Fiduciary loyalty is generally considered a valuable part of the law. Yet some of the very features of loyalty that make it valuable also encourage behaviors harmful to beneficiaries, third parties, or society as a whole. Examples include the corporate director whose concern with shareholder wealth maximization leads to considerable environmental harm and the skillful attorney whose zealous representation undermines justice between the parties. In short, actions that are motivated by good-faith fiduciary loyalty may be undesirable in individual cases. I will describe such cases as cases of pernicious loyalty. Outside the law, pernicious loyalty is often limited by features of extralegal loyalty itself. For example, the ‘alarm bells’ that Philip Pettit describes as a trigger for moral reasoning may help constrain otherwise harmful loyalty between friends. Unfortunately, such responses do not always translate well to legal settings. This Article considers the nature of pernicious loyalty together with potential legal responses to its excesses.
Gold, Andrew S, Pernicious Loyalty (March 9, 2021). William and Mary Law Review, forthcoming.