Breach of Fiduciary Duty

Chicago Breach of Fiduciary Duty Attorney

Effective Legal Representation for Illinois Businesses and Individuals

When acting in the interests of someone else, whether as an employee of a firm, partner in a business, or a member of a corporate board of directors, you have an obligation to behave responsibly. A failure to do so may constitute what is called a breach of fiduciary duty. When thousands or even millions of dollars are at stake, breaches of fiduciary duty are taken extremely seriously and often lead to litigation.

If you are an individual or business accused of intentionally or unintentionally failing to live up to your fiscal obligations, the Kenny Law Firm can help. Our team understands how to vigorously advocate for clients facing litigation from breaches and can work to resolve your case as quickly as possible. We can also assist small- to medium-sized businesses explore their options when an employee, partner, or director’s breaches create substantial liabilities.

Contact our Chicago fiduciary duty attorneys online or call (312) 647-2483. Your initial consultation is free of charge! Reach out to us today for trusted legal guidance.

Understanding Breach of Fiduciary Duty in Illinois

A breach of fiduciary duty happens when someone has a responsibility to act in the best interests of another party but fails to do so. A lawsuit can help an impacted firm or group to recover damages for the injuries they sustained as a result of the breach of fiduciary duty.

Breach of fiduciary duty examples:

  • Failure to account for company funds
  • Hiding important information from partners
  • Profiting at an employer's expense
  • Sharing an employer's trade secrets
  • Taking a business opportunity from the partnership for an individual's benefit

Key Relationships Involving Fiduciary Duties

There are many types of relationships involving fiduciary duty. Below are some common examples:

  • Controlling stockholder and a company
  • Investors and fund managers
  • Shareholders and executives
  • Employee and employer
  • Trustee and beneficiary
  • Guardian and minor child, or ward
  • Attorney and client

Proving a Breach of Fiduciary Duty in Court

If you are filing a breach of fiduciary duty lawsuit, you will need to demonstrate that the breach occurred in order to recover damages.

Proving that a breach of fiduciary requires the elements below:

  • Duty. A breach cannot occur between just any two people or entities. There must have been a clear fiduciary duty established. For example, in purposes of employment litigation, fiduciary duties exist between employers and employees, between partners in a company, and between a corporation’s board of directors and their shareholders.
  • Breach. You must be able to clearly demonstrate that the party with responsibility has done something contrary to the other’s interests.
  • Damages and Injuries. The breach must result in material loss, financial or otherwise, in order to be litigated.
  • Causation. A link between the breach and the injuries sustained must be established. Any injuries unrelated to the breach will not be eligible for damage recovery.

Consult with a Trusted Chicago Fiduciary Duty Litigation Lawyer

Breaches of fiduciary duty are not often obvious or open and shut. If someone is engaged in suspicious behavior and you have questions about what constitutes a breach, our firm can help answer your questions and review your legal options.

Continue below to learn when a case of breach of fiduciary duty may require litigation and examples of breaches between employees, employers, and business partners.

When Does Breach of Fiduciary Duty Require Litigation?

Injuries sustained in a serious breach of fiduciary duty can result in lasting or even permanent damage to a firm. In addition to direct financial losses stemming from theft or misappropriation of funds, other types of breaches of duty can involve benefitting competitors or robbing a company of its competitive advantages.

Breach of Fiduciary Duty Between Employees and Employers

Many breaches of fiduciary duty occur between employees and their employers. Employees have an innate fiduciary duty as an agent of the employing firm. The specific obligations of this relationship are sometimes expounded on in an employment agreement, but in practically every scenario, the act of being hired constitutes an establishment of fiduciary duty in the eyes of the law. Independent contractors and vendors that are formally hired by the firm are also considered agents and thus have legal fiduciary duties.

An employee can breach their fiduciary duties by:

  • Misappropriating or failing to adequately hold company funds
  • Stealing and disseminating trade secrets, intellectual property, and other proprietary information
  • Failing to adequately complete job responsibilities
  • Acting to benefit a competitor
  • Abusing company time and resources to individually profit

Do Employers Have a Fiduciary Duty to Employees?

Employers do not typically have a fiduciary duty to employees, except in the case where the employee is also a shareholder in a closely held corporation or a partner in a partnership or if a claim is appropriate under the ERISA (Employee Retirement Income Security Act) statutes.

Breach of Fiduciary Duty Between Business Partners

Business partners in a firm have a fiduciary duty to each other and their company. Breaches of fiduciary duty can still occur between them if one or more partners behave in such a way that violates this obligation and harms the business. Some companies will run into trouble when a specific partner continuously fails to act in its best interest or actively exploits its resources.

A partner can breach their fiduciary duty by:

  • Abusing, exploiting, siphoning, or mishandling company funds and resources
  • Neglecting to disclose conflicts of interests or other pertinent information to other partners
  • Engaging in self-dealing
  • Damaging the business’s reputation through incompetence, inappropriate, or unlawful behavior

When a firm becomes incorporated, a board of directors is elected by shareholders to shepherd the company. These board members have a fiduciary duty to their shareholders and must act in the business’s best interest. When board members fail to live up to their responsibilities, shareholders can potentially pursue legal action to oust bad-faith actors.

A corporate director can breach their fiduciary duty by:

  • Voting to unreasonably enrich the board
  • Pursuing unlawful acts to purge minority, dissenting shareholders
  • Restricting shareholders’ access to records and financial information
  • Restricting shareholders’ voting rights
  • Refusing to pay dividends when they are warranted

Contact Kenny Law Firm Today at (312) 647-2483

Each breach of fiduciary duty case is different and will require a unique, carefully considered approach. Whether you have been accused of breaching your duties or need to pursue legal action yourself, our Chicago breach of fiduciary duty attorney at the Kenny Law Firm can review the facts of your case, advise you on your rights, and recommend what legal steps to take.

Schedule a free initial consultation to explore your options with our team. Call (312) 647-2483 or contact us online to get started.

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