The Difference Between a Breach of Fiduciary Duty and Professional Negligence

Claims of breach of fiduciary duty and professional negligence can be similar, but it is essential to understand the distinction between the two if pursuing damages.  

This article will help you better recognize which type of claim may be applicable when someone that owes you a legal obligation fails to act in your best interests. 

 

Key Takeaways

 

• A fiduciary acts on behalf of another person(s), putting their clients’ interests ahead of their own. For example, a lawyer and a client. 
• To recover damages due to a breach of fiduciary duty, you must prove 3 key elements including suffering damages as a result.  
• Negligence may occur outside of a fiduciary obligation; however, negligence alone does not automatically constitute a breach of fiduciary duty. 
• It is vital to have an experienced attorney help you distinguish which claim to pursue in your unique case. 
• Stay up-to-date with legal news that may impact you and your company on our law firm blog. 

 

What is Fiduciary Duty? 

 

To better understand fiduciary duty, we must first define a fiduciary. A fiduciary is defined as a person or organization that acts on behalf of another person or persons, putting their clients’ interests ahead of their own. An example of this would be an attorney’s relationship with the client. 

 

Fiduciary duty is defined as the good-faith legal obligation a fiduciary owes a party as specified by their relationship. This relationship is formally established through a contract or informally through a personal connection. To elaborate on our example, the fiduciary duty of the attorney would be the agreement to represent the client’s best interest. 

 

Further examples of a fiduciary relationship include an employer and employees, a trustee and a beneficiary, a healthcare provider and a patient, or a financial institution and its clients. 

 

Common Forms of Fiduciary Duties 

 

1. Duty of Good Faith – The fiduciary is required to make honest and fair decisions on behalf of the client or both parties. 
2. Duty of Care – The fiduciary needs to make decisions for their client that are reasonably prudent, avoiding any injury or damages to the client. 
3. Duty of Loyalty – The fiduciary shall always represent the client’s best interests, avoiding any conflicts of interests. 

 

Learn More > Professional Liability and Ethics

 

What is a Breach of Fiduciary Duty? 

 

A breach of fiduciary duty is when the fiduciary fails to fulfill their duties or obligations. The client has a right to expect that the fiduciary is acting in their best interest; therefore, if a breach arises and results in damages, the fiduciary can be held liable in civil court.  

 

To recover damages due to a breach of fiduciary duty, you must prove these elements: 

 

1. The defendant acted as a fiduciary of the plaintiff concerning the breach 
2. The defendant breached that duty due to the plaintiff 
3. The plaintiff suffered damages 

 

What is Professional Negligence? 

 

Professional negligence is the failure of a professional to fulfill the obligations that they were hired to perform.  Professional negligence claims are also commonly referred to as malpractice claims. Although this sounds similar to a fiduciary duty, professional negligence is based on the expectation of “reasonable care.” Reasonable care is defined as:  

 

The degree of caution and concern for the safety of the self and others an ordinarily prudent and rational person would use in the same circumstances. 

 

 In simpler terms, the professional is expected to adhere to a similar standard of care as other related professionals would. Compared to fiduciary duty, professional negligence is not based on a legal obligation, but rather an expectation of professional standards. 

 

Winning a Negligence Case 

 

To win a negligence case, the plaintiff must prove four elements illustrating that the other party acted negligently: 

 

1. Duty – The plaintiff was owed a duty of care by the defendant 
2. Breach – The defendant breached the duty of care owed to the plaintiff 
3. Causation – The defendant’s actions caused injury to the plaintiff 
4. Damages – The plaintiff received harm as a result of the defendant’s actions 

 

Professional Negligence vs. Breach of Fiduciary Duty 

 

Negligence may occur outside of a fiduciary obligation; however, negligence alone does not automatically constitute a breach of fiduciary duty. While similar claims, they typically have differing statutes of limitations, penalties, and damage awards.  

 

It is vital to have an experienced attorney help you distinguish which claim to pursue, a professional negligence claim, or a breach of fiduciary duty. To win your case and maximize the damage award, we will explore the best claims applicable to your litigation matter.    

 

We have experience prosecuting and defending breach of fiduciary duty, professional negligence, and legal malpractice claims.  If you think your business dispute involves these claims, contact The Frazer Firm today or call our Jupiter, FL business and business litigation attorneys at 561-295-1551.