Professional Liability Blog

Generally, corporate officers and directors do not have a special relationship of trust (i.e., a fiduciary relationship) with third persons or creditors transacting business with the corporation. Moreover, unless they sign in an individual capacity, corporate officers and directors who negotiate and execute a contract on behalf of the corporation are not personally accountable on the contract, even if the corporation later defaults or otherwise breaches the contract. Likewise, corporate officers and directors will not be personally liable for the debts of the corporation, even if involved as an agent of the corporation in undertaking the debt.

The realities of running a business can sometimes interfere with the practice of law. When a lawyer needs funding to keep his or her practice afloat, a tempting source of financing might be a wealthy client with whom the lawyer has developed a relationship over the course of many years and transactions. Borrowing money from a client, however, is rife with ethical and legal ramifications.