That’s easy. His client proudly posted everything on Facebook and LinkedIn, and on his business website.  The judge understood that this is how a business, particularly one which seeks customers through the internet, communicates with those customers and prospective customers.  She was willing to treat those statements exactly as the owner intended when they were posted – what opposing counsel was trying to keep out of court.  She considered them as public statements to the world.  If that’s what you intend when you post on your company website or in social media postings, great!  Otherwise, you should rethink your policies on what you post…

You’ve probably heard of “piercing the corporate veil”, which means that the court will disregard the corporate entity and allow you to pursue the owners personally.  At the hearing, the judge advised opposing counsel that his client had completely ignored corporate formalities, such that his client ‘wasn’t even wearing a dress, let alone a [corporate] veil’, resulting in suppressed laughter from the attorneys in the courtroom (save for one.)

What lesson can you learn from this?  Given an owner who was too lazy (?) or too ‘cute’ to adhere to even basic formalities, it may be a sort of “well, duh!” moment, if your attorney has emphasized to you the importance of formalities.  If not, it should be worth hour or two of your attorney’s time to educate you on how to safely operate as a corporate entity (including as a limited liability company).

Here, the price of ignorance may be personal liability.  In less than an hour of the attorney’s time, the owner could have learned what dreadful consequences might result from sloppiness with corporate formalities, which formalities are most important, and what formalities are most relevant to the particular business activities of this owner.

So, think about spending an hour with your business attorney in the New Year for a refresher, to make sure that you can enjoy the maximum benefit from the protections offered by your limited liability entity.

… next post – Judges do “get” Facebook and LinkedIn in the business world…

(I’d like to thank John Cunningham for good advice and tips – and for encouraging me to get this blog going.  John, who was formerly a practicing attorney, general counsel with extensive experience, and journalist at Massachusetts Lawyer’s Weekly, now advises lawyers and law firms on how to communicate, in addition to his writing and editing.)