Being accused of a breach of fiduciary duty represents a threat to professional reputation and standing, as well as the potential for legal liability. You must respond to this type of claim with a well-thought-out defense strategy backed by legal expertise.

Several different defenses are commonly used in response to a breach of fiduciary duty. These include:

• Good faith – The simplest defense offered to an accusation of breach is to argue that you acted in good faith. Mistakes and oversight can happen without fraudulent intent, malice, or being motivated by personal gain. A good faith argument asserts that there was no intention to harm and that even though your actions resulted in a negative outcome, they were reasonable under the circumstances.
• Compliance with contractual terms – As fiduciary, you can point to the terms of the contract governing your role, which allows for discretion. The relevant contractual term is explicit authority; if that language is in your contract, you have a strong argument that you did not violate your duty no matter what the outcome of your actions.
• No actual harm – As fiduciary, you are vulnerable to a claim of breach of duty even where there is no actual harm or damage. If this is the case, you may have a potent defense, as a plaintiff must show actual harm to obtain damages. If there is no financial loss or no causal link between your actions and the alleged harm, you are likely to prevail in a legal action.
• Ratification or consent – You may be able to argue that your accuser was informed of the risks and potential outcomes of your actions and consented to them. If this is the case, they may have waived their right to claim a breach.
• Statute of limitations – Some claims of breach are filed too long after the action that they are filing a claim over.
• Business judgment rule – Corporate fiduciaries can invoke this rule, which protects them from liability if their decisions were made in good faith and with the belief that they were in the organization’s best interest rather than out of personal interest.
• Lack of fiduciary duty – Some fiduciaries can argue that they had no duty and that the plaintiff has overstated their responsibility. This is particularly effective where the terms of the relationship are ambiguous, not documented, and no special relationship has been legally established. It is also applicable when the fiduciary’s responsibilities were more limited in scope than the claim asserts.
• Advice of counsel or experts – As fiduciary, you can defend your actions by acting on the advice of legal counsel or other experts. This can demonstrate that your actions or decisions were reasonable and prudent.

If you are being accused of a breach of fiduciary duty and need legal counsel, we are available to help. Contact us today to set up an appointment.