ETHICS OPINION 312
NUMBER 312 1933
Question. Considering that most courts hold that a stockholder in a corporation has no redress, except by way of a stockholders’ representative suit in equity commenced and prosecuted on behalf of all the stockholders for the recovery of funds of the corporation misappropriated by the officers and directors; and considering that the affairs of the corporation should not be endangered by merely a few stockholders, and that such litigation should be conducted only by a large number of stockholders, and that in numbers there is strength and no one stockholder should be made to pay and bear the entire expense of such litigation for and on behalf of all the stockholders; and considering that the officers and directors charged with misappropriations are always organized and are in possession of all the funds and property of the corporation and are represented by skilled attorneys; state whether or not it is professionally improper:
1. For an attorney to be employed by an unsolicited stockholder for the purpose of effectuating an organization of stockholders for mutual protection and for the purpose of investigating the affairs of the corporation, as well as commencing and prosecuting any recovery .action or suit in equity; and
2. In the performance of his duties under such employment may the attorney employ lay people to assist him in perfecting such organization, in interviewing and soliciting the stockholders to become members of that organization; the attorney and the lay organizers and such other assistants, as may be employed for that purpose, being paid out of a fund created by the stockholders themselves who are members of the organization.
Answer. In the opinion of the Committee the lawyer should avoid any steps to select his own employment and all steps to stir up unjustifiable litigation (Canons 27 and 28 of the American Bar Association). It is unable to discover that the question suggests freedom from these faults. Therefore it is unable to approve the course suggested.
The Committee expresses no opinion upon the assumptions in the question.