Navigating Litigation Conflicts in Troubled Corporations

When a corporation finds itself in troubled financial waters, litigation by shareholders and creditors alike often follows. Increasingly, such litigation takes the form of a class action suit commenced against the company, followed closely by a derivative action against the directors and officers. In the context of derivative claims, a thorough understanding of both the duties of a corporation's officers and directors and to whom such duties are owed, is paramount. These dynamics, however, give rise to conflicts of interest that may pose significant ethical challenges for the attorneys representing the various parties.