Directors and officers face increasing scrutiny of their decision-making process and exposure to breach of fiduciary duty claims, especially in moments of financial distress, strategic uncertainty or leadership conflict.
Courts assessing these claims focus less on the outcome and more on whether the decision-making process was reasonable and deliberative. That means robust documentation for how decisions are made provides the strongest defense against challenges.
Yetter Coleman LLP partner Jamie A. Aycock published a Corporate Counsel article providing practical guidance for creating a bulwark against breach of fiduciary duty claims by documenting level-headed, process-driven decision-making even in times of crisis. The article is a thorough primer on creating the documentation that litigators need to defend corporate decisions in court and offers tips for creating a solid process.
“It’s crucial to build thoughtful record-keeping into your process — even for high-stakes, tough decisions under a time crunch,” writes Aycock. “This can prove hugely important for avoiding and defending against breach of fiduciary duty claims. Always assign record-keeping responsibility and ensure everyone involved understands the importance of establishing your own evidence.”