Legal Question in Business Law in California

Silent Partner liability (LLC)

I have assumed a silent partner position in the company that I own with another partner, effec. July, 2006. My business partner has hired an attorney to review emails she sent to me regarding our agreement. She now sent me a bill, insisting I owe her 1/2 of the money paid to the attorney, as she paid for the cost upfront. Do I owe her anything? I was not advised of this action and knew nothing about this attorney until an emailed conversation early in 2007. She hired this attorney to protect herself and her interests.

In addition, she had this attorney review the business and interact with the former owner's attorney (she carries the note on the business) to try to reduce the sale price after the closing, as she felt the former owner was not 100% honest during the deal. Again, I was not advised that she had retained this attorney, she has been managing the business herself, and she now says I owe her 1/2 of all the attorney fees. I was notified of these fees after all charges had been incurred and been paid in full, now I'm being sent the bill. (As Silent Partner, I relinquished all rights to the business bank accounts, however, I was to be advised of any significant decisions for the Co.)

Please advise,


Asked on 3/19/07, 4:50 pm

1 Answer from Attorneys

Re: Silent Partner liability (LLC)

Whether you are responsible for these bills will depend upon your agreement with your "partner". Is this a corporation, LLC or partnership? You should make sure if it is a partnership that you are not likely to have liability. Generally, partners are liable for all debts of the partnership. Depending on the type of business you may prefer to form a corporation or LLC to protect your personal assets.

The expenses for the attorney where the work performed was for the "partnership" are probably going to be half your responsibility.

However, if some of the work performed was exclusively for your "partner" then you have a good argument for not being responsible for those fees.

Let me know if you would like to consult on this matter.

Caleb

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Answered on 3/19/07, 5:06 pm


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