MTSU Professors receive Distinguished Research Award

Entrepreneurship is a vital part of our economic system. According to U.S. Small Business Administration estimates, small firms (those with under 500 employees) represent more than 99 percent of all businesses. However, entrepreneurship is a relatively new and emergent scholarly discipline. Therefore, the material in entrepreneurship textbooks and courses is still under development. MTSU entrepreneurship faculty members Robert Lahm, Ph.D. and Patrick Geho, J.D. recently published an article after noticing that textbooks are typically devoid of some of the more complex legal analysis that would lead would-be business founders to a more informed understanding of the limitations of corporate forms in affording protection from personal liability.

In other words, these texts may have contributed to what amounts to a “myth” in causing entrepreneurs to believe that they are personally separate and invulnerable, so long as they have taken the step to incorporate, as compared to operating as an individual under a sole proprietorship. The authors of this paper have quoted the term “myth,” because practicing corporate attorneys and the plaintiffs they represent, the courts and legal scholars are keenly aware of ongoing efforts to devise strategies and methods to pierce the corporate veil (which separates private individuals from their corporate forms).

The problem is, in order to maintain the protections afforded by incorporating, there are conditions that must be met. Laws vary from state to state. However, certain fairly universal conventions apply: for instance, incorporated businesses are at risk if they commit torts (fraud and negligence), comingle funds, or fail to adhere to formalities including holding meetings, disclosing that a business is incorporated or signing contracts as an officer of the corporation (instead of as an individual).

Veil piercing is one of the most litigated areas in corporate law. For the entrepreneur who is just starting out (or for those who may not be familiar with the fact that they are not “bullet-proof,” just because they have incorporated, the authors suggest consulting with an attorney about both the proper form of legal organization and the specific things that they must do to ensure that the chosen form would protect them in the event of a claim or litigation. For their work, Lahm and Geho recently received a “Distinguished Research Award” from the Allied Academies.

Just a few of the things we learned during this forum were that our youth want more opportunities to be directly involved in decisions that are made in our community; they want to know about leadership opportunities in all the segments of the community; they need adults to help facilitate their involvement; all youth want to be included, not just the “at-risk” or the high achievers; they want more contact with business, industry and social-profits through internships and cooperatives; and they want more opportunities like this forum in order to develop plans and act. The adults learned that we have a fantastic group of young people in Rutherford County and it is time that we take even more advantage of their vision, talents, and passion. Please be watching for the formal reports in early spring.