When you work with professionals, you expect to receive competent service from someone who adheres to all reasonable standards for the field. Whether it’s a real estate agent whom you asked to help secure a new office location for your business or an investment professional entrusted with the retirement funds of your staff, you need to know that the professional has your best interests in mind.
Although most professionals in critical positions comport themselves ethically, there are some people who do not. Encountering a professional willing to breach fiduciary duty can cost your business a lot of money and could even damage your reputation if it impacts your ability to complete projects or fulfill contracts.
What is fiduciary duty?
The most basic definition of fiduciary duty is the legal obligation of one party to act in the best interests of another. When you retain the services of someone whose position implies a degree of fiduciary duty, you trust that professional to make decisions that benefit you, not that professional or anyone else. Positions that involve fiduciary duty include guardians, investors, agents, attorneys and trustees.
The United States legal system also breaks fiduciary duty down farther. Fiduciary duty implies both a duty of care and a duty of loyalty. In other words, someone entrusted with fiduciary duties in a professional capacity should do the best he or she can to uphold the interests and needs of the other party. That includes avoiding any conflicts of interest and always acting in good faith.
What are common breaches of fiduciary duty?
Sadly, some people look at positions that generally require some degree of fiduciary duty to clients as a way to make money or otherwise profit off that trust. Some people may hide their financial or personal interests in a company, mislead clients about the nature of an offer, deal or purchase, or otherwise attempt to manipulate business decisions for personal gain. Doing so could mean failing to fully disclose details, as fiduciary trust requires. It may also mean failing to act in good faith.
Conflict of interest breaches are common as well. Perhaps the spouse of the professional you trusted runs a business related to the task at hand. The professional in question could attempt to create a scenario that benefits the business of the spouse instead of your company. Examples of this could include agreeing to a real estate sale for a lower price to a friend or family’s business, or accepting a contract bid for a project from someone’s company when other businesses offered more competitive bids.
If you believe that a professional has breached his or her fiduciary duty to your company, you have legal options available. Depending on the circumstances, a lawsuit could be an option, as could a complaint to a state licensing agency or board about the violation.