Who Just Hired the Lawyer?
Lawyers often refer to corporations as “legal fictions.” This means that from a legal standpoint a corporation is a real entity. It can sue people, be sued by people, and enter into contracts just like a real person can, but the corporation is not a real person. A corporation cannot hold conversations with people or act independently. Instead, corporations have to act through their agents, the employees and officers of the corporation. This can lead to complicated situations when the corporation finds itself embroiled in business litigation. The CEO or some other employee will be the one dealing with the lawyer, and may come to feel like the lawyer represents them. That is not so. Florida rule of ethics 4-1.13 lays out a lawyer’s specific duties with regard to representing corporations, duties that are important for corporate clients to understand.
Florida Rule 4-1.13
Florida rule 4-1.13 is an ethical rule that applies to lawyers, and governs their ethical obligations when representing organizational clients like corporations. Despite the fact that much of the rule is purely for lawyers, sections (a) and (b) are important for clients to understand as well. Section (a) of the rule clarifies that when a corporation hires an attorney, that attorney represents the corporation as a whole, not the CEO, and not the general counsel. This places a duty on the lawyer to act in the corporation’s best interest, even if that interest is at odds with the agent of the corporation that the lawyer deals with. This is especially important in light of section (b), which gives lawyers a duty to protect the organization’s best interests in the event that they discover a member of the organization intends to act in a way that “is a violation of a legal obligation to the organization or a violation of law that reasonably might be imputed to the organization”
What this Means for Officers and Employees
The most important thing for officers and employees to understand is that this ethical rule means that the company’s attorneys may not have their best interests at heart. If a point in the litigation appears where a litigation strategy will help the company as a whole, but at the cost of injuring a certain employee, the lawyer’s ethical duty is to do what is best for their client, the company. There are certain instances where the same lawyer can represent both the company as a whole and an employee of the company in the same matter, but that can lead to conflicts of interest. People involved in working with an attorney on a matter that involves both them personally and the company they represent should consult with the attorney to discuss the pros and cons of joint representation, as well as the benefits of hiring independent counsel to represent themselves personally.
If you are involved in a business dispute that may require litigation to solve, reach out to an experienced Florida business litigation attorney at Pike & Lustig, LLP today. Our firm’s team of dedicated professionals can help you understand the legal landscape and apprise you of all your strategic options.
