Businesses Need Lawyers - Literally

I see it all the time. A small business owner gets sued by a disgruntled customer, and then the president or other corporate officer of the business comes to court to defend the action...without also bringing their attorney. The problem is that judges don't like it when businesses do this - typically lawyers (including judges) are self-interested and look out for their own. That means requiring certain litigants to have attorneys because then lawyers make money, and it makes the judge's job easier. That is my jaded reasoning, but there is also some good legal reasoning as well. The Minnesota Supreme Court has created a bright-line rule on corporations: corporations, because they are not natural persons nor can they practice law, must have an attorney represent them in court. Nicollet Restoration, Inc. v. Turnham, 486 N.W.2d 753, 754 (Minn. 1992). This rule applies no matter if the business is composed of one shareholder or hundreds. The same rule applies to other business entities, like LLCs, and probably to partnerships. 301 Clifton Place L.L.C. v. 301 Clifton Place Condominium Association, 783 N.W.2d 551, 560 (Minn. App. 2010). Maybe Mitt Romney will try to change our thoughts on this because aparently "corporations are people" but I don't think judges will buy that. What seems clear-cut, though, is not. The legislature has written certain laws which carve out special treatment for certain businesses (basically landlords), both in district court as well as in the realm of housing and conciliation (small claims) courts. Despite these laws, the court system and its judges get to decide how to run the courts (remember that lesson about separation of powers in high school?). For this reason, the Supreme Court's bright-line rule that there must be an attorney representing the business is basically the only safe way to protect the business' interests. That said, I have seen some judges allow businesses to defend themselves without lawyers, and I have seen other judges enter a default judgment against a business that fails to bring an attorney because the business is literally incapable of defending itself in court under the Nicollet rule. So what should cost-conscious business owners do? Call us - we can tell you what representation will cost, we can quote you a flat fee instead of working by the hour so you can budget for the defense of the case, and we can also give you some proactive strategies that might help avoid these situations in the future. We also like to have repeat clients - does this happen to you a lot? If so, we might be able to work out a discounted rate or some type of ala carte legal services plan to meet the specific needs of your business, while keeping the business out of hot water through a violation of the Nicollet rule. So what's the take away? Paying a few hundred dollars now is a lot better than loosing a $10,000 judgment and then calling us to try to un-do that problem. By: Jim Conway, (952) 445-2817 jconway@jmwlaw.com