Fiduciary duty refers to the duty or legal obligation of one party – known as the fiduciary – to act in a way that benefits another. Often these benefits are financial in nature, and the fiduciary can be anyone in a position expected to act in the business’s best interest, such as an employee, contractual business partner, or a financial advisor. A breach of fiduciary duty is therefore an action taken by a fiduciary in their own self-interest or against the interests of the business to which they have said duty. Here are some examples of fiduciary relationships:

  • Corporate officers have a fiduciary duty to shareholders
  • Accountants have a fiduciary duty to their clients
  • Legal guardians has a fiduciary duty to their wards
  • Executors have a fiduciary duty to their clients and their  heirs
  • Lawyers have fiduciary duties to their clients

What Might a Breach of Fiduciary Duty Look Like?

Because a fiduciary duty can be held by anyone with a significant and trusted relationship with a business, there are a number of different types of fiduciary duty breaches. For example, if an employee were to leave their place of business to form a competing business and – in doing so – poached other employees from the original business, or took with them proprietary knowledge for the purpose of competitive advantage, this would be to the detriment of the original business and a breach of fiduciary duty.

Is Every Employee Automatically a Fiduciary to Their Employer?

An employee is not automatically considered a fiduciary to their employer by default. In order for the employee of a business to be considered a fiduciary, they are often required to be in a high-ranking position within the business or otherwise endowed with a significant amount of trust or responsibility over the course of a certain length of time.

What Should I Do if I Think My Business Has Suffered Due to a Breach of Fiduciary Duty?

If you think your business has been harmed by a breach of fiduciary duty, your next step should be to speak with a litigation lawyer who can take a serious and objective look at your relationship with the party in question. A law firm familiar with fiduciary duty and the responsibilities that come with it can identify whether the party in question would be legally considered a fiduciary and whether their actions would constitute a breach of fiduciary duty to you and your business. If a breach of fiduciary duty is suspected to have taken place, a law firm such as ours can walk you through the process of taking any and all immediate and necessary legal actions needed to provide your business with appropriate reparations and protect it from any further damage.