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Shareholder Derivative Suits

Phoenix Derivative Suit Lawyers Represent Plaintiffs and Defendants

Experienced trial lawyers advocate for your rights

The stock market fuels our economy, spurring innovation and growth and rewarding savvy investors. But selling stock to raise capital comes with strings attached. Corporations and their directors and officers have a fiduciary duty to manage their operations and assets for the benefit of shareholders. When negligent or criminal mismanagement of company resources causes share values to drop, shareholders, have the right to hold company directors and officers liable for the losses. At Law Offices of Donald W. Hudspeth P.C. in Phoenix, our business litigation attorneys represent shareholders in derivative lawsuits, so they can recover losses stemming from mismanagement. On the other hand, even a competently run company can suffer reversals due to market forces outside of its control. For this reason, we also provide vigorous defense representation for corporations and individual directors and officers targeted by unwarranted lawsuits.

Requirements of a shareholder derivative lawsuit

To bring a shareholder derivative lawsuit, a plaintiff must have standing. Most often this means being a shareholder when the wrongful act occurred. Less frequently, the plaintiff may have become a shareholder by operation of law, deriving the right to bring an action from someone who previously held that right. Before filing a lawsuit, a prospective plaintiff must make a demand upon the corporation to take action. The prospective plaintiff must then wait 90 days before filing a lawsuit except in one of these circumstances:

  • The corporation gives notice it will not take action.
  • The statute of limitations will expire before the 90 days are up.
  • Irreparable harm will occur if action is not taken sooner.

Most shareholder derivative lawsuits end in a settlement between the plaintiff and the company’s board of directors. Damages recovered in a derivative lawsuit are placed back into the company.

Common reasons to bring a shareholder derivative lawsuit

A plaintiff with standing can bring a derivative lawsuit over various actions that constitute a breach of fiduciary duty, such as:

  • Corporate waste — Diverting corporate assets to purposes that do not advance the organization’s interests
  • Fraud — Misrepresenting material facts in a way that damages the operation, reputation and/or value of the company
  • Proxy violations — Rigging corporate elections to deprive shareholders of their rights
  • Excessive compensation and benefits — Devoting undue amounts of corporate resources to officers or directors in violation of shareholder rights
  • Misappropriation of corporate resources — Making personal use of company assets, such as expense accounts, vehicles or real estate.

Our business litigation team has ample experience in a wide range of corporate cases. We represent both plaintiffs and defendants in matters where corporate mismanagement is alleged.

Contact our Phoenix business litigation lawyers for shareholder derivative representation

Law Offices of Donald W. Hudspeth P.C. in Phoenix provides determined representation for plaintiffs and defendants in shareholder derivative lawsuits. Call our talented and experienced business attorneys at 866-696-2033 or contact us online to schedule a consultation. Our firm is easily accessed either by light rail or car, with plenty of available parking.

Donald W. Hudspeth Attorney Photo
Donald W. Hudspeth
Principal Attorney

Attorney Donald W. Hudspeth has more than twenty years’ experience practicing corporate and business law. Before attending law school, Mr. Hudspeth held a stock brokers license at the age of 21 and owned his own business at the age of 23. He was a business law professor at Arizona State University, West Campus, and has conducted classes and seminars for a number of higher institutions and organizations. Mr. Hudspeth has published two books on law and is the founder of the radio programs Law on the Edge and Law Talk.

Mark S. Hamilton Attorney Photo
Mark S. Hamilton

About Attorney Mark S. Hamilton has experience handling all aspects of civil and commercial litigation in federal, state, and tribal courts at the trial and appellate levels. Practice Areas Business litigation Commercial litigation Education University Of Hawaii Wm. S. Richardson School Of Law, Juris Doctor - 2002 University Of Hawaii, Master Of Arts in Asian…

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  • McAfee Secure
    Lawyers Of Distinction
    2020 issue of AZ Business Leaders

Our firm now offers a scholarship program for ASU first and second year law students.

The scholarship is awarded to students for academic merit with an interest in business and business law. Candidates may have majored in fields other than business, have taken a break between college and law school, or have had exceptional life experiences.

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  • "I would recommend Mr. Hudspeth unequivocally. Not only is he an outstanding business attorney, he also provided me with access to a divorce attorney. Thanks to his skill, and resources available outside the Phoenix law family, I was successful in challenging a “family law” mediation that was particularly and grossly unfair." - Chandler, Arizona Private Individual

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  • "Glad about meeting with Don. Felt so much better, better than in 15 years. Really appreciated the conversation." - RH, Phoenix Manufacturing Company

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