Published on:

Law Firm Partner Does Not Owe A Fiduciary Duty to Client

This case is captioned Khoury v. Kathleen Niew, Stanley Niew, and Niew Legal Partners, 2021 IL App (2d) 200388. Kathleen Niew converted funds of the plaintiffs that were held in her firm’s trust account. The only issue on appeal was whether the trial court properly held that Stanley Niew also had a fiduciary duty to the plaintiffs. The Appellate Court reversed the judgment and held that Stanley Niew did not owe a fiduciary duty to the plaintiffs. The court’s reasoning is important for all lawyers to read and understand:

¶47 Plaintiffs do not contend that they had a fiduciary relationship with Stanley as a matter of law based on an attorney-client relationship. This is wise, as the formation of an attorney-client relationship is a consensual relationship in which the attorney must indicate acceptance to work on behalf of the client, and the client must authorize the attorney to work on their behalf. …The record shows that plaintiffs and Stanley barely communicated at all, much less demonstrated a consensual relationship for Stanley to work on their behalf. Plaintiffs admit that they never spoke with Stanley via phone, e-mail, or text and at most Jamal could recall three short interatctions, which can be fairly described as small talk.The record does not support that Stanley ever agreed to perform work on their behalf, performed work on their behalf, or billed them for his services.

The court held that there was no attorney-client relationship with Stanley and held that the trial court erred in failing to grant summary judgment on his behalf.

Comment: Lawyers will breathe a sigh of relief at this decision which, had it reached the opposite conclusion, would have meant that every law firm partner (member or shareholder) would be liable if another partner converted funds from the trust account. For those who are critics of the legal profession, please note that the opposite holding would have pretty much ended the IOLTA trust account system in Illinois. Few partners would take the risk that they would be personally liable for a wrongful act they were unaware of. Also, please note that Kathleen Niew was disbarred in 2013 for converting funds.

Contact Information