When Lawyers and Law Firms Invest in Their Corporate Clients’ Stock

I will state my conclusion at the outset. I am not convinced that lawyers\u27 investments in clients in lieu of fees are problematic enough from a conflicts standpoint that the rules of professional responsibility should treat them as presumptively inconsistent with the lawyer\u27s fiduciary responsibility. Lawyers\u27 investments in their clients do raise interesting and unsettling issues, but these issues are not qualitatively different from issues raised by many other norms or practices within the legal profession that also threaten lawyerly objectivity. Indeed, in contrast to some other practices, these fee arrangements can, in some respects, enhance objectivity, or at least balance out some of the agency-cost problems that otherwise infect attorney-client relationships in the corporate setting. If so, broadly banning these fee arrangements in the name of fiduciary responsibility makes little sense. My aim here, in large part, is to speak to the good lawyer about what objectivity and prudence really mean in a world where serious wealth has become the metric for professional success, and how both law and ethics ought to respond to the residual problems caused by these fee arrangements