Response to Arthur B. Laby’s, Advisors as Fiduciaries
In a recent article, Advisors as Fiduciaries, Professor Arthur Laby examines the roles of advisors in multiple contexts and elaborates justifications for whether and when advice-giving does (and should) trigger the imposition of a suite of distinctively fiduciary duties of care and loyalty. Professor Laby’s article is a major intervention in fiduciary-law scholarship because it examines in depth the justifications for fiduciary status and articulates why many advisors are treated as fiduciaries. As this Response explains, Professor Laby’s intervention turns on re-situating questions about the fiduciary status of advisors into a framework that focuses on an advisor’s activity and relationships with clients, not a priori (or taxonomic) categories that turn on the possession of discretionary authority over another’s assets or interests more generally. Beyond academic theory, Professor Laby’s article has practical implications because it helps to clarify analysis in a category of cases where courts have not reached consensus. Moreover, the stakes are significant. Advising is a common-place activity integral to many professions and pervasive in day-to-day life. Additionally, the remedies available for breach of a fiduciary duty are distinctive. Gain-based remedies are tightly linked to the fiduciary duty of loyalty underscoring for advisors the importance of avoiding or disclosing conflicts between the advice given and the advisor’s own interests.
Professor Laby’s article is also a springboard for reflection on agency law, a long-standing misfit within a fiduciary realm dominated by trust-law prototypes and inquiry into whether an actor possesses discretionary authority. As Professor Laby points out, many years ago I identified the possession of discretion as a common theme in accounts of fiduciary obligation. My perspective now is grounded in the implications of agency law for fiduciary theory. This Response begins by identifying the analytic steps that undergird Professor Laby’s sophisticated and comprehensive account of advisors. The Response then explores the implications of agency law’s persistence as a fiduciary category in light of Professor Laby’s account of advisors. A brief conclusion highlights why and how these questions matter.