Pick a nonprofit scandal. Generally a lawyer served on the board of directors. When reading about nonprofit scandals, my question is “Where was the lawyer?” It often appears they were absent as a board member and a lawyer.
During a recent CLE program, I spoke on lawyer’s legal and professional responsibilities using the example of a troubled “hypothetical” nonprofit. While lawyers have legal training and experiences, they should understand their responsibilities and limitations serving as a board member.
Lawyers typically are recruited to a nonprofit’s board for two reasons. They are expected to provide free legal services and to raise funds.
During my presentation I asked: “Who liked to provide ‘free’ legal services?”
Few lawyers raised their hands. Not surprising since most practice law for their livelihood. Yet charging for their services during or after serving on the board may be problematic.
When asked “How many liked fund raising?”, none raised their hands. Few board members do!
Writing this blog raised a third unasked question: “How many marketed their services to the nonprofit’s board members and stakeholders?”
Likely many would have raised their hand including me. That’s what I sought joining my first board. I didn’t foresee how my experiences might lead to my current practice and this blog. But I digress.
Boards are responsible for managing the corporation’s affairs. Board members function as leaders and managers with specific legal duties to the corporation and its stakeholders. They are a political participant in the board’s decisions. Other board members generally consider their advice as if a client in the lawyer client relationship despite the lawyer’s disclaimer if given. Yet this professional relationship does not exist in the board context.
Further, the lawyer/board member may lack the requisite competency or knowledge; professional independence; or ability to fulfill ethical responsibilities to a lawyer’s detriment. Many seminar participants did not realize neither their malpractice insurance nor their D&O liability coverage may insure them for advice rendered while on a board.
Today’s nonprofits require professional expertise specific to the nonprofit sector which many lawyers lack. Few lawyers have nonprofit training nor even fewer have an MPA degree with a concentration in managing nonprofits.
Nonprofits should use and budget for legal services with nonprofits as a core competency. As a proactive advisor, legal services are always less expensive than “after the fact” damage control!
There is a simple solution for a lawyer. Choose your role!
If a lawyer wants to provide legal counsel, don’t serve on the board. If they want to serve on the board, then don’t provide legal advice. A simple choice, but one which a lawyer should make.
