Examining breaches of fiduciary duty by solicitors in commercial arrangements

This article will identify two key distinctions that need to be made in order to understand the consequences of breach of fiduciary duty by solicitors operating under different circumstances. These distinctions are between (i) solicitors acting as a trustee in relation to an express trust and those assisting their clients with commercial transactions; and (ii) breaches of fiduciary duty by solicitors that involve dishonesty and those that do not. Of particular interest is the different approaches taken in English and Australian courts with respect to the question of causation. This paper will focus on breach of custodial fiduciary duties where the solicitor acts on behalf of a client. However, it will also touch on the implications for solicitors who are directors of an incorporated legal practice and whose breach is in the course of his or her duties as a director. It will conclude that while a solicitors obligation to account follows from a breach of trust, the remedial consequences of a breach of fiduciary duty in commercial relationships demand an inquiry into whether the breach was fraudulent.