Cooperation and trust are central to the continued success of many businesses — and when they’re abandoned, they can cause serious problems. Breaches of fiduciary duty are one such instance of broken trust, and they must be dealt with properly.
An experienced business litigation attorney can support businesses that experience these breaches. Here’s an overview of what a breach of fiduciary duty is, several examples, and how business lawyers can help with them.
Understanding Breach of Fiduciary Duty
A breach of fiduciary duty occurs when an individual in a position of trust acts against the best interests of the party they are obligated to support. This betrayal of confidence is more than just poor judgment, as it violates the duty of loyalty and care owed in professional or legal relationships.
Fiduciary responsibilities often arise in business affairs, such as those involving a partnership, corporation, or limited liability company. When these obligations are broken, serious legal liability and damages may follow, leading to lawsuit proceedings and the involvement of a business litigation attorney to pursue or defend against claims of wrongdoing.
Common Examples of Breach of Fiduciary Duty
- A board of directors failing to act in good faith for the shareholdersWhen corporate directors favor their own interests over the beneficiary stakeholders, they violate the obligation to act with loyalty and integrity. This breach can severely damage a company’s reputation and result in significant financial loss for its investors.
- A trustee mismanaging estate assets or committing embezzlementIf a trustee misuses trust funds or engages in embezzlement, it undermines the trust placed in them by the executor and beneficiaries.
- A real estate agent failing to disclose a known property defectAgents who withhold material information breach their fiduciary duties to clients. This deception can result in claims of misrepresentation, fraud, or negligence, especially when the injury or expense is substantial.
- A financial adviser recommending investments for personal gainWhen an adviser places personal profit over a client’s best interest, the conflict of interest breaches fiduciary duty. Such actions often involve risky investment advice that leads to money loss and exposes the adviser to a lawsuit.
- A business partner misappropriating company fundsWithin a partnership, diverting company assets for personal use is a serious violation. This kind of misappropriation may lead to claims of breach of contract, accounting errors, and even criminal charges.
How a Business Litigation Attorney Helps in Fiduciary Disputes
- Identifying and proving breach in courtA skilled business litigation attorney helps collect important evidence to meet the burden of proof required in court. Demonstrating causation between the fiduciary’s conduct and the resulting harm is essential to seek a legal remedy or injunction.
- Advising on the best legal path forwardWhether a case is best pursued through mediation, alternative dispute resolution, or full trial, business attorneys guide clients through every step. Their extensive knowledge of commercial law, contract, and tort claims enables informed decisions that protect the client’s interest.
- Calculating and recovering damagesFrom punitive damages to lost profits, a litigation lawyer helps assess all possible damages that result from the breach. Their role is central in presenting these losses in a class action or commercial litigation context.
- Defending against false accusations of breachWhen wrongly accused, a defendant must rebut allegations with strong evidence and legal arguments. Attorneys can challenge the plaintiff’s claims using confidentiality agreements, the statute of limitations, and other strategic defenses to preserve the client’s position of trust.
- Protecting future business relationships and interestsLegal professionals not only resolve existing disputes but also advise on policy changes and contracts that reinforce fiduciary duties. This proactive approach strengthens limited liability companies, corporations, and employment contracts against future legal liability.
Schedule a Consultation With Garibian Law Offices Today
As we discussed, breaches of fiduciary duty can arise in many forms. Trusting an experienced law firm with insights into fiduciary law is key to handling complex litigation and protecting your business.
At Garibian Law Offices, we specialize in business litigation, contracting drafting, and other fields and will be there to help you resolve any breaches of fiduciary duty you encounter. Contact us today to schedule a consultation and speak with our attorneys about your business.