Strict Corporate Formalities

A panel of the Maine Grievance Commission has ordered a reprimand of an attorney for violations of the business transactions (Rule 1.8(a)) and lawyer for an organization (Rule 1.13)  rules.

Respondent’s mother and half-brother (the complainant) had taken a loan and purchased a Ford dealership.

He was not involved in that purchase but was consulted upon his return from Afghanistan.

The Panel rejected some charges by a 2-1 vote and cautioned on the dangers of not following the rule requirements when dealing with family members

While it may be reality that family members interact informally with each other in family-owned businesses and do not adhere to strict corporate formalities, this case illustrates what can happen when a family business relationship sours.

(Mike Frisch)