Article: Fiduciary Standards

James Toomey (University of Iowa – College of Law) recently published, Fiduciary Standards, 2025. Provided below is an abstract:

“Fiduciary” law is, notoriously, all over the place. Many doubt it hangs together—that anything beyond the label “fiduciary” unites corporate directors and physicians. Others offer theories of the conditions under which the law refers to a relationship as “fiduciary”—to compensate for power dynamics, where legal power is exercised for another, in money management. What’s missing is a theory of the standards guiding fiduciaries’ exercise of legal power—what it means to be a fiduciary.

This Article argues that in making sense of fiduciary standards, we can turn to a longstanding debate in a particular fiduciary context—surrogate medical decision-making. There, two contested standards apply—“best interests,” which asks the decision-maker to pursue the “objectively best” decision, and “substituted judgment,” which seeks the decision the patient would have made. I argue that these standards offer a framework for organizing fiduciary decision-making generally. Some fiduciaries, like trustees, make decisions in the best interests of their beneficiaries. Others, like agents, make the decision their principal would have made. Most fiduciaries do some blend of both.

Moreover, the law allocates aspects of best interests and substituted judgment based on its views of the purpose of a given fiduciary relationship. Substituted judgment applies where the beneficiary is treated as an individual personal identity. Best interests applies where for some reason—efficiency, expertise, or because the beneficiary doesn’t have one—the beneficiary is not treated as an individual personal identity. This account offers a new picture of fiduciary law, structured around agency and trust, and suggests how the law might consider allocating the best interests and substituted judgment frames.