Florida Businesses & Breaches Of Fiduciary Duty
A fiduciary is a person who holds a legal or ethical duty of trust toward a person or entity. It is a foundation of business law, with fiduciary duty used as an effective deterrent to unethical conduct for many actors. However, many do breach their fiduciary duty, whether through accident or malice, and the fallout for a business can be significant. When there is a breach of fiduciary duty, the credibility of the person or business falls into question, which can make it difficult to do business in the future.
A Lack Of Good-Faith Effort & Care
The number one rule for a fiduciary is that the client is owed the best efforts of the fiduciary – that is, their best skills and due diligence must be on display, as well as unflinching honesty and care. A breach of the duty happens when the fiduciary decides to act in their own interests, rather than upholding their client’s, and this can manifest in any number of ways. Arguably the most serious, however, is when a fiduciary misappropriates corporate funds for their own purposes.
In addition to acting in potentially criminal ways, a fiduciary may be in breach simply by failing to live up to the standard required of a fiduciary – that is, by not using all due effort to uphold the client’s interests. It can sometimes be difficult to establish this has actually happened, but sometimes a fiduciary relationship exists by statute – for example, the definition in Florida law mentions an “agent, trustee, partner, corporate officer or director,” and others specifically.
Potential Consequences Are Severe
The duty of care owed by a fiduciary is quite high, because of the potential stakes and damage to a business’s reputation. Because of this, the consequences for a breach are often severe – not only compensatory damages for those damaged (for example, shareholders), but also potentially professional consequences such as losing one’s license or even facing suit for legal malpractice. Punitive damages are even possible if the breach is truly egregious – generally, if the fiduciary acted with malice under Florida law.
If your business, or an employee of your business, has breached their fiduciary duty, it is crucial to attempt to mitigate the fallout as quickly as possible, both for your business’s reputation as well as its finances. The business community is more insular than one might expect, and if your business acquires a reputation for breaching its fiduciary duties, it can have a long-term effect on your bottom line.
Contact A Florida Business Law Attorney
Being able to transact business as a corporation requires a positive reputation for honesty and due diligence. A breach of fiduciary duty that goes unremedied can cause significant financial difficulties going forward. A Florida business law attorney from the Hunt Law Group is ready to answer your questions about this type of suit. Call our office today to schedule a consultation.