Here’s a real-life scenario that sometimes plays out for corporations in California and elsewhere across the country.

Imagine that you are a business executive and part of a key management team in a corporation. You are routinely tasked with making important decisions that guide the business and centrally determine its vision and forward-looking strategies.

As such, you and other high-ranking principals routinely exercise business judgment that you have cultivated and progressively honed. That acumen has well served corporate interests in the past, and your thinking is that it will continue to benefit shareholders going forward.

Imagine further, though, that not all shareholders subscribe to your view. In fact, a number of them have banded together in what is essentially a class action lawsuit that targets you and other key decision makers for malfeasance that is harming the corporation. Because the corporate entity itself is not taking action to defend its interests, the shareholders are doing so via a shareholder derivative lawsuit.

Such filings are not uncommon in the business world, their central thrust being action that is taken on behalf of the corporation for alleged mismanagement of business officers. An article on such lawsuits calls them the “final weapon in the arsenal of the shareholders.”

Understandably, derivative actions can be complex and entail a large degree of subjectivity that needs to be judicially waded through. Often, key analysis focuses on a corporate team’s aforementioned business judgment and whether it was sufficiently displayed to safeguard corporate officers from liability.

Company officials defending against a derivative action have a lot to think about. A proven business and commercial law firm can help them contest such an action and prepare a case that justifies their conduct as necessary or otherwise protected as a matter of informed business judgment.

Client Reviews

6/27/18, FindLaw.com

Rated 5 out of 5

We received a letter from an attorney representing an ex employee from years ago. This letter couldn’t have come at a worse time for our family. Although the ex-employee had no substance in their case and this was mostly a nuisance, we felt very vulnerable and unprepared. I reached out to a few lawyers for a quote and their retainer fees alone were deal breakers. When I reached Thomas Gallagher, he approached my case from a completely different angle and walked me through the many small steps we would take to get through this issue. Within the first conversation I felt like I had a plan of attack, an attorney I could trust, and that our family was protected. Our case ended up never going to court. In fact, Thomas was able to resolve the entire issue within a week. I am extremely happy with the results from this potential lawsuit, but even happier knowing my family and business is now protected by a lawyer than can get the job done.

anonymous

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