Corporate Pro Se Representation in North Carolina Courts
Article Date: Monday, November 08, 2010
Written By: Heather Adams
Generally a corporation cannot represent itself in court through a non-lawyer representative. The primary rationale for the restriction is that a corporation is a fictional entity and is incapable of representing itself. If a non-lawyer company representative appeared in court on behalf of a corporation, the representative would be practicing law without a license.
The Lexis-Nexis Case
In Lexis-Nexis v. Travishan Corp., the plaintiff sought to recover amounts billed under a contract with the defendant. The district court judge permitted the defendant’s CEO and sole shareholder to represent the corporation, even though she was not licensed to practice law.
The Court of Appeals reversed the district court, holding that a corporation cannot be represented in court by a non-lawyer representative. In reaching this decision, the court considered N.C. Gen. Stat. 84-4, which provides that, except for persons appearing on their own behalf, only licensed attorneys may practice law in North Carolina, and N.C. Gen. Stat. 84-5, which specifically prohibits the practice of law by a corporation. Although a non-lawyer may permissibly draft legal documents and negotiate transactions on behalf of a corporation, the court concluded that a corporation cannot appear in court through a non-lawyer, except in limited circumstances. Lexis-Nexis v. Travishan Corp., 155 N.C. App. 205, 207-08, 573 S.E.2d 547, 549 (2002).
The Lexis-Nexis decision has been applied in subsequent cases. For example, when a non-lawyer employee of the defendant faxed a letter to the trial court requesting a continuance, the request was properly denied because “[a]n employee of a corporation, who is not an attorney, may not appear or litigate pro se on behalf of the corporation.” Wallace v. TLP Int’l, Inc., 2005 N.C. App. LEXIS 1464, *6 (Aug. 2, 2005) (citing N.C. Gen. Stat. 84-5(2003)).
Exceptions to the Rule
A corporation may appear in court through a non-lawyer representative in small claims court. Lexis-Nexis at 208-09, 573 S.E.2d at 549 (citing Duke Power Co. v. Daniels, 86 N.C. App. 469, 472, 358 S.E.2d 87, 89 (1987) (In enacting our small claims court system, the General Assembly intended to provide citizens, corporate as well as individual, with an expedient, inexpensive, speedy forum in which they can process litigation involving small sums without obtaining a lawyer.)).
Also, there is some support for the proposition that a corporation may appear through a non-lawyer representative in order to avoid default. In one case, when a corporation’s vice president sent a letter to the court responding to the allegations in a complaint, this constituted an appearance sufficient to avoid default judgment entered by the clerk. Roland v. Motor Lines, 32 N.C. App. 288, 231 S.E.2d 685 (1977) (cited in Lexis-Nexis, 155 N.C. App. at 208, 573 S.E.2d at 549).
The Scope of the Restriction
Federal courts similarly require a lawyer to represent a corporation. See Rowland v. California Men’s Colony, Unit II Men’s Advisory Council, 506 U.S. 194, 201-202 (1993). Courts often have a local rule that speaks to the issue. For example, some local bankruptcy rules specify that corporations may not proceed pro se with limited exceptions, such as an appearance at a meeting of creditors.
In the context of administrative hearings, corporations may appear pro se through a non-lawyer unless a specific rule or statute says otherwise. Allied Envtl. Servs. v. North Carolina Dep’t of Env’t and Natural Res., 187 N.C. App. 227, 653 S.E.2d. 11 (2007) (majority opinion). Some administrative appeals specifically require licensed attorneys to represent corporations. For example, a corporation is required to be represented by a licensed attorney in Property Tax Commission Appeals. In the Matter of Appeal of Schwartz & Schwartz, Inc., 2004 N.C. App. LEXIS 384 (March 16, 2004).
The restriction can apply to other corporate entities – not merely corporations. For example, according to Lattanzio v. COMTA, 481 F.3d 137 (2nd Cir. 2007), an LLC may appear in court only through a lawyer. Likewise, courts have expressed a willingness to apply the restriction to non-profit corporations, partnerships, and unincorporated organizations. See Move Organization v. United States Dep’t of Justice, 555 F. Supp. 684 (E.D. Pa. 1983) (dismissing a complaint filed pro se by a non-profit corporation because the non-profit corporation must be represented by counsel); First Amendment Foundation v. Village of Brookfield, 575 F. Supp. 1207 (N.D. Ill. 1983) (stating that the general rule regarding corporations is applicable to partnerships and unincorporated organizations).
Impact on In-house Counsel
In summary, unless a case is proceeding in small claims court or the corporation is attempting to avoid default, a corporation must be represented in a North Carolina court by a licensed attorney. In most situations, the licensed attorney can be a salaried employee of the corporation.
Pursuant to N.C. Gen. Stat. 84-5, an attorney retained by a corporation, whether or not the attorney is also a salaried employee of the corporation, may represent (a) the corporation or an affiliate or (b) an officer, director, or employee of the corporation or an affiliate in any matter arising in connection with the course and scope of the employment of the officer, director, or employee.
Accordingly, when in-house counsel is licensed in the jurisdiction where the lawsuit is pending, it is permissible for in-house counsel to represent a corporation in litigation. Of course, there are usually practical reasons to engage outside counsel.
With respect to litigation pending in states where in-house counsel is not licensed, most local court rules do not allow pro hac vice admission by in-house counsel. In this situation, the corporation would need to be represented by outside counsel.
By statute, when a corporation is acting in a fiduciary capacity, it cannot rely on a salaried employee to handle formal court proceedings and must instead hire outside counsel. N.C. Gen. Stat. 84-5(2) (2009).
Heather Adams is a litigation partner at Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P. and can be reached at 919-821-6708 or firstname.lastname@example.org.
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