Firm-Wide

Breach of Fiduciary Duty

Simply defined, fiduciary duty is an obligation to act in the best interest of another party. For example, a company’s board member has a fiduciary duty to shareholders and a trustee has a fiduciary duty to the trust’s beneficiaries to pay out the appropriate amounts.

Legally speaking, fiduciary duty refers to the relationship between two parties where one is compelled to act exclusively in the interest of the other. The fiduciary party owes a legal duty to the other party – the principal – and extreme care is to be taken to guarantee no conflict of interest arises between the fiduciary and their principal. In most cases, no profit is supposed to be generated from the relationship without explicit, prior consent.

Fiduciary duties exist in a variety of business relationships. Where a party undertakes to act primarily for the benefit of another, that association turns into a fiduciary relationship. A fiduciary, like a trustee, is subject to a higher degree of duty that obligates the fiduciary to act in a diligent and faithful manner to further the other’s best interests.

If you suspect someone has breached their fiduciary duty to you, get legal help as soon as possible. Call the commercial litigation lawyers at Burg Simpson right now at 866-234-7768.

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Types of Fiduciary Duty Relationships

Fiduciary relationships can take many forms. For example, majority shareholders and directors of a corporation owe fiduciary duties to minority shareholders. Business partners owe a fiduciary duty to the other partners. Banks and investment brokers owe fiduciary duties to their customers and clients. Lawyers owe a fiduciary duty to their clients.

  • Trustee and Beneficiary: A trustee and beneficiary fiduciary relationship emerges most often in estate and trust arrangements. The party named as the trustee is the fiduciary, and the beneficiary is the principal. In this relationship, the fiduciary legally “owns” the estate or trust, maintaining control over the assets. But, the trustee is compelled to exercise decisions over those assets that are in the best interest of the beneficiary.

  • Guardian and Ward: In a guardian-ward relationship, guardianship of a minor is transferred to another party. The appointed guardian, then, becomes the fiduciary and is charged with making sure the minor, the ward, is proved suitable care. This can include decisions related to the minor’s education, health care, and daily well-being.

  • Principal and Agent: In a principal-agent relationship, the agent is legally selected to act for the principal without a conflict of interest. A typical example: a group of shareholders performing as principals when electing management or executives to act as agents. Investors also work as principals when hiring investment managers as agents to manage assets.

  • Attorney and Client: The attorney-client fiduciary relationship is a strict one. As the fiduciary, the attorney must act in complete fairness and honesty in all client dealings.


If you have been in any of these relationships and you are convinced you have not received the fiduciary duty that you are owed, you need to speak with a corporate litigation lawyer as soon as possible.

Elements of a Breach of Fiduciary Duty




There are three critical factors when pursuing a claim for breach of fiduciary duty. Plaintiffs must be able to answer the following questions:

  1. Did a fiduciary relationship exist at the time of the disputed breach?

  2. What was the extent of the relationship and the exact duties of the fiduciary?

  3. Finally, which of these duties were breached during the relationship?


The breach could be taking action against the client’s best interest, misappropriating funds, or an undisclosed conflict of interest. In short, you must prove that a duty existed, that duty was breached, and that you were damaged as a result of that breach.




CONTACT THE COMMERCIAL LITIGATION ATTORNEYS at BURG SIMPSON FOR HELP


Burg Simpson has extensive experience in handling breaches of fiduciary duty, both from the plaintiff’s and the defense side. We have litigated numerous cases involving a breach of fiduciary duty. If you are engaged in a dispute that could involve a breach of fiduciary duty, we will help counsel you about your rights and legal obligations, as well as represent you in negotiations, settlement, or at trial. The corporate litigation attorneys at Burg Simpson can help. Call us immediately at 866-234-7768.

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