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Kim Courtney
Kim Courtney,
Category: Legal
Satisfied Customers: 4219
Experience:  Founder/Member at Food Business Association
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I invested in a company [restaurant] 100% of its capital.I

Customer Question

I invested in a company [restaurant] 100% of its capital.I had an attorney draw up a loan agreement with restictions ie no salary increases,limited capital outlay and many other caveats.The lawyer was the same person who,without disclosing to me,drew up an operating agreement with the manager.When there was a suspicion of theft, I was helpless as the operating agreement was solely in the managers name. I was forced to settle a lesser amount of the loan[$200,000 being the shortfall in the payment.]
Did the lawyer have a conflict of interest in drawing up the loan agreement without revealing the operating agreement to me?
Submitted: 1 year ago.
Category: Legal
Expert:  Kim Courtney replied 1 year ago.

Hello, my name is ***** ***** I am an attorney. I am happy to assist.

So if you were an investor and also had an interest in the company as an officer, director, member, etc., then you would have needed to be a party to that operating agreement. It would not be a conflict of interest for the attorney to draft your loan document and the operating agreement, but he would have to include you in that agreement.

In the event that you only have the loan document, but don't have a direct interest in the company, then that would not be a conflict for the attorney to draft up that operating agreement - EXCEPT for the fact that it sounds like there was something in there that was contrary to your loan interest? I wasn't clear exactly what that was, but if there was something in there that the attorney knew would specifically cause you damages, then yes that would be a conflict.

However, if this was just a situation where you have a loan, but aren't involved in the company, suspect theft, and had no control because you weren't involved in the company, that wouldn't be a conflict.

You do still have a legal case here, from the info you have given me. You have the right to sue for money lost, especially if there was some wrong doing in the company. You may also be able to include that attorney in the case if there was something in the operating agreement that he knew would specifically harm your rights under your loan.

Please let me know if this isn't clear, or if you have any follow up questions.