By Robert Nislick
You are a Massachusetts business owner. Perhaps you are the trustee of a trust. Maybe you are a landlord who owns some rental property. When you started operating your business, you decided to incorporate.
One day, you find yourself in a dispute. Someone has sued your company. Alternatively, someone owes your business money. It could be a non-paying tenant who owes six months of back rent, or maybe a customer who hasn’t paid your last three invoices. Whatever the source of your business controversy, you realize that the halls of justice will be beckoning you soon.
Your first instinct may be to show up to court by yourself, on behalf of your incorporated business, without a lawyer. This would be a colossal mistake. Hire a lawyer. Not only is this good business advice, it is also the law. If you, as a nonlawyer, attempt to appear for your business in court without counsel, you run a substantial risk of having your claims dismissed and also having a default entered against you.
A corporation may not be represented in judicial proceedings by a corporate officer who is not an attorney licensed to practice law in the Commonwealth, except for small claims matters. See Varney Enterprises, Inc. v. WMF, Inc., 402 Mass. 79, 79 (1988). Massachusetts upholds the “well-established common law principle that corporations must appear and be represented in court . . . by attorneys.” See id. at 82.
This rule also applies to Massachusetts limited liability companies (LLCs). See Musi v. Gloucester Boat Building Co., 2013 Mass. App. Div. 18, 22 (2013). One Housing Court case noted: “Like a corporation, a limited liability company is a business entity that protects its members from personal liability for business debts. Like a corporation, a limited liability company can act only through its agents. Like a corporation, allowing a limited liability company to be represented in court by a nonattorney agent would permit the practice of law by an unlicensed layman who is not subject to the discipline of the court. And like those who accept the benefits of incorporation, those who accept the benefits of a limited liability company must also accept its burdens, including the need to hire counsel.” Sunset Properties LLC v. Valentino, Western Housing Court No. 08-SP-1385, slip op. at 4, (Fein, J.) (June 27, 2008).
The Housing Court added: “As a matter of public policy, it may well be that the time has come to extend the right to self-representation to a small LLC . . . . Unless and until the legislature acts to identify an exception, however, existing statutory and case law require the conclusion that a limited liability corporation must be represented by counsel in court proceedings, other than small claims cases.” Id. at 4-5.
Moreover, “the Varney exception for small claims cases . . . has not been extended to summary process cases.” Conti v. Elgbe, Boston Housing Court No. 11-SP-0588 (Kerman, J.) (Jun 28, 2011).
With regard to real estate trusts, the Court has similarly cautioned “plaintiffs [who] had appeared pro se on behalf of the real estate trusts for which they served as trustees . . . against acting without an attorney in legal proceedings involving the real estate trusts.” See Kitras v. Zoning Administrator of Aquinnah, 453 Mass. 245, 250 n.14 (2009).
There are several reasons why the courts require corporations to have counsel. One of them is that in a situation where a corporate officer’s own liability may be at stake, his or her interests may be antagonistic to those of the corporation. In that scenario, the corporation needs someone to represent its interests.
Additionally, the Varney Court noted that, “a thorough familiarity with procedural and substantive rules of law on the part of responsible advocates bound by rules of discipline is a prerequisite to the efficient functioning of courts and the proper administration of justice.” See Varney Enterprises, Inc., 402 Mass. at 81.
What this means, in a nutshell, is that judges and clerks want to deal with lawyers, whose job it is to know the law and the rules. They don’t want to waste time explaining the basics to unrepresented parties. It is frustrating for Court, especially when they need to be mindful and not overstep into an advice-giving mode.
Once I was in court and saw a criminal defendant get arraigned. He qualified for a free court-appointed attorney, but he told the judge he would rather represent himself. The judge responded by quoting Abraham Lincoln, and told this man: “He who represents himself has a fool for a client.”
The same applies for successful businessmen and women as well.
Robert Nislick is a Massachusetts business and real estate lawyer. Contact him today to discuss a litigation issue relating to your corporation, limited liability company, or trust.