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Lawyers Serve

4/2/2013

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     The French political thinker Alexis de Tocqueville in his Democracy in America was taken by the involvement of lawyers in the American society of the 1830’s.  We still see lawyers involved in all aspects of community life and see them routinely rising to leadership positions in many groups.  Lawyers are often sought out to serve on boards, particularly non-profits.  It is very satisfying work and allows us to give time back to our community and to be active in our non-legal interests.  It helps us be known in the community and can be meaningful work both professionally and personally.  I encourage you to do so.

     A caution is in order, however.  Typically the less sophisticated, smaller organizations often want you there — to be their lawyer.  There are many practical roles on Boards for lawyers, but serving as the attorney should not be one if you are also on the Board.  Either be the attorney, or serve on the Board.  You should not be both.

     Of course, privilege waiver could occur if also on the Board.  Divided loyalties would occur with dual roles.  Most importantly, you are not likely covered by your professional coverage when acting as a Board member and conversely when acting as a Board member and then sued you may not be covered by anything.  You should make certain any Board service comes with Directors and Officers’ (D&O) liability coverage and you should clearly indicate you as serving as a Board member, and not as its lawyer.  A conflict may disqualify your entire firm.  It may prevent future desirable representations.  Of course, public identification of you and the firm with a company, a cause, and certain activities may also be an issue.  So, think through this before agreeing to serve.

     While we lawyers do not like regulation of us, a pre-approved second set of eyes policy is in order in any size firm.  It will help the person who wants to serve think through the role, the coverage, and the perceptions to be created by the Board service.  If the company is a for profit, its bona fides need to be checked carefully.  In this “aiding and abetting” claims world a director is a likely target for bad investments and more so if the director also is a lawyer.  (See Sarbanes Oxley Act of 2002).  They will go after the firm’s coverage when the company has failed.

     I personally would not be inclined to serve on a client’s board at all.  I would encourage non-profit service with a firm approval process in place that makes the lawyer think through the role.

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    Steve Crislip was the General Counsel and Loss Prevention Member to a 11 office and 7 jurisdiction law firm for 10 years and has been defending lawyers and firms for more than 25 years and litigating for 40 years.
    These articles reflect lessons learned for Law Firms.

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