A jury tagged Alston & Bird yesterday with a legal malpractice verdict arising out of allegations that one of its partners failed to properly advise and protect a small, family-owned limited liability company, when its manager looted the business of nearly $1.5 million in excess compensation and overvalued shares in the company. The jury took only a few hours to reach a verdict, which, to trial attorneys, typically means the jury didn't have to think much about responsibility and went right to damages.
We've talked before about the new LLC Act in Connecticut (which goes into effect in July 2017) here and here. The new Act will have a provision allowing a member to seek a court order expelling another member from the LLC. It's a remedy that should help keep more limited liability companies alive rather than dissolved by court order. To expel a member, the plaintiff would have to show one of the following:
Whenever someone is referred to us because they are in a dispute with a member of their LLC or another shareholder of a corporation, the word dissolution must enter the discussion. But like a marital divorce, we know dissolution gets ugly, especially in closely-held businesses or family businesses, and never solves the underlying problems. We always try to find a way to avoid litigation but sometimes that is the client's only recourse and a lawsuit seeking dissolution of the company the only path.