If you suspect breach of fiduciary duty, look into it and get legal help
In business, being loyal and upstanding is not just the right thing to do; sometimes, it is a legal obligation. For example, if you are a member of a partnership or a shareholder in a corporation, you are owed a fiduciary duty. Simply put, a fiduciary duty is the obligation to give the enterprise and your partners the same level of care and attention in handling their matters, as you would your own. There are three basic fiduciary duties: Duty to disclose, duty to refrain from self-dealing and duty of loyalty.
In carrying out the affairs of the business, fiduciaries (conservators and guardians, as well as personal representatives probating a will are all fiduciaries) one must be certain to avoid conflicts of interest, and fully disclose any potential financial opportunities which might benefit the fiduciary at the expense of the other partners.
Partners must act in the best interests of the partnership, dealing fairly and in good faith with other partners and disclosing to them relevant information, and corporate officers must act in a similar respect toward the company for which they are officers. Breach of fiduciary duty is very serious, and can lead to monetary damages for the aggrieved party.
But how are you to know when a fiduciary duty you are owed has been breached? While you by no means need definitive proof that a fiduciary duty has been breached before reaching out to a business law attorney for legal counsel, there are a few ways you can gather more information if you want to test the preliminary validity of your hunch before retaining a lawyer.
Instincts, paper trail among ways to sniff out breach of fiduciary duty
First and foremost, trust your intuition. Look for telltale signs that someone in a fiduciary position is not being completely forthcoming. Is this person offering advice that is misleading? Constantly derailing the conversation when it turns to certain aspects of the intimate operations of the business? When you notice a fiduciary behaving in a way that falls outside the normal expectations for somebody in that role, it may be an indication that there is something more to your suspicions.
When in doubt, it is almost always a good idea to turn to written records. As a partner or shareholder in a business, you likely have a right to access a great deal of financial information. Make a written request, Then, by looking at ledgers, tax returns, even meeting minutes if available, you can see if some of the numbers simply aren’t adding up or if some of the decisions made at a high level seem to defy logic with no immediately apparent explanation. Also, take a refusal or delay in providing requested information as a sign something is not completely right.
Finally, pay attention to your competitors. Believe it or not, sometimes the best place to look for a breach of fiduciary duty is outside of the organization. If a rival company’s business strategies begin to inexplicably mirror your own to an uncanny extent, someone may have sold confidential information that they should have kept in trust pursuant to their duty to partners or to the company.
Talk to a lawyer to take investigation to the next level
There are many ways to uncover a breach of fiduciary duty, and this list is by no means exhaustive. But, sometimes even a little cursory digging can either confirm or allay your fears, at least superficially, and a more thorough review by a business law attorney can then be initiated if necessary. If you believe a breach of fiduciary duty may have affected you as a partner or shareholder in a business, talk to an attorney today to learn more about the next steps and the potential legal remedies that may be available.