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The Binding Power of a Testifying Corporate Representative

By Slater Elza

In a lawsuit, the governing rules of procedure allow your opponent to essentially take your company’s deposition.  Opposing counsel is permitted to give your company a list of topics and require the company to designate one or more persons who will provide sworn testimony on each of those topics. This representative represents the corporation, and the corporation is bound by such testimony.

A company will have difficulty avoiding the sworn testimony of its designated corporate representative. When a corporation produces an employee, it represents that the employee has the authority to speak on behalf of the corporation with respect to the areas within the notice of deposition. The corporate representative testifies as a representative of the entity, his answers bind the entity, and he is responsible for providing all the relevant information known or reasonably available to the entity. This type of deposition is not used to discover the witness’s personal knowledge. Instead, the representative presents the entity’s “positions” in the lawsuit.

Such witness can testify as to the entity’s legal and factual positions. Likewise, it is appropriate for the corporate representative to be asked about the company’s contentions and subjective beliefs and opinions related to the lawsuit. In fact, the representative may be asked to clarify the basis for or scope of the company’s legal claims. To hold otherwise would lead to a result where entities could avoid ever being asked about their positions and contentions in a lawsuit.

A corporate representative’s testimony also constitutes binding judicial admissions on behalf of the company. Admissions during these depositions which are deliberate, clear, and unequivocal constitute binding judicial admissions. Once such testimony is given, the company cannot later contradict such testimony. Because of the binding power of a corporate representative, it is imperative that companies choose the best person to testify and spend the time and resources necessary to prepare them for the deposition.  The stakes are far too high to risk sabotaging your lawsuit by choosing the wrong representative or not properly preparing them.

 




Concerns When Representing a Governmental Entity

By Slater Elza

An attorney representing governmental entities has an ethical obligation to know and understand who it is they represent.  Companies and governmental entities are buildings and office furniture and inventory.  They cannot communicate except through their governing boards, management and employees.  So we have to figure out who we represent and make sure the client and its interests always come first.

Who Is My Client?

The first sentence of Rule 1.12 of the Texas Disciplinary Rules of Professional Conduct clearly states that when you represent an organization, the attorney’s client is the entity itself.  This concept applies equally to governmental entities and private corporations.  Because the attorney represents the entity, the Rule also makes it clear that the attorney does not represent the individual members, officers, or employees of the entity.  This seemingly straight forward concept is sometimes difficult for board members, employees, or other client representatives to understand.  Accordingly, it should be made clear to the city council (or school board) and the city (school) staff at the beginning of representation (and as the representation continues) that the attorney only represents the entity.  This will help avoid problems and confusion in the representation.

This concept is markedly more difficult to successfully navigate than when representing private companies,  When representing private companies, legal counsel often deals with (or has regular access to) the decision maker(s) who can provide real-time answers and direction.  With a governmental entity, the actual decision makers (who may or may not be the problem) are a city council or school district that meets infrequently.  This can magnify ethical issues that might be less difficult with private companies. 

Who Do I Take Direction From and Report To?

Disciplinary Rule 1.12 recognizes that when representing an entity, the entity can only communicate with the attorney through its agents.  Of course, a governmental entity may not only have a governing board and city manager or superintendent but a number of other individuals who may or may not be responsible for communicating with the attorney on behalf of the entity.  So, the Rule limits who the attorney reports to and takes direction from to those who are “duly authorized” by the entity.  This usually means the duly elected board and city manager or superintendent.  But at times it may also encompass other positions such as the chief of police, business office manager, fire chief, department heads, principals or anyone who is authorized to act on behalf of the entity.  It is not uncommon for a board member to reach out to the attorney.  It is advisable that any governmental entity develop a protocol on exactly who can contact the attorney to avoid confusion (and problems) in the future.

Logically, this qualification requires the attorney to answer additional questions in making sure they are representing the entity, and not the personal interests of some official or employee.  Has this person been duly authorized to communicate with the attorney on behalf of the entity?  If so, how were they authorized?  Was it by action of the board through an adopted policy, a resolution or ordinance?  Was it by authority granted to them by state statute or other law?   For example, the city manager of a home-rule municipality who contacts the attorney about a $5,000.00 contract could well be a “duly authorized” representative of the city.  However, working with a employee on a matter that has not been authorized can create significant potential problems.

As a practical matter, this can also be addressed in the engagement letter between outside legal counsel and the entity.  The engagement letter should make it clear who is authorized to communicate with the attorney on a routine basis on behalf of the entity.  Additionally, when I am contacted by someone other than my regular contact, I make clear that I will likely inform the governing board about the substance of any conversation.  This insures there are no mistaken understandings about who I represent (and who I do not represent).