Understanding the rights and responsibilities of a fiduciary

| Sep 28, 2020 | Firm News |

A fiduciary is an attorney, professional or firm who works on behalf of someone else’s best financial or legal interests. This organization or person must uphold ethical and legal responsibilities, act in good faith and preserve the client’s trust.

Review the common roles, rights and responsibilities of an individual acting as a fiduciary in California.

Fiduciary duties

In general, the ethical and legal obligations in this position include:

  • Prioritizing clients’ needs when making financial transactions on their behalf
  • Avoiding conflicts of interest

In addition to these guidelines, specific duties vary depending on the type of fiduciary. Examples of professionals who have fiduciary responsibility include lawyers, corporate executives, corporate board members, estate executors, accountants, insurance agents, bankers, financial planners and money managers.

Fiduciary breach accusations

The Supreme Court governs the strictly controlled fiduciary relationship between an attorney and his or her clients. Attorneys must always act with complete fidelity, loyalty and fairness to their clients to maintain a relationship with the highest degree of confidence and trust. If a client accuses an attorney of breaching fiduciary responsibilities, the attorney faces legal ramifications. He or she may have to pay actual and punitive damages if the lawsuit succeeds.

The plaintiff must prove the existence of a fiduciary relationship, show that the attorney failed to live up to the duties of this relationship and that this failure resulted in financial damages. The defendant can counter that the breach did not occur. He or she can also argue that they attempted to act on behalf of the client in good faith.

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