Operating a business as a corporation, including an LLC (limited liability company) or PLLC, or as a partnership has many advantages in North Carolina, including limiting the liability of business owners. However, there are some disadvantages to operating a business as a corporation (as opposed to a sole proprietorship). One is that in North Carolina a corporation cannot represent itself, through its employees and non-attorney owners, in a judicial proceeding, such as a proceeding in District or Superior Court; a corporation must appear through a licensed attorney at a trial or other judicial proceeding.

The practice of law in North Carolina is governed by statute. The practice of law includes performing any legal service for another person, firm, or corporation, with or without compensation, preparing court documents, assisting in legal work, and advising another person, firm, or corporation of their legal rights. (NC Gen. Stat. § 84-2.1) One statute specifically provides that a non-attorney may not “appear as counsel or legal counsel in any action or proceeding before any judicial body, including the North Carolina Industrial Commission or the Public Service Commission”. .” One case held that a corporation cannot even request the continuation of a court date, because this constitutes the practice of law.

Federal courts have generally applied the same rule, requiring a corporation to appear through a licensed attorney. The rule also applies to partnerships and non-profit corporations. Some federal proceedings are exempt from this rule, such as proceedings before the Social Security Administration, the Internal Revenue Service, and the US Citizenship and Immigration Services (USCIS).

The leading case on this issue in North Carolina is found at 155 NC App. 205, 573 SE2d 547 (2002). In this case, the plaintiff sued the defendant, who was a corporation. The corporation had one shareholder, who was also the president, chief executive officer, and chairman of the board. This owner filed an answer and a counterclaim, and apparently appeared in court to argue one or more motions. The plaintiff sought to vacate the response on the grounds that the owner could not file the response for his corporation. The presiding judge contacted the North Carolina State Bar Association (which regulates attorneys licensed in North Carolina and also investigates unauthorized practice of law), who informed the judge that the owner could represent your corporation in court. The case subsequently reached the North Carolina Court of Appeals, which held that it was in error. The court wrote, “in North Carolina, a corporation must be represented by duly admitted and licensed counsel and may not proceed pro se unless it does so in accordance with [limited] exceptions”.

One of those exceptions is that the employee of a corporation can represent the corporation in small claims court. 86 NC application. 469 (1987). The reasoning for this case is suspect, but this exception is still recognized.

It is not entirely clear whether a corporation can represent itself in an administrative proceeding before the Office of Administrative Hearings (OAH), or before a licensing board or agency. North Carolina General Statute 84-2.1 states that the following constitutes the practice of law: “the preparation and filing of petitions for use in any court, including administrative courts and other judicial or quasi-judicial bodies, or assistance through advice, counsel or otherwise in any legal work”. The State Bar has said, apparently based on this statute, that “to appear before a court or before any judicial or quasi-judicial body on behalf of another” constitutes the practice of law.

Therefore, it would appear that a company must appear through a lawyer in administrative proceedings. The term “quasi-judicial” generally means “denoting or relating to judge-like powers and functions, such as are exercised by an arbitrator or administrative tribunal.” Additionally, North Carolina case law states: “A ‘contested case’ is a quasi-judicial administrative proceeding to resolve the rights, duties, or privileges of a person involved in a dispute with an administrative agency.” 358 NC 649, 657 (2004).

On the other hand, one case held that a corporation may represent itself in an administrative hearing unless a specific rule or statute says otherwise. 187 NC Application. 227, 653 SE2d. 11 (2007). Therefore, it is difficult to summarize this precise issue and to predict how courts will adjudicate in specific administrative contexts.

Therefore, a corporation appearing before the North Carolina Superior or District Court, or before a Board or before the Office of Administrative Hearings, must hire an attorney to represent it or, at a minimum, hire an attorney for advice if legal advice is required. When a lawyer is required, the absence of a lawyer will mean that the corporation cannot assert its rights and cannot defend itself.