Under New York law, corporations and partnerships are typically required to retain counsel when pursuing or defending a lawsuit (see CPLR 321(a)). Generally speaking, when a party to an action is a legal entity with limited liability (such as a corporation, such entity cannot represent itself in court, but it must be represented by a licensed attorney to commence or answer a case and handle all aspects of the proceedings.
Which entities Are Subject to This Rule?
This rule applies to corporations and other business organizations such as limited liability companies (LLCs), partnerships, and limited partnerships. On the other hand, sole proprietorships are not required to hire an attorney for legal proceedings.
Exception: Representing Your Business in Small Claims Court
It’s worth noting that there are exceptions when it comes to Small Claims Court in New York. Small Claims Court is a specialized division within New York City, Town, or Village courts designed for resolving disputes without the need for an attorney, especially when only a small amount of money is at stake. Generally, corporations are not permitted to initiate a small claims case in New York. However, corporations may defend themselves in small claims court either through an attorney or by their directors or officers (without an attorney). Moreover, corporations may file a “commercial small claim” without an attorney in New York under specific conditions.
Conclusion
Failure to secure legal representation for your business entities in New York courts can have severe consequences. If a corporate defendant fails to retain counsel, it may result in a default judgment being entered against the corporation. If your business is embroiled in a lawsuit or you are contemplating initiating legal action on behalf of your business it is advisable to consult an experienced litigation attorney to explore your available options.
