We often hear the term “fiduciary duty,” but what does it mean and to whom does it apply? According to Alabama statutes, a fiduciary is “an agent, trustee, partner, corporate officer or director, or other representative owing a fiduciary duty.”
The word “fiduciary” by definition means “held or given in trust.” Thus, a fiduciary duty requires one to act in the best interests of another person or entity. Investment advisers may have a fiduciary duty to manage their clients’ money responsibly and not to enrich themselves at the expense of those clients. Partners in a business may share a fiduciary responsibility, or duty, not to let the pursuit of their own personal interests outweigh their obligations to the enterprise.
Corporate directors have a fiduciary responsibility to their shareholders to manage with the shareholders’ best interest in mind. Employees have a fiduciary responsibility to their employers not to pursue their own self-interests at the expense of the company, for instance, by stealing trade secrets or by advising a competitor.
A “breach of fiduciary duty” occurs when that trust has been broken. The person who has suffered as a result of that breach has legal recourse to seek and recover damages.
If you feel you have suffered financially, personally, or otherwise because of a fiduciary’s breach of duty and you are located in Birmingham, Alabama, anywhere in the state of Alabama, or in the Florida Panhandle, contact the Clark Law Firm PC today. Attorney John W. Clark IV has helped countless others like you over the years in both commercial and business disputes and will fight for your rights.
A fiduciary is entrusted with the authority to act on behalf of another, such as an attorney aiding a client. Fiduciaries have both a duty of loyalty and a duty of care to the individual or entity with whom they have a relationship.
If you open a retirement account with an agent or a bank, they have a fiduciary duty to care for your investment. Trustees and executors named in any trusts or wills have a fiduciary duty to honor the wishes expressed in the trust or last will and testament. Guardians of minor children also have a fiduciary duty to act in the best interests of the children they are taking care of.
Other examples were given in the introduction, including corporate officers, business partners, and even employees, who owe a duty of loyalty to their employers.
A breach can be said to occur when a fiduciary, whether a person or institution, breaks their duty of care and/or duty of loyalty. An investment banker who places his clients’ funds only in instruments that favor him with high commissions may be breaching his duty to care for his client's financial well-being.
A partner in a business who spends all his time pursuing his own self-interests — running a side business, for instance — rather than helping the enterprise succeed might be considered a breach of fiduciary duty. An employee who sells his employer’s trade secrets to a competitor would also be considered a breach of loyalty.
Any person or entity which is a victim of a breach of a fiduciary duty may suffer reputational damage, which could cost that person or entity future business. The victim may cut ties and seek a different fiduciary, agent, or representative.
Various legal remedies are also available to the victim of a fiduciary breach. If matters go to court, there can be monetary penalties for direct and indirect damages, as well as (potentially) for legal costs. Equitable relief may also be available, such as an injunction against the party responsible.
If matters do result in a lawsuit being filed, negotiations would most likely be the next logical step. However, if negotiations fail the only remedy may be litigation. In litigation regarding a breach of fiduciary duty, the victim must show that:
A fiduciary relationship actually existed
The fiduciary breached its/his/her fiduciary duties
You, the victim and now plaintiff, suffered actual damages
Generally, to prove a fiduciary relationship existed, something documenting that relationship, such as a written agreement — a will or trust are obvious examples — is often essential. You must also be able to show that actual damages were suffered, through financial losses or other damages. A skilled attorney can guide you through all these steps.
If you feel that you’ve suffered from a breach of fiduciary duty as a partner in a business or a shareholder in a corporation — or if you’re being accused of a breach — you should seek the help of a seasoned and knowledgeable business litigation attorney as soon as possible to help resolve the situation.
At the Clark Law Firm PC, business litigation attorney John W. Clark IV has over 15 years of experience assisting individuals and businesses facing issues related to the breach of fiduciary duties. John has degrees in business administration and finance in addition to his Juris Doctor law degree and would be proud to use his extensive knowledge and expertise to help you seek the justice you deserve. If you believe you have been victimized through a breach of fiduciary duties, don’t face these challenges alone. Call or reach out to the Clark Law Firm PC today to schedule a consultation.
Throughout his career, Attorney John W. Clark IV of the Clark Law Firm PC has helped businesses throughout Alabama and the Florida Panhandle settle disputes and get moving in the right direction once again. John stands ready to help you with your breach of fiduciary duty situation. If you live in Birmingham, or anywhere in Alabama or the Florida Panhandle, and are facing a possible breach of fiduciary duty, contact the Clark Law Firm PC today for an initial consultation.