Breach of Fiduciary Duty Lawyer in Troy, MI

Do you know or suspect that someone hasn’t lived up to their fiduciary duty to you, or are you defending against claims of breaching your fiduciary duty? Figuring out what to do next can be challenging, but August Law is here to help. Our team offers a wide range of legal services, clear, straightforward advice, and unwavering support to protect your interests. We aim to simplify the legal process for you and fight for a favorable outcome. 

What is a Fiduciary Duty?

A fiduciary duty is a legal obligation to act in the best interest of another party. The party who owes this legal duty is called a fiduciary, while the party whose interests the fiduciary must protect is called the principal. Fiduciary relationships are important in areas like law, finance, and real estate, where trust and reliance on expertise are paramount.

In essence, fiduciary duties require fiduciaries to put their principals’ interests above their own, ensuring their decisions and actions benefit their principals. This means a fiduciary must act with utmost good faith, loyalty, and honesty toward the principal. They must never use their position or the information they have for personal gain at the principal’s expense.

Common Types of Fiduciary Relationships

Below are examples of common types of fiduciary relationships, illustrating how these duties play out in various contexts:

Lawyers and Their Clients

In lawyer-client relationships, lawyers act as fiduciaries for their clients. They must put their clients’ interests above their own, protect client confidentiality, and avoid conflicts of interest. For instance, a lawyer cannot represent a new client if doing so might harm the interests of an existing client. This duty ensures that clients can trust their lawyers with sensitive information and rely on them for impartial legal advice and advocacy.

Trustees and Beneficiaries

Trustees manage assets or property for the benefit of beneficiaries. A trustee must solely focus on the beneficiaries’ interests, following the terms of the trust without regard for personal gain. For example, let’s say someone sets up a trust to provide for their children. The trustee must manage and distribute the trust assets in accordance with the trust’s instructions, prioritizing the children’s needs and welfare above all else.

Corporate Directors and Shareholders

Corporate directors owe their company’s shareholders a fiduciary duty. They must make decisions that benefit the shareholders, not their personal interests. This includes making prudent investments, avoiding unnecessary risks, and acting transparently. Directors must guide the company toward profitability and shareholder value, ensuring their actions align with the company’s success and shareholder interests.

Financial Advisors and Their Clients

Financial advisors, including investment advisors and brokers, have a fiduciary duty to their clients. They must recommend investments and financial strategies that best meet their clients’ goals, taking into account risk tolerance and financial circumstances. Advisors must avoid conflicts of interest, such as recommending products that offer them higher commissions, but that might not be in the client’s best interest.

Main Types of Fiduciary Duties

Fiduciaries must follow certain rules in their actions and decisions. These rules, known as fiduciary duties, require them to act in the best interests of those they serve at all times. Let’s look at the main types of fiduciary duties:

Duty of Care

This duty requires fiduciaries to make decisions with the same care an ordinarily prudent person would take in a similar position and under similar circumstances. It means they must thoroughly consider the information and potential consequences before making decisions. For example, a company board member must research and understand the implications of a decision before voting.

Duty of Loyalty

The duty of loyalty requires fiduciaries to always put the interests of those they serve ahead of their own. They must not use their position to gain personal benefits or favor others at the expense of their obligations. For instance, a lawyer must prioritize their client’s interests over their own, even if it means missing out on personal or financial benefits.

Duty to Act in Good Faith

This duty requires fiduciaries to act honestly, without deceit or malice, and in a manner they genuinely believe to be in the best interests of those they represent. For example, if a trust invests in stocks, the trustee should diligently research and select investments with growth potential rather than simply choosing options that are convenient for them.

Duty to Avoid Conflicts of Interest

Fiduciaries must avoid situations where their personal interests could conflict with their duties. They should not engage in activities or pursue interests that compromise their ability to act in their principals’ best interests. For example, a trustee must not invest trust funds in a business in which they have a financial stake.

Duty of Confidentiality

This duty obliges fiduciaries to keep sensitive information confidential. They must not disclose or use information they acquire through their positions for personal gain or in a way that could harm those they serve. For instance, a lawyer must not disclose a client’s personal health information without their consent, except in legally permitted circumstances.

Breach of Fiduciary Duties

If a fiduciary breaches their fiduciary duty by acting against the interests of their principal, they can face legal action. Principals can sue fiduciaries to hold them accountable for their actions. For instance, if a financial advisor makes investment decisions that benefit themselves over their client, the client can sue. In their lawsuit, they can ask the court to order the advisor to pay damages for any losses resulting from the breach.

Courts can also force fiduciaries to return any profits they made from their wrongdoing. This is called disgorgement. For instance, if a company executive uses inside information to profit from stock trades, they might have to return the profits.

In some cases, courts might order what’s known as equitable remedies. This could involve compelling the fiduciary to take a specific action, such as transferring property back to the rightful owner. It could also involve prohibiting them from acting in ways that could further harm the beneficiary.

Additionally, fiduciaries found guilty of breaching their duties may be required to pay punitive damages to those they harmed. These are extra costs, on top of compensation payments, meant to punish the fiduciary and deter others from similar misconduct.

Legal Representation in Breach of Fiduciary Duty Cases

Having a lawyer is essential in cases involving breach of fiduciary duties, whether you’re bringing the charge or defending against one. Your attorney can collect important evidence, argue your case effectively in court, and handle challenges as they arise. For those accusing someone of a breach, a lawyer can prove the violation and demand accountability. For those facing breach-of-duty accusations, a lawyer can prepare tailored defense strategies and mitigate potential consequences. In any scenario, a breach of fiduciary duty attorney can fight for your rights and interests, increasing your chances of a favorable result.

Contact a Breach of Fiduciary Duties Lawyer

Ready to take the next step in addressing your fiduciary duty concerns? Contact us online. We’re ready to provide clear answers to all your questions and discuss how our team can deliver the results you need.