Who is the Client? Rethinking Professional Responsibility for Benefit Corporations

Authors

Joseph Pileri, American University Washington College of LawFollow

Document Type

Article

Publication Date

2019

Journal

Catholic University Law Review

Volume

68

Abstract

A growing social enterprise movement has led companies to increasingly opt into the benefit corporation form, and those companies are hiring lawyers. Benefit corporations challenge the notion that corporate law’s primary focus is on furthering shareholder interests. While many have written about the benefit corporation with respect to corporate fiduciary law, this Article is the first to explore the form’s ethical implications for lawyers. Ethical obligations necessarily reflect substantive law governing client organizations; changes to the corporate form presented by benefit corporation legislation should reverberate in legal ethics. The legal profession, however, has not addressed how to lawyer to a for-profit company that also seeks to create a public benefit in nearly a century. By incorporating as a benefit corporation, a client’s attorney must show fidelity to the changes found in benefit corporation legislation. This requires that attorneys representing benefit corporations adopt a new framework through which they define their ethical obligations.

In developing an ethical framework for attorneys representing benefit corporations, historical rules and norms around corporate representation and contemporary frameworks for nonprofit and government lawyers are particularly instructive. Of particular concern is benefit corporation clients engaging in greenwashing, or purporting but failing to further a mission or social benefit. Ethical rules require reinterpretation to aid lawyers in navigating situations involving greenwashing clients under this new framework. Lawyers for benefit corporations should weigh confidentiality against their client’s stated purpose differently than do their colleagues representing traditional corporations. This will necessarily result in weaker confidentiality obligations for lawyers who identify clients engaging in greenwashing or otherwise failing to abide by the procedures and objectives of benefit corporation legislation. These lawyers should also broaden the scope of their advice to include counseling clients on the effects of corporation activity on nonshareholder stakeholders.

Recommended Citation

Joseph Pileri, Who is the Client? Rethinking Professional Responsibility for Benefit Corporations, 68 Catholic University Law Review (2019).
Available at: https://digitalcommons.wcl.american.edu/facsch_lawrev/1141