Deciding Between Fiduciary and Discretionary – Which One is Right for You?

Corporate Director and Officer Liability: “Discretionaries” Not Fiduciaries by Marc I. Steinberg challenges the traditional beliefs around corporate fiduciaries. According to Steinberg, directors and officers should be viewed as “discretionaries” rather than fiduciaries, with their legal responsibilities varying based on specific circumstances. This redefinition of terminology aims to bring the law in line with the realities of corporate governance.

Steinberg’s horse racing analogy humorously highlights the discrepancy between labeling directors and officers as fiduciaries when, in fact, their roles are more akin to “discretionaries.” Drawing on his experience as a former Securities and Exchange Commission (SEC) enforcement attorney, Steinberg argues for a more accurate understanding of the legal obligations of corporate leaders.

Prominent legal figures have echoed support for Steinberg’s perspective. J. Travis Laster, vice chancellor of the Delaware Court of Chancery, commends Steinberg for delving deep into how the law functions and for challenging the conventional view of corporate fiduciaries. Similarly, Leo E. Strine, former chief justice of the Delaware Supreme Court, recognizes the importance of Steinberg’s analysis in addressing the balance between risk-taking and accountability in corporate law.

By questioning the existing framework that categorizes directors and officers as fiduciaries, Steinberg’s work raises critical discussions about corporate governance and legal responsibility. The publication of Corporate Director and Officer Liability: “Discretionaries” Not Fiduciaries marks a significant contribution to the field of corporate finance law, encouraging a reevaluation of the roles and obligations of corporate leaders in today’s business landscape. Steinberg’s insights bring a fresh perspective to longstanding legal concepts, prompting readers to reconsider traditional assumptions about director and officer accountability.