FlexFunds Holdings, LLC v. Rivero
A private equity firm's 75% owner and its counsel sued the 25% member/former CEO, who counterclaimed derivatively on the company's behalf against the majority owner and his affiliated entities. The trial court disqualified the firm's lawyer and law firm from representing the company, the majority owner, and his entities under Rules 4-1.7, 4-1.10 and 4-1.13, and the Third DCA affirmed as to the company, holding that where a minority owner alleges serious wrongdoing by those in control, the interests of the entity and the controlling owner are not aligned and the derivative plaintiff's consent is required for dual representation.
Key facts
- FlexFunds Holdings, LLC, a private equity firm with a 75% owner and 25% member/former CEO, became the subject of litigation when the majority owner and his counsel sued the minority member.
- The 25% member/former CEO counterclaimed derivatively on behalf of the company against the majority owner and his affiliated entities, alleging serious wrongdoing by those in control.
- +2 more key facts with a free trial
Why it matters
Practitioners handling closely held business disputes should note that once a minority owner asserts derivative claims charging serious wrongdoing by those in control, company counsel's continued joint representation of… — full analysis with a trial
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