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LLCs must have attorneys in federal court

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Owners of limited liability companies must be represented by an attorney to appeal a decision in federal court, ruled the 7th Circuit Court of Appeals today. Because a company and its president appealed a District Court's decision without an attorney, the appellate court dismissed the appeal.

In United States of America v. Derrik Hagerman and Wabash Environmental Technologies, LLC, No. 08-2670, Wabash and its president, Derrik Hagerman, appealed the District Court's dismissal of the government's petition for relief after Wabash agreed to start paying restitution and furnish specific financial information. The defendants were convicted of criminal violations of the Clean Water Act and ordered to pay $250,000 in restitution and placed on five years of probation.

The 7th Circuit dismissed Hagerman's appeal because he wasn't a party to the probation-violation proceeding and no order naming him was entered, wrote Judge Richard Posner. Wabash's appeal also must be dismissed because they are proceeding pro se with the appeal, which can't be done in a federal court.

Hagerman claimed, as president and "member" of Wabash, he can represent the company in proceedings. But corporations aren't permitted to litigate in federal court unless represented by an attorney who is licensed to practice in that court, and the same applies to LLCs, wrote the judge. Even though the appellate court hadn't ruled on whether an LLC can litigate only if represented by a lawyer, the same rule applies.

The right to conduct business confers privileges, and one of those is the obligation to hire an attorney if you want to sue or defend on behalf of the company, Judge Posner wrote.

"Pro se litigation is a burden on the judiciary ... and the burden is not to be borne when the litigant has chosen to do business in entity form. He must take the burdens with the benefits," he wrote.

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