Fiduciary Loyalty, Inside and Out

58 Pages Posted: 20 Aug 2018 Last revised: 17 Apr 2019

See all articles by Stephen Galoob

Stephen Galoob

University of Tulsa College of Law

Ethan J. Leib

Fordham University School of Law

Date Written: August 7, 2018


The duty of loyalty is central to fiduciary law. But what does “loyalty” mean? Some theorists and judges (“moralists”) see a deep connection between fiduciary loyalty and the ordinary notion of loyalty. Others (“amoralists”) see no meaningful connection between the demands of loyalty that apply to fiduciaries and those that apply in moral life. This long-running debate parallels similarly fundamental disputes in contract law about the relationship between “promise” and contract, as well tort law debates about the whether “wrong” or “duty” should be understood in moralized terms. In each of these cases, the question is whether the legal concept essentially references the moral understanding of the term, or whether the legal concept is wholly independent of its moral analogue. We contend that fiduciary loyalty, like ordinary loyalty, has an inherently cognitive dimension. Whether a fiduciary satisfies the demands of loyalty depends, at least in part, on how she deliberates, how her deliberation is connected with her actions, and how sturdy her commitments to her beneficiary are. Both inside the law and out, loyalty makes demands on the inside of the fiduciary. We call this view cognitivism about fiduciary loyalty. We show that cognitivism describes ordinary loyalty, and then identify doctrines in corporate law, trust law, agency law, bankruptcy law, and the law governing lawyers to demonstrate that cognitivism provides the best way to understand fiduciary loyalty. Appreciating the cognitive dimension of fiduciary loyalty provides a way around the dispute between moralism and amoralism about fiduciary law. Both moralists and amoralists can appreciate that whether a fiduciary satisfies the duty of loyalty depends, at least in part, on questions about the fiduciary’s deliberation, conscientiousness, and commitment to the beneficiary. Cognitivism also has significant implications for resolving a number of open or disputed legal questions, as well as for extending fiduciary duties to new types of legal relationships.

Keywords: Fiduciary Law, Moralism, Duty of Loyalty, Corporate Law, Trust Law, Agency Law, Bankruptcy, Professional Responsibility, Law Governing Lawyers

Suggested Citation

Galoob, Stephen and Leib, Ethan J., Fiduciary Loyalty, Inside and Out (August 7, 2018). Southern California Law Review, Vol. 92, No. 1, 2018, Fordham Law Legal Studies Research Paper, Available at SSRN:

Stephen Galoob

University of Tulsa College of Law ( email )

3120 E. Fourth Place
Tulsa, OK 74104
United States

Ethan J. Leib (Contact Author)

Fordham University School of Law ( email )

150 West 62nd Street
New York, NY 10023
United States

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