The court ruled that the attorney did not have authority to prosecute the action, and upheld the dismissal. A business entity has no legitimate business interest in a struggle amongst its owners over control of that business entity—the company must remain neutral.
Lawyers often specialize in either business law or personal law. For this reason, you should search for lawyers who have business law experience. The following sections describe six types of lawyers for small businesses.
When you learn about the case details, you’ll know which type of lawyer you’ll be up against. You can then work with a business attorney to determine the best plan to handle it. The most common lawyer that you’ll face is the one for general business. The upside is that the damages are likely to be the smallest with this type of lawyer.
Rather, the board of directors had the statutory right to manage the affairs of the corporation, and “the president of a corporation is not authorized to employ an attorney to conduct litigation for the company absent express authority or implied authority . . . set forth in the bylaws or by proper action of the board of directors.”
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At the hearing on the motion, the challenged attorney has the burden to show sufficient authority to prosecute or defend the suit on behalf of his client, a party to the lawsuit.
Attorneys stepping into that representation should be cautious because the owner in control probably has no authority to retain counsel on behalf of the company. Even in non-deadlock situations, there may be issues with the authority of corporate officers hiring corporate counsel, if the controlling owner fails to or does not wish ...
The defendants moved to dismiss the complaint because a majority of the LLC’s governing authority—the four members—had not authorized the suit on behalf of the company. The Street Star Designs, LLC board was deadlocked two-to-two.
The bank filed a Rule 12 Motion to Show Authority and attacked the attorney’s power to prosecute the action because the Square 67’s board of directors did not authorize the attorney’s employment. The trial court agreed with the bank and dismissed the action.
The appellate court held that there was no basis for the claim that “the president of a corporation is authorized solely because of his office to initiate litigation on behalf of the company and employ legal counsel for that purpose.”. Rather, the board of directors had the statutory right to manage the affairs of the corporation, ...
The appellate court granted the relief, stressing that although the attorneys purported to represent the corporation, “a lawyer may not be hired to represent a corporation by one of two factions in the organization against the other faction.”.
In fact, a business entity is not even a necessary party in a dispute between its owners over the dissolution of the company.