Attorneys on Nonprofit Boards: Ethical Considerations
With attorneys on nonprofit boards, two ethical considerations can arise — confusion about their role on the board and the possibility that other board members will give extra weight to what they say because they are an attorney. Both the attorney and the nonprofit need to be aware of these ethical considerations and take steps to ensure clarity for all involved.
Here are some things to consider and actions to take when asking an attorney to serve on a nonprofit board.
Be clear about the ask
When it comes to an attorney’s role on the board, it must be clear whether they are acting as legal counsel for the organization and providing legal advice or acting in a personal capacity and providing a personal opinion as a board member.
Thus, nonprofits should have a clear goal in mind when asking an attorney to serve as a board member. If the reason for inviting an attorney to the board is to serve as legal counsel, discuss options for retaining them in that capacity rather than as a board member. If you are seeking the person’s presence on the board strictly in a personal capacity, state that clearly to the board and to the attorney. The attorney should, in turn, be clear with the nonprofit on their area of legal expertise and what role they are willing to take.
In general, it is a best practice that attorneys serving as legal counsel for an organization do not also serve as a board member. Serving in a singular role that is clearly defined for all other board members helps protect the attorney and the nonprofit.
If the attorney’s role on the board isn’t clear to everyone, it can create a potential conflict of interest for the organization or the attorney and lead to questions about what information may or may not be covered by attorney-client privilege. The Rules of Professional Conduct for attorneys in Oklahoma, and specifically rules on conflict of interest, can be reviewed at 5 O.S. § 1.7. Comment 35 to Section 1.7 highlights that an attorney should determine if the role of board member and legal counsel to the organization causes a conflict. Where the dual role of legal counsel and board member compromise the attorney’s independent professional judgment, the attorney should either resign from the board or as legal counsel.
Understand their scope of expertise
Sometimes, people put greater weight on what an attorney says because of their profession. However, when serving in a personal capacity as a board member, their opinion should not be considered as that of legal counsel to the organization.
“Attorneys typically have a specific area of practice, and most do not specialize in nonprofit legal matters and compliance.”
Attorneys typically have a specific area of practice, and most do not specialize in nonprofit legal matters and compliance. When inviting an attorney to serve on your board, it’s important that all board members understand their area of expertise and in what capacity the attorney is serving.
Know the limits of D&O insurance
If the actions of an attorney sitting on the board are viewed as those of legal counsel, the director’s and officer’s (D&O) insurance policy held by the organization may not cover it. At the same time, the attorney’s malpractice insurance may not cover actions taken as part of a nonprofit board. Attorneys should understand the potential liability involved and ensure their professional liability insurance covers any gaps.
Document things for clarity
If a legal matter is being discussed, the attorney should make clear to all involved if they are speaking as legal counsel or in a personal capacity as a board member. Even if it feels repetitive to regularly state their position, it will help board members understand and properly interpret any opinion or advice. This should be documented in the meeting minutes for clarity and future reference.
Many attorneys serve on nonprofit boards and provide significant value to the organization. The key is to ensure clarity for everyone involved by being clear about the role the attorney is asked to fill, understanding their scope of legal expertise, knowing the limits of insurance coverage, and documenting things for clarity.
