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Breach of Fiduciary Duty

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Fiduciary duty can be described as a legal obligation to act in someone else’s best interests. For example, a lawyer should act in the best interest of their client, while a trustee should manage trust assets for their beneficiary in an ethical way.

If there’s a fiduciary breach, this means the person has violated ethics and laws, such as if a trustee is misappropriating assets or a CEO doesn’t make decisions that are in the company’s best interests.

When a fiduciary breach occurs, you want to act quickly and diligently to prevent it from becoming a dispute. A lawyer from ContractsCounsel, an online legal network that connects lawyers with clients, can help you to navigate the situation and help you prove the fiduciary breach.

Read the rest of the article to understand fiduciary duties, different types of fiduciary breach, how to deal with it, and how a lawyer can help you find a legal remedy for it.

What are Fiduciary Duties?

Fiduciary duties vary depending on the relationship of the parties and what’s required of them. Generally, they include the following:

  • Duty of Care: Sourcing information to make legally sound and ethical decisions.
  • Duty of Loyalty: Acting in the beneficiary’s best interests, such as not getting involved in situations where there’s a conflict of interest.
  • Duty of Good Faith: Acting within the law to assist the beneficiary
  • Duty of Confidentiality: Keeping the beneficiary’s information private and confidential at all times.
  • Duty of Prudence: Administering matters in a professional way.
  • Duty to Disclose: Disclosing all information that might affect how they carry out their responsibilities.

What Steps are Involved in a Fiduciary Breach?

A fiduciary breach occurs when someone has the duty to work in the other party’s best interests but doesn't. There are four elements you need to cover in case of a fiduciary breach:

  • Breach of duty. This is when the individual has breached their responsibility and hasn’t carried out their duties.
  • Fiduciary relationship. The individual news to have been in a fiduciary role.
  • Damages. The other party must show that they’ve experienced damages because of the breach, such as financial losses.
  • Causation. There must be proof that the individual is directly involved in the damages the other party has experienced.

What are Legal Remedies for Fiduciary Breaches?

Dealing with a breach of fiduciary can have several consequences, such as financial losses and legal expenses. There are several legal solutions for proving a breach. These include the following:

  • Monetary damages. If you’ve experienced financial losses from the breach, the other party will have to compensate you.
  • Disgorgement of profits. This is when the fiduciary has to release any profits they wrongfully benefited from by breaching their duties.
  • Rescission. To deal with the breach, the contract that caused it is terminated.
  • Injunctive relief. Setting up a court order so that the fiduciary stops their activities.
  • Removal. The court could declare that the fiduciary needs to be removed from their position, such as a trustee.

What Should You Do if You Suspect a Fiduciary Breach?

If you think you’re involved in a fiduciary breach, there are some things you can do to protect yourself and your assets.

Keep a Record of Activities

Gather evidence, such as in the form of emails, contracts, and financial records, that show the fiduciary isn’t acting in good faith. You’ll need this evidence to prove the breach should you go to court.

Review Any Contracts

If your fiduciary relationship is governed by a contract, review it to see what it says about breaches and dispute-resolution processes. These will help you know how to navigate the situation in a legal way.

You should post a project on ContractsCounsel to connect with a lawyer who can help you review your fiduciary duty contracts. They will check it for any loopholes and red flags, while explaining confusing or vague terms.

Understand the Fiduciary’s Duty

Know what responsibilities the fiduciary had in the contractual agreement or working relationship. This will help you gauge if their behavior is a breach or not. For example, if they have made an honest mistake and there’s no negligence, that’s not a breach.

Use Alternative Dispute Resolution (ADR) Methods

If there’s a dispute regarding the breach, you should try to settle it out of court. ADR methods include mediation and arbitration, both of which are less time-consuming and costly than taking the disagreement to court.

  • Mediation is when you hire a neutral, third-party mediator who oversees negotiations between you and the fiduciary. They encourage constructive communication so that you can reach an agreement you’re both happy with.
  • Arbitration involves hiring a neutral third-party arbitrator. Both parties present evidence to the arbitrator, who will consider both perspectives and then deliver a final, binding decision on how they can resolve the issue.

If you can’t resolve the dispute with ADR, your case might go to court. During litigation, you’ll have to present evidence and should you be successful, there are different types of relief that could be available to you. These include:

  • Monetary compensation. This is a common legal solution. The fiduciary will be ordered to pay damages for their losses or return money they’ve previously gained from the plaintiff.
  • Equitable remedies. These include injunctions, rescissions, and profit disgorgement.

Decide the Fate of the Working Relationship

If you’re involved in a breach that you’ve resolved, you need to think about the fate of the fiduciary relationship. If you’re struggling to trust him, you might want to terminate your agreement and relationship.

Consult a Lawyer for Fiduciary Duty

Fiduciary duty breaches can be complicated and technical, so it’s worth hiring a lawyer with experience in these situations. They will review your documents and evidence, and let you know if you have a valid claim.

Here’s how a lawyer can help you deal with a fiduciary duty breach.

  • They’ll provide an in-depth explanation of all laws and regulations that apply to you.
  • They’ll help you explore your options and devise a strong strategy for navigating the breach.
  • They’ll protect your rights and assets.
  • They’ll represent you in court during litigation.

Contact ContractsCounsel for a fiduciary breach

If you find yourself in a fiduciary breach, connect with vetted, experienced lawyers from ContractsCounsel. You’ll work with skilled lawyers with years of experience in assisting clients with fiduciary duty breaches.


ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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