The Duty of Lawyers to Serve Their Clients’ Interests -- An Economic and Psychological Account
RILE Working Paper Series 2014/03
29 Pages Posted: 2 Apr 2014
Date Written: January 30, 2014
In many Codes of Conduct for lawyers around the globe, the duty of the lawyer to serve the interests of his client, and not his own interest, is incorporated.
This paper analyzes this duty from various perspectives. Theoretical Law and Economics literature views the client-lawyer relationship as a principal-agent relationship and predicts that the lawyer may (try to) further his own interests, even at the expense of those of the client. This issue has especially been studied with respect to the remuneration scheme, which indeed is predicted to affect the behavior of the lawyer. Empirical research subsequently corroborates this view, so that one may conclude that lawyers are also influenced by their self-interest, which is contrary to the norm that they should always act in the best interest of their client. Hence, Law and economics and empirical research suggest that lawyers will not always act in the best interest of their clients. Psychological and behavioral economics literature in addition casts doubt on whether lawyers are able to act in their client’s best interest, even if they would want to do so. Research concerning personality characteristics of lawyers vis-à-vis clients as well as literature discussing various biases and heuristics plaguing lawyers is discussed.
The paper concludes, on the basis of Law and Economics, empirical, behavioral economic and psychological literature, that there are various reasons to believe that the principle that lawyers should only serve the interest of their client and not their own interests is naive.
Keywords: Agency theory, behavioral economics, biases, code of conduct, heuristics, Law and Economics, lawyers
JEL Classification: K23, K41, K42
Suggested Citation: Suggested Citation