The Primerus Paradigm - Winter 2012 Page 20

T H E P R I M E R U S P A R A D I G M

Jeff Horst is Krevolin & Horst's senior litigator. He has handled a wide
variety of business related disputes in the areas of appeals, business
torts, contracts, corporate governance, intellectual property, officer
and director liability, securities litigation, shareholder disputes, and
trade secrets. Jeff has tried cases in Alabama, Delaware, Florida,
Georgia, and Texas, which have lasted from two days to seven months.
Jeff also serves on the Board of Advisors for the Kennesaw College
Corporate Governance Center.

Krevolin & Horst, LLC
1201 West Peachtree St. NW
One Atlantic Center, Suite 3250
Atlanta, Georgia 30309
404.888.9700 Phone
404.888.9577 Fax
horst@khalawfirm.com
www.khlawfirm.com

Jeffrey D. Horst

This article is written from the perspec-
tive of a trial lawyer who was brought in
shortly before the commencement of a
two-week trial to defend the chief execu-
tive officer and the executive vice presi-
dent of a large financial institution who
were defendants with the company in a
shareholder derivative suit. This is not
a tome on fiduciary duties of directors
replete with footnotes and commentary
on the nuances of the latest cases out of
the Delaware Chancery court. Rather,
this article is a short distillation of a
presentation given to boards of direc-
tors coupled with some insights gained
from trial one of the few, if not the only,
shareholder derivative cases ever tried
in Georgia. The goal is to help directors
not only lessen the likelihood they will
become embroiled in a shareholder suit,
but also to perform their responsibili-
ties as a director more effectively which
should, in turn, help their companies
function better and more profitably.

a Real case

The clients The CEO and EVP of

a $1+ billion Georgia financial
institution. Both had long,
distinguished careers at their
company, serving in multiple
positions. The company was also a
defendant.

The Plaintiff A shareholder who also

was the chairman of the county
commission in the county where the
case was to be tried.

The claims Breach of fiduciary duty

arising out of the disposition of
collateral from a foreclosed business/
real estate loan.

Plaintiff's attorneys A very large,

national firm headquartered in
Atlanta, Georgia.

Time of Engagement Two months

before a specially set trial.

challenges Multiple:

1. No dispositive motions had

been filed by the previous
defense lawyers.

2. No exculpation provision in

the charter.

3. No motion to recuse the judges

of the superior court had been
filed although the court received
30 percent of its budget from the
county commission of which the
plaintiff was the chair.

4. Substantial pre-trial publicity

had occurred.

5. Plaintiff was a very powerful,

influential businessman and
politician in a relatively small
county where the case was to
be tried.

6. Finding an unbiased jury willing

to rule against the chair of the
County Commission.

7. Witnesses who were unwilling

to testify on the defense's behalf
because of the plaintiff's ability
to influence zoning, tax, business
incentive or other issues
significantly affecting their
business interests.

The Effective Board of Directors:
Limiting Risk/Maximizing Return

North America