Brief Fact Summary. A major law firm is accused of being complicit in serious corporate fraud.
Synopsis of Rule of Law. An attorney’s duty is to the corporation as an entity, not to its owners, managers, or officers.
Of course, it does not necessarily follow that equitable defenses can never be asserted against FDIC acting as a receiver; we hold only that the bank's inequitable conduct is not imputed to FDIC.View Full Point of Law
Issue. How much of a duty, if any, does corporate counsel have to the corporation and its investors to expose ongoing fraud?
Held. An attorney’s duty to the corporation should always supersede any duty it may have to its officers and managers.
A corporate client’s fraud does not “cancel” the attorney’s fiduciary duty of due care.
The attorney’s duty of care to a corporate client includes a duty to its investors, not merely its managers and officers.
Attorneys always have an obligation to conduct investigations independent of what their clients have told them.
Discussion. While it is easy for attorneys in the Defendants’ position to lose perspective as to whom they are representing, firms should always remember that they are retained to represent the best interests of a corporation, even if this means acting against the wishes of its managers.