You expect and need those in positions of trust to handle your business affairs competently and ethically. Unfortunately, though, there’s a real possibility that business assets will be mismanaged, causing harm to your business reputation and your bottom line. These are risks you can’t afford to take, which is why it’s critical that you remain vigilant when it comes to analyzing the actions of those who serve in a fiduciary role.
Those who act in a fiduciary capacity are required to put the interests of the business ahead of their own. They must act with loyalty, care and good faith and avoid self-dealing, dishonesty and conflicts of interest. On its face, that may seem obvious. But when it comes to taking legal action and proving breach of fiduciary duty to protect your business, the matter can become much more complicated.
Steps to take to prove breach of the fiduciary duty in Texas
To succeed on a claim for breach of fiduciary duty, you have to prove certain legal elements. They include that a duty actually existed, there was a breach of that duty, the breach caused financial harm and damages in fact resulted from the breach of duty. Here are some ways that you can go about proving your case and protecting your business:
- Gather documentation: To prove that a duty existed and that it was breached, you’ll likely need to rely on documentary evidence to a certain extent. Employment contracts, partnership agreements, emails and financial statements can all be crucial here. Be as diligent as possible. Communications that may seem innocuous at first glance can wind up proving a key element in your case.
- Obtain witness statements: Breach of the fiduciary involves some sort of wrongdoing. It’s rare that those who breach their fiduciary duty are able to do so in a vacuum. There are probably multiple witnesses, some of whom may be within your business, who observed the wrongdoing in question. Be thorough, then, in speaking to those who worked and interacted with the fiduciary so that you can determine if their accounts can help you show that the fiduciary duty has in fact been breached.
- Consider utilizing a forensic accountant: Fiduciaries who cheat the businesses they work for can be savvy in covering their tracks. This can make it hard to spot mismanaged or missing funds. A forensic accountant can analyze your business’s financial records to determine where money has gone, giving you a better idea if wrongdoing is afoot.
- Develop a timeline: If you suspect that your partner or other individual acting in a fiduciary capacity has engaged in self-dealing, financial misappropriation or carelessness, then it may help to put together a timeline to help pinpoint when the breach occurred. A strong timeline can also give you guidance in your investigation, as it can narrow down when things started to change or go wrong, thus driving you toward the actions that may have constituted a breach of the fiduciary duty.
Act now to protect your business after a breach of the fiduciary duty
There’s certainly a lot at stake when the fiduciary duty has been breached. If you don’t take swift action, then your business’s reputation can suffer significantly, and you can lose a lot of money. That’s why you have to take the matter seriously. We understand that it can be stressful to figure out your next steps, but with help from an experienced business litigation attorney, you may be able to position yourself for the outcome that you want. So, if you have questions about how to handle the specific facts of your case, then now is the time to discuss the matter with your legal team.