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A Theory of Calibrated Fiduciary Duties in Firms
At the heart of the laws of firms lies an unsolved enigma: Although all owners presumably desire maximal profit irrespective of the form of firm, the rules of fiduciary duty diverge, as if the law seeks discretely disparate managerial behavior and thus qualitatively different business outcomes for each form of firm. The differences are not […]
Robert J. Rhee is the John H. and Marylou Dasburg Professor of Law at the University of Florida Levin College of Law. This post is based on his recent article, forthcoming in the Journal of Corporation Law.
At the heart of the laws of firms lies an unsolved enigma: Although all owners presumably desire maximal profit irrespective of the form of firm, the rules of fiduciary duty diverge, as if the law seeks discretely disparate managerial behavior and thus qualitatively different business outcomes for each form of firm. The differences are not subtle shades of refinement, but quantum contrasts of discrete legal states. The law shuffles, reclassifies, and relocates core elements of the duty of care and the concept of good faith uniquely in each form of firm. Why? Despite apparent differences in legal expressions, a single fiduciary rule governs all forms of firms. My article, A Theory of Calibrated Fiduciary Duties in Firms, 51 Journal of Corporate Law (forthcoming 2026), theorizes the idea of calibrated fiduciary duties, which explains why the law does and should vary the fiduciary standards of conduct in agency, noncorporate firms, and corporations.
