgive a debt owed to her by a wealthy family that included a judge before whom the attorney regularly practiced. The attorney also represented the estate of the judge’s father. He drafted and the client executed a document forgiving the debt. The conflict of interest formed the basis of one charge. The hearing board had found no breach of duty or dishonesty in the lawyer’s dealings with the client.

The lawyer or his employee also prepared the judge’s personal and business federal income tax forms from 1996 to 2000 at no fee. The hearing board found no ethical violation for this conduct or in the failure to disclose this service to opposing counsel. Finally, the hearing board found that the another had neglected another estate matter.

The review board found that the debt cancellation matter was a breach of fiduciary duty to the client:

“it is undisputed for purposes of review that Cutright [the lawyer] had conflicting loyalties that impacted his ability to make appropriate inquiries of Hayden and advise her in a good faith manner. As part of his fiduciary duty to Hayden [the client], Cutright was required to avoid conflicts of interest and give Hayden his undivided loyalty. The Hearing Board found that he did not do so. Thus, it follows that Cutright breached his fiduciary duty to Hayden.

The Hearing Board’s finding that Cutright was following Hayden’s instructions in canceling the debt does not alter our conclusion. Blind obedience does not satisfy one’s fiduciary obligation. Cutright was required to make a diligent inquiry into Hayden’s financial circumstances, assess her best interests, and advise Hayden of the consequences of her decision. He did not do any of those things.”

The review board found that the failure to advise opposing counsel of the free legal services bestowed on the judge did not amount to dishonest conduct:

“…the Administrator asserts that Cutright’s ‘oblivious’ state of mind – as found by the Hearing Board – is ‘so careless or reckless’ so as to satisfy the scienter requirement because Cutright, like every other attorney in this state, should have known what the Rules of Professional Conduct require.

Despite its specious appeal, the Administrator’s argument fails. While ignorance is no excuse, neither is it a chargeable offense in this context. The analysis must start and end with the finding – unchallenged by the Administrator – that Cutright did not intend to deceive anyone by his omissions.”

A dissent would find the breach of fiduciary duty charge “unecessary and entirely redundant.” (Mike Frisch)