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The attorney should be paid by the LLC.
If the attorney is not paid by the LLC, and is paid for by one of the members, the payment will become complicated as it turns into a contribution to the LLC by one of the members and must be accounted for.
As with all LLC questions, this is of course conditioned on the governing documents for that specific LLC.
We had a hearing with the judge who said the stop payment should stand and that my husband should pay it. The associate who sued refused to sign any documents making him a member of the LLC. However, he signed 2 leases with personal guarantees along with my husband. The 2009 and 2010 tax returns have him listed also, but not the 2011 return. Our argument is that he is not a member. There are no LLC papers except those that have only my husband as a member.
Without a formal LLC, with the tax paper documentation, and with the Court's holding, that does change things. (I still have my own opinion that an LLC is responsible for its own legal bills, but if it is not properly formed, it does not truly exist, therefore the Court would be correct).
Is the LLC registered with the Secretary of State?
Yes, it is registered with my husband's name only as the sole member.
The other question then, is how did the Court find that the Plaintiff is entitled to stop payment on a check if he is not a member (or officer) of the LLC?
Good question. They are arguing that he is a member. We never had a chance to argue our side. Our attorney wanted to keep the trial "narrow and focused" by asking for money for both associates. Our attorney also did not mention the fact that witnesses have been improperly served twice. The judge simply allowed for checks to be distributed to each doctor in an uneven amount (favoring the associate) and ruled that my husband should pay the legal expense (which we cannot afford personally). We have been making online payments to the attorney in previous months that were not questioned.
We had taken the associate off the bank account when he wrote himself a check for $12,000 in spite of the fact that the bookkeeper told him there was not enough money in the account for distributions at that time. During mediation, and against the advice of our bank officer, we agreed to put him back on the account.
I am sorry to hear that things are going in this direction at this time. I would like to assist you more directly, but I am somewhat limited in that I cannot give you specific direction or legal advice. If you are not happy with your attorney, you can always speak to another civil litigation attorney to see if they have a different perspective or if they can offer a different strategy in your matter (it is much easier to take a more aggressive stance in your current lawsuit than to try to unwind something with your current attorney afterwards). I do not want to second guess your attorney's strategy through this limited forum (I am only receiving limited information through a "chat" forum, and perhaps there is more to what he is trying to do or there is a different issue he is trying to build towards, sometimes asking for an explanation as to why significant sums of money appear to be at stake will allow you to review the current strategy - it is okay to question your attorney, even in a cordial manner).
If there is a general legal question, I can certainly answer it, and would be happy to do so. I just cannot provide you with strategy - I do not have the information to do so, and I do not want to steer you in the wrong direction with half informed advice. (Plus I am prohibited from conducting the practice of law through this forum).
I just wanted an answer as to who should pay the legal expense. It sounds like your opinion is that it should be the LLC. That is what our attorney says. However, if we didn't get a chance to argue our side, the judge is already one sided. The plan is for mediation to continue. But if that happens, we will never get a chance to argue our side. I understand your position in not wanting to give any other advice, but I thought that was the point of this website.
No, the website is limited to giving general legal information. My general legal information is that an LLC is responsible for its own legal expenses (it is a separate entity that exists separate and apart from its members). If there is a question about the validity of the LLC, there may be an issue, but that does not appear to apply to your situation. We are unable to give legal advice as that would be the practice of law (we cannot do that through this type of forum).
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