The Harm in the Fiduciary Myth

Authors

Kelli Alces Williams

Abstract

Fiduciary law has become the doctrine of choice in scholarship aiming to protect vulnerable parties from powerful decisionmakers. But fiduciary law cannot fill all the gaps in those impersonal, public relationships because the beneficiary class is large, disparate, and widely dispersed. Public leaders and decision makers cannot zealously pursue the interests of all parties vulnerable to their decision making and they are often driven by various personal interests in choosing which set of beneficiary interests to prioritize. The persistent myth that leaders of large groups are fiduciaries and that fiduciary obligation is the answer to all power imbalance problems harms the very people it claims to protect.

This Article is the first to argue that the fiduciary myth is harmful. The myth is most prevalent in corporate governance, in the notion that corporate directors owe fiduciary duties to the corporation and its shareholders. The move to replicate corporate fiduciary duties in other settings is misguided because the fiduciary myth undermines, rather than promotes, ethical director behavior in corporate law. It would do even worse in other public relationships. Trustworthiness, not fiduciary loyalty, is the character trait the law should work to inculcate in public leaders and decision makers. Fiduciary doctrine obscures trustworthiness. The threat of fiduciary litigation makes the supposed fiduciary relationship adversarial. It sets the parties at odds with each other, when the goal is supposed to be to align their interests and to encourage empathy on the part of those in power.

Attempts to adapt fiduciary obligation to the contexts of other public relationships can only replicate the harms of the fiduciary myth. Suggestions to export fiduciary principles are well-intentioned. But good intentions alone do not effective solutions make, and such suggestions often do more harm than good when they over-promise and underdeliver.

Rights

© 2024 Brigham Young University Law Review

Recommended Citation

Kelli Alces Williams, The Harm in the Fiduciary Myth, 49 BYU L. Rev. 1465 (2024).
Available at: https://digitalcommons.law.byu.edu/lawreview/vol49/iss5/9