Prof. Tamar Frankel Examines Impact of “Watered Down” Fiduciaries in Philosophical Foundations of Fiduciary Law
New book offers philosophical analysis of fiduciary law by leading scholars
Tamar Frankel, Michaels Faculty Research Scholar and professor of law at Boston University School of Law, has authored a chapter entitled “How to Water Down Fiduciary Duties” in the newly published Philosophical Foundations of Fiduciary Law (Oxford University Press, 2014), edited by Andrew S. Gold of DePaul University College of Law and Paul B. Miller of McGill Faculty of Law.
The first such collection of philosophical essays examining fiduciary law, Philosophical Foundations of Fiduciary Lawfeatures chapters by leading theorists from around the world. It addresses key questions of related legal, moral, and political philosophy, analyzing topics from morality in fiduciary duties to the economic impact of fiduciary law.
“This book not only offers a much-needed theoretical assessment of fiduciary topics, it defines the field going forward, setting an agenda for future philosophical study of fiduciary law,” says Oxford University Press’s website forPhilosophical Foundations.
In “How to Water Down Fiduciary Duties,” Frankel argues that fiduciary law can be interpreted in various ways, which consequentially can dilute fiduciary duties. For instance, framing a fiduciary relationship in terms of a contract can negate the power relationship between the parties and reduce the expressive impact of the law on the fiduciary’s conscience. Viewing fiduciary relationships as contractual, Frankel suggests, will decrease the likelihood that fiduciaries will observe prohibitions that limit their freedom—and potentially increase their own benefits from the relationship.
Additionally, Frankel challenges the borrowing of terms and concepts from other disciplines and applying them to fiduciary law. Agency cost terminology, in particular, poses problems, as “agency” has distinct meanings in various economic and legal contexts. Even different kinds of fiduciary relationships—trust and agency relationships, for example—require different responsibilities of the fiduciary, and the fiduciary duties may be watered down when a trust relationship is transformed into an agency relationship.
A number of legal arguments could help fiduciaries evade, re-characterize, or lessen their fiduciary duties. But in pausing to reflect on the consequences, Frankel challenges readers to consider whether such justifications cumulatively are beneficial to society.
A longtime member of the Boston University School of Law faculty, Professor Frankel writes and teaches in the areas of fiduciary law, financial system regulation, securitization, mutual funds, and corporate governance. She has published over 80 articles and 10 books, including The Ponzi Scheme Puzzle: A History and Analysis of Con Artists and Victims(OUP, 2012), Fiduciary Law (OUP, 2010), and Trust and Honesty, America’s Business Culture at a Crossroad (OUP, 2006). Fiduciary Law recently was translated to Japanese.
In 2013, the Institute for the Fiduciary Standard established the Frankel Fiduciary Prize, named for Professor Frankel, to acknowledge individuals who have made significant contributions to the preservation and advancement of fiduciary principles in public life.