Imagine this: you have just created the business you’ve been dreaming about for years. You hired an attorney to file all the necessary paperwork to form your company and you now have a company that is legally recognized under Texas law and, more importantly, is bringing you revenue.
Suddenly, for one reason or another, the unthinkable happens – you have a lawsuit filed against your business. You review the citation and petition that your business has been served and see that there are only twenty days to file an answer! Instead of hiring another attorney to prepare and file your business’ answer, you do what you think is most efficient: you file an answer yourself on behalf of your business. Phew! You have made the answer deadline, and you and your company are in the clear – at least until you can find another attorney. Right? Wrong.
Under Texas law, a business cannot legally be represented by a non-attorney. It does not matter if you own 51 percent of the company and are fully capable of making major decisions on behalf of your company, or if you are the president and sole member of the company.
It does not matter.
This is because under Texas law, your business is its own legally-recognized entity, entirely separate from you individually.
And, like you, your business requires representation in any legal proceeding. However, a business cannot represent itself like you, a natural person, can represent yourself pro se. A business requires separate representation in the courtroom, and the only individuals capable of representing on behalf of another in a courtroom are (you guessed it) attorneys.
Although a person can file an answer on their personal behalf, a person who files an answer on behalf of their business has in fact filed no effective answer at all; it is defective. This can lead to what is called a default judgment against your business. A default judgment is what it says it is – a judgment by default – because there is no answer in response to the allegations made against your business within the lawsuit’s petition. It is as if your business admitted to the claims made against it, even if you filed an answer on its behalf. Alternatively, a summary judgment could be entered against your business. A summary judgment is the quick (summary) disposition of a case prior to the case going to a full trial. If a motion for summary judgment is filed against your business, your business cannot legally respond without an attorney filing a response on its behalf. Courts will not allow a business owner to represent his or her business themselves in the courtroom. The business must be represented by an attorney.
Unfortunately, business owners often do not know this, and their attempt to save money and represent their business themselves often leaves their business entirely vulnerable to an adverse judgment against it. As such, whenever your business finds itself in unwanted litigation (hopefully never), it is imperative you find an attorney to represent it on its behalf in the courtroom.
If that ever happens and you need sound legal counsel on you and your business’ behalf, we hope you look to the attorneys here at Lovelace Law!