Understanding Fiduciary Duties for Corporate Businesses in Dallas
A Fiduciary Duty: A Requirement of Trust for Business and Corporate Matters3 min read
At its core, a fiduciary duty is a requirement of trust that is placed on certain individuals when dealing with a business or corporate matters. Any person or entity with the legal standing to serve in the role of a fiduciary has an obligation to act in the best interests of the person or entity they are entrusted to assist. This requirement holds true even when the fiduciary’s interests may conflict with the interests of the person or entity they are representing. In Dallas, this is especially important to grasp, as state and local laws govern fiduciary responsibility in certain industries.
When seeking advice about fiduciary matters, it can be helpful to consult with an experienced lawyer to ensure that both proper protocol and ethics are observed. UpCounsel has a network of experienced lawyers who understand the nuances of local regulations in Dallas, and who can guide you through the process of fulfilling your fiduciary duties with confidence.
In this article, we will discuss some of the most critical aspects of the fiduciary duty, and what it means for those who must serve in such a capacity in Dallas.
What is Fiduciary Duty?
A fiduciary duty is an ethical relationship bound by law that stipulates that one person or entity acts in the interest of another. Generally, this duty requires that the fiduciary act in good faith and in the best interest of the person or entity they are serving. The fiduciary’s client or party may be an individual, a company, or even a charitable organization.
The fiduciary is responsible for delivering the highest quality of service to the client, which typically includes discretion, loyalty, good faith, trustworthiness, and care. Unsurprisingly, this can lead to conflicts of interest. For example, if the fiduciary also serves as an executor of a will, the economic interests of the deceased person need to supersede the fiduciary’s interests.
What is the Scope of a Fiduciary’s Obligations?
In most cases, a fiduciary is required to act in the best interests of the client, to avoid conflicts of interest and self-dealing, and to provide timely, accurate, and honest advice. The fiduciary must be ethical, competent, and represent their client’s interests fully and with no conflicts of their own. A fiduciary must also stay up-to-date with legal and financial information relevant to their client and be capable of taking a broad view of the circumstances and timing for a given decision.
It is also important to note that a fiduciary obligated to serve the client’s best interest means that the fiduciary should provide free advice whenever possible. They should not take advantage of the fiduciary relationship to make the client do something that a generally prudent person would not do.
Who May be Subject to a Fiduciary Duty?
In Dallas, a fiduciary duty may be established for a wide variety of professionals and entities. These include, for example, lawyers, court-appointed executors, trustees, financiers, venture capitalists, private investors, corporate officers, directors, and business advisers.
In some cases, the law imposes an automatic fiduciary duty, such as when a board of directors of a corporation serves in the interest of the shareholders. In other cases, a fiduciary relationship may be formed through the use of contracts or through explicit legal designation such as through court orders.
Can Breach of Fiduciary Duty Lead to Legal Action?
Yes. If a court determines that a fiduciary has breached their duty of trust, a plaintiff can seek a legal remedy for the breach of duty. To do so, the plaintiff must show specifically that the fiduciary has failed to take reasonable steps, or is otherwise acting out of bad faith with respect to their duty. If it is found that the fiduciary has acted in bad faith, they may be liable for damages.
How to Find a Fiduciary Attorney in Dallas
Business attorneys who understand the complexities of the fiduciary duty are invaluable resources. To that end, it can be immensely beneficial to consult with an experienced Dallas lawyer who is well-versed in this area of the law. This may require a bit of research to find the right lawyer.
At UpCounsel, we have access to a network of experienced, highly rated lawyers who can provide ethical advice regarding the fiduciary responsibility. Our attorneys also understand the complexities of Dallas regulations, so you can trust that you are receiving the best counsel possible. Our online profiles display ratings and reviews of any of our lawyers, allowing you to make an informed decision about who to trust with your business matters.