Not looking for legal advice but just wondering if I'm crazy. Here's the situation...

Interim CEO, 2 founders and company are all named as defendants in lawsuit. Everyone agreed to joint defense and company is covering all costs associated with the litigation including any settlement payments. Settlement Agreement has Interim CEO signing individually and on behalf of company.

I think this is a conflict of interest and someone else should sign for company. Am I crazy?

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Not uncommon for execs to get named as defendants along with their business (especially where the the business’ liability stems from action/inaction of said execs).

As CEO they have the rights authorized by the BoD. Not uncommon for it to include settlement authority. As an executive they have legal duties to the company; if they breach them the shareholders can sue.

Who else would be authorized to green light a settlement??

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Company policy governing general employees is N/A.

The CEO is a position created by the BoD and entitled to all the powers they delegate (temporary vs interim ain’t really pertinent). That specific power grant is going to trump a general policy affecting contractors.

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Not understanding the issue. They are all defendants and one is signing the settlement on behalf of them all? The joint defense agreement should indicate who can sign. Is the interim ceo not allowed to sign?

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No, not one signatory for all on the settlement agreement. The joint defense agreement was signed by the individuals for themselves and a different exec signed on behalf of the company. The other twist is company policy doesn't grant signing authority to non-employees. Interim CEO is a contractor, not an employee.

You are not crazy to question this, as having the Interim CEO sign on behalf of the company while also being a defendant could create a conflict of interest. Typically, someone who is not personally named in the lawsuit and has no direct stake would sign for the company to avoid potential legal complications. It is reasonable to raise this concern to ensure the company’s interests are properly represented.

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The CEO must have a signed power of attorney to act on behalf of other Defendants to the suit.

The individual defendants are signing for themselves.

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