Ask someone to describe what comes to mind when they hear the words “corporate lawyer” and do not be surprised if it includes mention of conservative business attire and a corporate board room with floor-to-ceiling windows offering a panoramic view of a large city. Oh, there will also be mention of a leather briefcase.
A stereotypical image that people have of a corporate lawyer offers little if any, insight into the role attorneys have in the niche area of law known as “corporate law.” A clearer understanding may come from taking a closer look at corporations and the areas of law that apply to them.
What is a corporation?
Any discussion of corporate law should begin by taking a look at corporations. A corporation is a legal entity authorized and formed under state law. Those laws may differ from one state to another, but all corporations, no matter where they are formed, are recognized as a legal entity or person. This means all corporations possess the following similarities:
- They can enter into contracts.
- They can sue and be sued in a court of law.
- They can be prosecuted for committing criminal acts.
- They can own assets, including real estate.
- They are subject to taxation.
Corporations possess many of the same rights, privileges, and responsibilities the law grants to or imposes on the average person.
As legal entities, corporations exist separate and apart from the shareholders who own their stock. For example, if the contractor you hired to do work on your house failed to complete the project, you would sue that individual to recover damages. However, if the contractor did business as a corporation, your lawsuit would be against the corporation and not against the individual owner.
As a general rule, the owners of shares of a corporation participate in the profits of the business through dividends without being personally responsible for corporate debts. In the event of a lawsuit against the corporation, shareholders risk losing the money they invested in the company, but their personal assets are protected.
Formation of a corporation is a relatively easy process completed through the Secretary of State or other state agency designated to oversee and regulate corporations. A corporation that does business in a state other than the one in which it was originally formed is referred to as a “foreign corporation.” Foreign corporations must register with the state agency overseeing corporations where it intends to do business.
What is corporate law?
All of the laws and regulations enacted by states to govern the formation, ownership, taxation, and operation of corporations operating within their borders constitutes the area of law known as corporate law. It encompasses every aspect of the way corporations do business and extends to regulating the handling of disputes between shareholders and between shareholders and a corporation. Because it is a distinct and separate entity from its owners, corporations can be sued by their shareholders to resolves disputes that may arise between them.
Corporate law also governs the internal management and structure of a corporation. The usual structure of a corporation is made up of directors, officers, and shareholders.
Directors set the general policy and establish long-term goals for a corporation. They are elected to the position by a vote of the shareholders and appoint officers to oversee the day-to-day operations. A small, privately held corporation, which means its shares of stock are not publicly traded on one of the recognized stock exchanges, may have one person serving as a director, officer, and owner of the corporation.
State laws require that corporations hold annual meetings of their shareholders and boards of directors. Minutes of the annual meetings must be kept by the corporation and available for inspection by state officials and by the Internal Revenue Service to ensure the corporation is operating within the law.
The role of corporate lawyers
They may not be portrayed on TV or in the movies in the heroic roles of crime fighters or zealous defenders of the rights of the accused, but corporate lawyers serve a vital function. They act as the legal advisers ensuring that decisions and actions were undertaken by the corporations they represent to comply with the law. They also must also protect and enforce the legal rights of their corporate clients.
Corporate lawyers must have knowledge of a number of different areas of the law, including the following:
- Contract law: Corporate lawyers negotiate terms, draft, and review contracts on behalf of the corporation they represent. Contracts and agreements may range from leases and purchase agreements to employment contracts and real estate acquisition agreements.
- Securities law: Shares of stock issued by corporations, particularly stock that is publicly traded, are subject to state and federal regulations that corporate lawyers must ensure their corporate client does not violate.
- Mergers and acquisitions: Corporate lawyers may handle the negotiations, due diligence, drafting and review of agreements, and other tasks related to the acquisition of or merger with another business entity.
- Corporate compliance: It is the responsibility of corporate lawyers to ensure that a corporation complies with all laws, rules, and regulations in all states and jurisdictions in which it conducts business.
Corporate lawyers provide oversight and advice to the directors and officers of a corporation to avoid violations of state or federal criminal laws. Because a corporation can be prosecuted for violating criminal laws, a corporate lawyer may be called upon to defend the business against allegations of fraud, misrepresentation, bribery, and antitrust activities.
What does it take to be a corporate lawyer?
Someone with a desire to become a corporate lawyer needs to graduate from law school with a Juris Doctor and pass the bar examination to be licensed in the state in which they intend to practice law. Skills essential to the work done by a corporate lawyer include the following:
- Superior written and verbal communication skills.
- A talented negotiator.
- Knowledge of different areas of the law.
- Excellent researcher.
An ability to work as part of a team is critical for success as a corporate lawyer. Taxation, litigation, and other highly specialized areas of the law may require a corporate lawyer to reach out to attorneys possessing the specialized knowledge a corporation needs for a particular matter.
In-house or outside counsel
Corporate lawyers do not necessarily work only for one corporation. While it is true that some corporations have in-house corporate counsel working only for them, there are law firms around the country offering their services as outside counsel to corporations that retain them either to work on a particular matter or on an annual retainer to provide ongoing corporate legal services.
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