Could lack of alternative fee arrangements (AFA) breach a fiduciary duty owed by a general counsel?

Jeff Carr, the general counsel of FMC Technologies, held forth on a panel at the SuperConference yesterday. In the context of billing arrangements by law firms other than hourly billing (and discounted hourly rates), Carr speculated out loud.

He wondered whether a general counsel who has not actively explored and tested some of the performance-based payment methods might be derelict in the obligation that executive has to steward the company’s funds and resources. Might there be a breach of fiduciary duty to the company, he asked the audience?

Seeking authoritative guidance of what this might mean, I found US Legal.

“A fiduciary duty is an obligation to act in the best interest of another party. For instance, a corporation’s board member has a fiduciary duty to the shareholders, a trustee has a fiduciary duty to the trust’s beneficiaries, and an attorney has a fiduciary duty to a client.” Surely a general counsel must act in the best interest of the company and its shareholders. To miss opportunities that reduce legal costs and improve quality might, over a period of time, breach the fiduciary duty of a general counsel to the client employer. But I am nervous even writing this…..

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