Gaithersburg, MD Fiduciary Duty Litigation Lawyers

Attorneys Addressing Fiduciary Duties in Business Litigation in Gaithersburg, Maryland

Whether a business is a family-run company, a small partnership, or a larger company structured as an LLC or corporation, it will often be built around a shared vision. It will often depend on trust among the people running it. When one owner or manager is given control over company funds, strategic decisions, or confidential information, the other stakeholders need to rely on that person to protect their best interests. Unfortunately, that trust may be broken, and a person may take actions that have put other stakeholders or the entire business at risk of financial losses or other issues.

When a person violates the trust that others have placed in them within a business, this may be considered to be a breach of their fiduciary duty. At Fox & Moghul, our business litigation attorneys can help business owners, partners, and other parties involved in businesses determine how to address these issues. We can provide guidance on how litigation may address a breach of fiduciary duty and protect the investments that our clients have made in their businesses. We can also provide representation for clients who have been accused of breaching their fiduciary duties and work to resolve disputes with their business partners or other parties.

In cases involving breaches of fiduciary duty, complex financial records and other information may need to be reviewed, and a strong understanding of how these cases are handled can help ensure that disputes will be resolved effectively. Our lawyers have the experience needed to address these matters and achieve success for our clients. We have been awarded for the high-quality services that we provide in litigation and other matters, and our record of success speaks for itself. Our team members are leaders in this field, and we work to pass our knowledge on to other attorneys through educational seminars.

Fiduciary Duties Owed to a Business and its Stakeholders

A fiduciary duty exists when a person is given authority to act on behalf of others in a business. They are expected to act in ways that benefit the business rather than focusing on the personal advantages of the decisions they make. Business partners owe fiduciary duties to one another. Members of LLCs with management authority owe fiduciary duties to the company and its other members. Corporate officers and directors owe these duties to a corporation and its shareholders. Majority or controlling shareholders will also owe duties to minority shareholders, and they will be restricted from taking actions that could unfairly disadvantage those who have a smaller stake in a business.

Fiduciary Obligations

One of the most important fiduciary duties is the duty of loyalty. A partner or another person who has control of a business's operations will be required to put the interests of the business ahead of their personal financial gain. A person may breach this duty when they have a conflict of interest and take steps to enrich themselves or secure other personal advantages at the expense of the business and other partners.

A fiduciary will also have a duty of care, which will require them to act in reasonable ways and use sound judgment when making business decisions. Acting without fully considering the available information or taking steps to address potential risks could lead to financial losses, and a person may be held responsible for their failure to use good judgment.

Common Breaches of Fiduciary Duty

Some examples of situations where a person may commit a breach of fiduciary duty include:

• A managing partner may direct a business to purchase supplies or services from a company the partner owns at prices that are higher than the rates offered by other companies. A person's failure to disclose this conflict of interest to other partners may lead them to take action to address this issue.
• A corporate officer may learn about an opportunity to acquire a business through their role at a company, but they may choose to pursue the deal personally, preventing the corporation from benefiting from the acquisition. Because the person enriched themselves at the expense of the business, other stakeholders in the corporation may take action against them.
• An LLC manager may make major financial commitments on behalf of the company without reviewing the proper financial information or consulting with other members. When a person's decisions have resulted in losses that would have been prevented if the proper judgment had been used, they may be held responsible.
• A majority shareholder in a corporation may stop holding shareholder meetings and withhold financial records from minority shareholders. When these types of actions have effectively shut minority shareholders out of having a meaningful role in the business, they may take action to address the ways they have been affected.

How Business Litigation Can Address Breaches of Fiduciary Duty

A business's stakeholders may take steps to resolve disputes informally by negotiating agreements between partners or other parties, arranging for a business buyout, or making changes to a business's ownership structure and the responsibilities of different parties. However, if these issues cannot be resolved through negotiations or agreements, litigation may be necessary to hold the responsible party accountable and protect a business.

Fiduciary duty litigation will typically begin when one party sends a complaint to the person who has been accused of breaching their fiduciary duty. This complaint will describe a person's specific conduct, showing that a breach of fiduciary duty occurred and that it led to harm to the business or its stakeholders. In some cases, a claim may be filed directly by a partner or shareholder who has suffered harm, or a derivative action may be filed on behalf of the company itself.

In many cases, courts will order monetary damages, requiring a person to compensate a business or its stakeholders for the financial harm that occurred. During litigation, courts can also impose requirements on a person, preventing them from taking any actions that could harm a business or its stakeholders. The goal of fiduciary duty litigation will usually be to put the business and other partners or shareholders in the position they would be in if the breach had not occurred.

Contact Our Gaithersburg Fiduciary Duty Litigation Attorneys

A breach of fiduciary duty can damage a business from the inside. It can also lead to strained relationships among a business's owners and shareholders while damaging the company's reputation and jeopardizing its financial stability. At Fox & Moghul, our attorneys can help our clients address the harm done by breaches of fiduciary duty and make sure the proper steps are taken to ensure that a business can operate successfully in the future. We will work to protect our clients' interests and help them resolve disputes effectively. Contact our Gaithersburg, MD fiduciary duty lawsuit lawyers at 301-409-5316 to set up a consultation.