Rarely are you required by law to retain counsel, which makes this scenario the logical place to begin.* Although it is a good idea to hire an attorney in a wide array of circumstances, in Pennsylvania the only time you are required to have an attorney is when “you” are an incorporated entity (LLC, incorporation, etc.) and you are embroiled in litigation.
The law of Pennsylvania is clear: an incorporated entity cannot represent itself in court. It must have counsel. While this attorney could be an in-house lawyer, most in-house counsel are focused on business-side matters rather than litigation. In layman’s terms, this means that for an incorporated entity to bring a lawsuit or defend against a lawsuit, it must hire a lawyer. In Pennsylvania, “a corporation may appear and be represented in our courts only by an attorney duly admitted to practice law.” Walacavage v. Excell 2000, Inc., 480 A.2d 281, 285 (Pa. Super. 1984), This rule is old and consistent. See Shortz v. Farrell, 193 A. 20, 24 (1937) (stating: “In the case of a corporate party…there can be no legal representation at all except by counsel, because a corporation cannot appear in propria persona. … Were it otherwise, a corporation could employ any person, not learned in the law, to represent it in any or all judicial proceedings”).
The Pennsylvania Superior Court recently made clear just how serious this requirement is taken. David R. Nicholson, Builder, LLC vs Jablonski, 173 A.3d 266 (Pa. Super. 2017), presents a fairly remarkable set of facts. The suit was initially filed in at the magistrate level by David R. Nicholson, Builder, LLC – a single member LLC. At the magistrate level, incorporated entities that sue for money damages or to evict tenants may be represented in court by a principal or authorized agent. Pa. R.C.P.M.D.J. 207(A)(3). Here, the sole member of the plaintiff LLC properly represented the company in court, and lost. Everything to this point was fine, but when the LLC appealed the magistrate decision to the Court of Common Pleas. After the defendants retained counsel, they challenged the viability of the appeal because the plaintiff LLC did not retain counsel to file the appeal. In an attempt to rectify the procedural defect, the plaintiff LLC retained counsel, who filed a second complaint. That wasn’t sufficient to remedy the defect, according to the trial court and the Superior Court. Simply appealing from the magistrate decision and availing itself of the Court of Common Pleas’ jurisdiction without counsel rendered the appeal infirm.
While it might seem strange that the sole member of a single member LLC, most likely taxed as a sole proprietorship, cannot appear on behalf of her company, the law is unambiguous: all incorporated entities must be represented by counsel in order to appear in court.
There is only one exception to this rule: a corporation need not retain counsel in a shareholder derivative suit. Walacavage. at 284. The reason here is simple: the shareholder is suing on behalf of the corporation and thus stands in the corporation’s shoes; the counsel retained by the shareholder(s) is sufficient representation.
The lesson is as uncomplicated as it may seem harsh: an incorporated entity must retain counsel to participate in litigation unless the matter is before a district magistrate or the action is a shareholder derivative suit.
* While there are certain scenarios where a minor or other dependent requires an agent or attorney, our focus is trained on small businesses, professionals, and families.