Will the lawyer on your non-profit board really provide legal advice?


An executive director friend and I went to lunch a few weeks ago to catch-up on life and share stories. The company was great, the lunch was good, and I learned something new about non-profit board volunteers who work in the legal community. As it turns out, some law firms seem to be requiring their employees to clear a number of hurdles before serving on a non-profit board.

This revelation came about when my executive director friend said something to the effect of: “. . . and now the lawyer on my board can’t even provide legal advice in the boardroom.”

As you can imagine, I heard that old record player needle scratching across the surface of a vinyl album (ugh . . . yes, I am dating myself and obviously don’t belong to the Millennial generation). I swear the restaurant went dead just like in those E.F. Hutton television commercials, and all I could utter was one simple word . . . “Huh?”

So, my friend went on to explain that a new board volunteer, who just happens to be an attorney, sent him a letter from his law firm requiring the executive director to sign-off on a letter of agreement outlining the conditions of their employee’s board service.

I had a difficult time wrapping my head around this concept and asked my friend to email me a copy of the letter. The following are excerpts from that letter (with the names excluded to protect the innocent):

“The Firm has adopted policies regarding circumstances under which a Firm lawyer may serve as a director for non-client companies, and prohibits such service without permission of the Firm’s Professional Responsibility Committee. An additional prerequisite to my service is that I obtain written acknowledgement from the non-profit organization (The Company) regarding the capacity in which I will be serving on the board, and certain other matters. By signing and returning this letter to me, therefore, the Company and the Board acknowledge the matters stated below:

  1. I will be serving in my personal and individual capacity only. I will not be acting as a lawyer or providing legal services or advice to the Company. I will not be acting as an agent, partner or employee of the Firm.
  2. The Company acknowledges that it is not now a client of the Firm, and understands that the Firm will not be able to represent the Company without first obtaining special permission from the Firm’s Professional Responsibility Committee, which permission is rarely granted or unless I resign as a director.
  3. Because I will not be providing legal services or advice in my role as a director, there will be no attorney-client privilege protecting communications between me and the Company or the Board.
  4. As mentioned, the Firm’s policy prohibits director service by Firm lawyers without Professional Responsibility Committee permission. The Firm’s policy also requires that the Professional Responsibility Committee reconsider this question at least annually. Although the committee has indicated that it will permit me to serve as a director of the Company, it is possible that the Committee could change its view on this question in the future. If this were to occur, I would have to resign as a director at that time.”

I must admit that I’ve read this letter over and over again in disbelief.  A number of things raced through my mind each time I read it, including:

  • Why would I ever recruit someone from a law firm who I might one day want to retain for legal counsel?
  • Board volunteers are suppose to bring their “Time-Talent-Treasure” to their non-profit board service. If I can only get two of three, is it still worth recruiting an attorney to serve on the board? Or would they just make a better special event or annual campaign volunteer?
  • Why would I ever include an attorney on my board as part of a board officer succession plan when the Firm can yank them off my board in a moment’s notice?

I am sure that if I thought about all of this for another few minutes, I could come up with additional questions and concerns. But where is the fun in that when I can open it up for discussion with the awesome non-profit professionals and volunteers who subscribe to this blog?

What questions and concerns do you have when you read excerpts from this letter? Have you been asked to sign off on anything similar by an attorney serving on your non-profit board? Does this letter of agreement impact how you think about recruiting an attorney to serve on your board? Why? Why not?

Please use the comment box below to share your thoughts on this important board development subject. We can all learn from each other.

Here’s to your health!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC
www.thehealthynonprofit.com 
erik@thehealthynonprofit.com
http://twitter.com/#!/eanderson847
http://www.facebook.com/eanderson847
http://www.linkedin.com/in/erikanderson847

Advertisements

About DonorDreams

Erik got his start working in the non-profit field immediately upon graduation with his masters degree in 1994. His non-profit management and fundraising experience numbers nearly 20 years. His teachable point of view around resource development is influenced by the work of Penelope Burk and those professionals subscribing to a "donor centered" paradigm. Donors have dreams and it is our responsibility to be dream-makers because donors are not ATMs.

Posted on October 23, 2012, in Board development, leadership, nonprofit, volunteers and tagged , , , , , , , . Bookmark the permalink. 4 Comments.

  1. I think the law firm’s point in this is to draw a line between letting their lawyers provide general legal knowledge and provide pro-bono services to the non-profit. For instance, it would be acceptable for the lawyer to read over an MOU to make sure all legal aspects are covered, but not to draft the MOU. And certainly not to defend the organization when there was a conflict under the MOU. But because they are part of a legal community, they can help steer the board to another great firm who could represent the organization.

    • Thanks for your reply, I really appreciate you taking time to weigh-in. In fact, I thought the same thing at first, but when I re-read the letter for the umpteenth time I decided that the sentence reading “… I will not be acting as a lawyer or providing legal services or advice to the Company …” might mean that they wouldn’t even help with the MOU example you provided. I dunno, but I find all of this very interesting and wonder if it is part of a larger trend in the legal community.

  2. Hi Erik- I haven’t seen a letter like that but I had the same reaction as you: Wow! I am interested to see if your readers have had similar experiences. When I served as an Exec I had a cadre of 5-6 attorneys, about half had been or were on the Board; I called them for issues that related to their expertise. There was one instance when the attorney I called, who was a past Board member, asked us to sign a form indicating we were engaging her for her services as the issue had the potential to become a case, and if it did we would be paying for her counsel, at a reduced rate. Thankfully it didn’t. I thought she handled it very well. For me, it drew the line between legal advice and legal services. Perhaps the solutions is for nonprofits themselves, before counsel is required, to draw up similar forms for their Board members who are attorneys illustrating the difference and defining what process will be used to retain counsel when needed.
    Dani

    • Dani . . . I really like how you distinguish between “legal advice” and “legal services”. I wonder if that changes how I read that letter now? I need to sleep on that thought. Thanks for bringing that to the table. I always appreciate your perspective!

      ~Erik

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: