Legal Question in Business Law in Nevada

legal ethics

A corporate attorney, who also owns a significant amount of stock in the company instigated a ''takeover'' removing the current President (and the majority stockholder) by getting enough votes to remove him. She contacted the second largest stockholder, and they covertly got enough votes to remove him. She also voted her one million shares against him. She never disclosed that a vote was taking place-or disclosed any inkling to the President and majority stockholder.

(He was Pres, CFO, CEO and Treasurer, who owned 28% of the stock- and the largest individual stockholder.) Is this a conflict of interest and a violation of her fiduciary duty to the President of the Corporation? She is their Corp. Attorney, is paid by the Corp., and has one million shares of stock or 5%.


Asked on 3/30/09, 2:12 am

2 Answers from Attorneys
Jonathan Reed Reed & Mansfield

Re: legal ethics

The corporate attorney doesn't owe a fiduciary duty to the president of the corporation. She owes a duty to the corporation. I am sure she would argue that she did what she did for the benefit of the corporation, however weak or strong that argument might be. However, it is somewhat disconcerting that the corporate attorney is acting as both a principal and the corporate attorney.

The Nevada State Bar would probably only consider any ethics complaint you have after this matter goes through litigation or only after it is clear that this matter is not headed toward litigation.

It sounds like you are aligned with the President. If he and you would like to talk to me about possible legal actions I would not charge for an initial consultation. But, in all honesty, from the statement of facts in your questions it is not at all clear that the CEO and his allies have a winnable case. I am sure the total fact picture in this situation is very complex and does not lend itself to a complete one paragraph summary, even though you have phrased your question very well.

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Answered on 3/30/09, 11:19 am
Warren Markowitz Warren R. Markowitz, Esq

Re: legal ethics

Its an assumption made by many people but the Corporate Attorney doesn't owe a fiduciary duty to the President of the Company, he/she owes one to the Company itself and indirectly to the shareholders.

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Answered on 3/30/09, 3:25 pm


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