Hendry v. Pelland

In Hendry v. Pelland, 315 U.S. App. D.C. 297, 73 F.3d 397, 401-02 (D.C. Cir. 1996), the federal appellate court held that it is not necessary for a client to prove that his attorney's breach of fiduciary duty proximately caused monetary injury in order to recover the legal fees paid for the tainted representation. The Hendry Court concluded that there are important policy and practical reasons for permitting a breach of fiduciary duty cause of action against an attorney without proof of monetary damages flowing from the breach. The federal court reasoned: To the extent the clients sought disgorgement of legal fees, they needed to prove only that the attorney breached his duty of loyalty, not that his breach proximately caused them injury. Although we have found no District of Columbia cases precisely on point, courts in other jurisdictions have held that clients must prove injury and proximate causation in a fiduciary duty claim against their lawyer if they seek compensatory damages, not if, as here, they seek only forfeiture of legal fees. Even courts that sometimes do require a showing of injury and causation in claims seeking only forfeiture of legal fees have stated that it is not necessary when the clients' claim is based, again as here, on a breach of the duty of loyalty. . . . The different treatment of compensatory damages and forfeiture of legal fees also makes sense. Compensatory damages make plaintiffs whole for the harms that they have suffered as a result of defendants' actions. Clients therefore need to prove that their attorney's breach caused them injury so that the trier of fact can determine whether they are entitled to any damages. Forfeiture of legal fees serves several different purposes. It deters attorney misconduct, a goal worth furthering regardless of whether a particular client has been harmed. It also fulfills a longstanding and fundamental principle of equity-that fiduciaries should not profit from their disloyalty. And, like compensatory damages, it compensates clients for a harm they have suffered. Unlike other forms of compensatory damages, however, forfeiture reflects not the harms clients suffer from the tainted representation, but the decreased value of the representation itself. Because a breach of the duty of loyalty diminishes the value of the attorney's representation as a matter of law, some degree of forfeiture is thus appropriate without further proof of injury. Id. at 402.