Corporate Board of Directors Disputes and Lawsuits
Corporate Board of Directors Disputes and Lawsuits
Defending Corporate Board of Directors Disputes in San Diego
Corporate Board of Directors disputes and lawsuits in San Diego are more common than many believe. The key is to resolve them quickly and in a cost-effective manner so that the corporation may remain focused on primary business objectives. Individuals serving as an Officer or on the Board of Directors for a corporation have personal liability for some actions they perform as an officer of director of the company. Some of the risks are covered or “indemnified” by the company, and some expose the director or officer to potential personal liability. Officers and directors are charged with specific fiduciary duties in their service to the company including:
- A Duty of Loyalty to the Best Interests of the Company
- A Duty of Acting in Good Faith on Behalf of the Company
- A Duty of Care When Making Decisions or Taking Actions on Behalf of the Company
An Officer or Director must put the interests of the corporation above their own personal interests. They must not seek to secretly profit at the company’s expense, nor compete against the interests of the company they serve. Directors and officers must conduct all business at “arm’s length” as if they did not have interest or standing in the company. A central issue in these cases is “disclosure” – if there is any question about whether a business transaction, investment or other activity is a potential conflict of interest it should be fully disclosed to other officers, directors and the company itself.
The Director or Officer must act in good faith and conduct themselves in a way that continuously reflects faithful attention to their duties and responsibilities. Dereliction of their duties or a “conscious disregard” for the well being of the company can open the door to personal liability.
All decisions must be based upon sound business and financial judgment, and act as any “reasonable” party would if they were in a similar position. They must be cautious to ensure that they have conducted whatever research or investigation is necessary to reach their decisions, and that they have acted in the best interests of the company.
In some cases, there are disputes between Directors within a corporate board, and Board of Directors disputes with shareholders. It is important to work with a law firm who have decades of experience and expertise in these matters.
Experienced Attorneys Who Advise and Defend Corporate Officers and Directors
The experienced corporate and litigation attorneys at the Watkins Firm support corporate officers, Board of Directors, and individual directors to ensure that they remain compliant with all fiduciary duties with which they are charged. California law protects corporate directors from legal exposure unless the individual is guilty of “gross negligence.” These protections do not extend to the officers of a corporation. If an officer, such as a CEO or CFO is serving on the Board the legal perspective can become quite complex from a perspective of liability. If the officer was acting in their capacity as a CEO or CFO, for example, their actions are not subject to the same protections under California law.
Directors should discuss indemnification packages when they are invited to join a corporate board, and should always ensure that the company carries Director & Officer liability insurance, known as “D&O” insurance. There is additional risk to the officers and directors of a corporation as it approaches insolvency.
Bringing a Derivative Lawsuit Against a Corporation
If the shareholder of a corporation is concerned about the action of corporate officers or directors, they must bring what is known as a “derivative lawsuit.” A derivative lawsuit is brought on behalf of the corporation when a conflict of interest, or a breach of a fiduciary duty has occurred. These lawsuits are quite complex, and the attorneys of the Watkins Firm have decades of experience advising shareholders and corporate officers and directors in these matters.
Contact an Experienced Law Firm For Disputes with a Corporate Officer or Board of Directors
Our approach to litigation is designed to resolve corporate disputes in the shortest possible time frame and at the least expense. There are occasions where principled disagreement or the integrity of a Corporate Board or individual Director must be protected at all costs. The Watkins Firm is uniquely positioned to provide skilled and expert representation throughout the business litigation process and all phases of a dispute including negotiation, mediation and arbitration, and ultimately litigation in a Court of Law.
Corporate Board of Directors disputes are quite distracting to any San Diego corporation. If you are a shareholder who is concerned about the actions of a corporate officer or director, or are a corporate officer or director who is facing a dispute we invite you to contact us to schedule an appointment or call 858-535-1511 for a complimentary and substantial consultation. We will discuss the issues or dispute at hand, and develop a strategy to resolve the underlying dispute and accomplish your goals and objectives for the situation at hand.