As part of our litigation practice, we provide director and officer liability representation litigation services.

When Does Director and Officer Liability Arise?

Officers and Directors of companies are trusted to provide sound and reasonable business decisions for running a company. When these trusted individuals fail to operate in a manner best suited to the company’s interests and/or fail to keep adequate balances to ensure the company assets are separated from their personal assets, director and officer liability can arise.

It is important to understand that although companies can be structured in a manner to help protect officers, directors and even owners from liability arising out of a the company, care may need to be taken to protect the integrity of those company structures to help prevent a piercing of the corporate veil, allowing for direct liability of individuals.

Seeking Attorney Assistance in Director and Officer Liability Disputes

Liability disputes can arise against directors and officers in two manners.  A third party with a grievance against the company can seek to expand liability to the decision makers of the company, or the company experiencing a breach of fiduciary duty or other damage can seek to direct liability on the decision makers of the company. In either circumstance, the advice from experienced business litigation attorneys with an understanding of the particular type of business can help make or break a case.

Business litigation involving liability accusations for directors and officers can become complex and involve a wide range of issues, such as:

Business owners should seek advice from attorneys experienced with the subject matter at issue as well as the type of business industry, to help with effectiveness of representation and provide cost efficiencies.

Director and Officer Liability Litigation Cases 

The following are examples of factors that could affect the outcome of a liability case:

Our business attorneys handle litigation of director and officer liability disputes and can also provide advice to help prevent disputes from arising to begin with.

What Can Companies Do To Avoid Personal Liability by Officers, Directors, and Owners?

Not only is entity type important, but keeping proper records to help show the individuals acted with care and in the best interest of the company is important in Director and Officer liability cases. For example, companies should have sound legal advice on the following considerations, for example:

  • Entity Structure

  • Proper Company Agreements & Articles

  • Annual Minutes

  • Formal Resolutions and Consents

  • Corporate Governance

  • Director & Officer Insurance Coverage (D&O)

This is just a small example of the type of things that will help prevent direct officer or director liability, as well as to prevent officers and directors from doing wrong in the first place. 

Typically, it isn’t until after a dispute arises that company owners or shareholders scrutinize how decisions were being handled for the company. Business attorneys with an understanding of the various issues that can arise in a particular business industry are able to provide guidance on best practices and processes for companies to implement to help avoid individual/personal liability.

Local Counsel for Director and Office Liability Litigation

We also act as local counsel for out-of-state plaintiffs and defendants involved in D&O liability litigation in state and federal courts in Texas. See our Local Counsel page for more information regarding our services.

Additional Insights Regarding D&O Liability Litigation

For more information on director and officer liability legal issues, see our Legal Insights and Industry Solutions pages.