August 28, 2019
Risks are inherent in every business, and Virginia entrepreneurs open for business are also open to greater liability. From data privacy and financial disputes to personal injury lawsuits, a single complaint can overwhelm a small business.
The Virginia State Corporation Commission (“SCC”) requires all foreign and certain domestic business entities, such as limited liability companies (“LLCs”), corporations, and partnerships, to designate a “registered agent” during formation. The name and address of your business’s registered agent are public, and litigation filed against your business may be served on your registered agent. Designating an experienced Virginia business attorney at McClanahan Powers, PLLC to serve as your Virginia registered agent can mitigate the risks, stress, and expense associated with business litigation. It may even deter frivolous lawsuits and exploitative filings.
Virginia law clearly defines a registered agent as a qualifying individual whose “sole duty” is to forward to the business any legal process, service, or demand served on the company to the company’s “last known address.” This means, if you’re sued in Virginia, the summons and complaint may be served on your registered agent in accordance with Virginia law. Service on your registered agent, in many circumstances, is service on the business and starts the clock for your responsive filings. A registered agent must maintain an office in Virginia and should be available to receive process in person or via mail during normal business hours. The majority of registered agents may not receive process at a P.O. Box, which means certain foreign, virtual, or mobile businesses must contract with a qualified registered agent in Virginia to do business.
Every domestic (Virginia) and foreign business entity transacting business in Virginia with the exception of certain sole proprietorship is required to maintain a registered agent at a registered office in the Commonwealth. You may only have one registered agent, and a business entity cannot act as its own registered agent. However, an entity may serve as the registered agent for another business. An initial registered agent must be designated on your registration paperwork with the SCC, and you should update this information as necessary. Service on a registered agent is considered valid service on the entity in most circumstances, which means your business may have a default judgment entered against it in litigation if your registered agent’s information is out of date.
Not everyone qualifies as a registered agent in Virginia. Instead, Virginia law only permits the following individuals/entities to act as registered agents provided they reside and/or maintain an office in the Commonwealth:
A registered agent must consent to the designation, often in writing. You may not select a law firm, business entity, or manger to act as your registered agent without approval. Further, Virginia does not permit the SCC to serve as an elected registered agent.
In Virginia’s state and federal courts, you must file a response to a legal complaint within 21 days of receiving service unless otherwise waived by the parties. Service on a registered agent, which is permitted in Virginia when service cannot be accomplished on the entities’ members, starts this clock regardless of whether your registered agent timely and correctly forwards you the complaint. This is the inherent danger in utilizing “courtesy” agent, trading favors with another business, or entrusting service to an unreliable member of your enterprise. By the time you receive a forwarded complaint, find an attorney, and draft a response, you may have to petition for additional time to answer or fight an expensive default judgment. This can mean expending substantial litigation expenses on an otherwise frivolous lawsuit or judgment, which may disproportionately affect foreign entities doing business in Virginia.
Designating a qualified Virginia business attorney as your registered agent means he or she, with your consent, can immediately do the following:
Further, when a plaintiff prepares to serve and file a lawsuit against your business, they may think twice about the validity and nature of the litigation when he sees that his complaint will be met with an immediate challenge from the experienced and respected business litigation attorneys at McClanahan Powers.
Business is a risk, and litigation happens to even the most diligent entities. Designating a business litigation attorney at McClanahan Powers, PLLC to serve as your registered agent can save your business from incurring substantial litigation expenses, prevent default judgment against foreign business entities, and give you the peace of mind to run your business without the constant threat of litigation. To schedule a business litigation consultation, contact our experienced Virginia and D.C. attorneys online or by calling (703) 520-1326.