[simplerman]

You would sue guilty employees even if they quit and move to another company. I feel that would be much better for personal responsibility.

And the best part about this would be people cannot hide behind "I am just following orders."

[mminer237]

Also, it would mean you usually would not recover anything since a corporation usually has deep pockets and your average employee is not even worth suing even if you could win.

[simplerman]

True, but that may be a good thing. This may prevent people from suing for small infractions.

On other hand, let's say, if your average software developer knows that they can be sued into bankruptcy, then they will not release unfinished code and voice strong opposition to it. Thus shifting responsibility to middle managers. Now if middle managers know that they can be sued into bankruptcy, they will not override developers concerns and extend deadline and refuse to push unfinished product. Executives may try to override managers decisions but then responsibility shifts to them and they would not want to lose significant portion of their net worth. Board or managing-owners may try to override CEO, but then they will be responsible and they would not want to be personally sued and lose a portion of their personal wealth.

Yes this may not impact billionaire owners but that is a small number. Most companies will be more ethical and people will have a high degree of personal responsibility.

[bumby]

I think my issue with your hypothetical is that is assumed a company is already viable and in business. One of the primary advantages of a corporation or LLC is it’s limited liability. I.e., you can take a risk and if things don’t work out you can still personally recover. I suspect if we took the approach of your post, many, many fewer people would try their hand at starting a business because there are no limits to liability and much less capital to fund businesses if shareholders downside wasn’t capped.