Risks for lawyers wearing other hats
Lawyers are often called upon to wear many hats other than lawyer. However, many times the new hat requires the lawyer to lend a hand using his education, skill, and experiences practicing law. For example, lawyers are often asked to serve on boards of non-profits, local banks, churches, and other organizations. This is primarily because the legal training and commitment to uphold high ethical standards with our clients is desired also by the organization. In other words, people ask lawyers to serve because of the lawyers’ good reputations.
Despite being asked to serve on a board because you are a lawyer, you are not serving on a board as the organization’s lawyer. The organization isn’t the lawyer’s client. But sometimes that line is blurred or misunderstood through poor clarification of the role, or by implication through action taken by the lawyer. And the lawyer then faces significant potential risks. What happens if the line is blurred too much?
The risks inherent in mission-creep
There is a saying (in the military, at least) that “work expands to fill the time alotted.” Lawyers often become lawyers because they want to help people. Their duties to their clients can expand over time, to include things outside the intended scope of the attorney-client relationship. In military terms, the mission’s scope has creeped, or expanded, beyond what it was originally intended. For lawyers, this can be very problematic.
Why? Consider that a lawyer is very familiar with their legal and ethical duties to their clients. That lawyer naturally fulfills those duties. Later, as a board member of an organization, the lawyer is asked a question that is “legal” in nature. The board wants the lawyers “legal opinion.” This is outside the lawyer’s duties as a board member. Indeed, the lawyer’s duties as a board member don’t include those of providing objective, ethical legal advice and counsel, because the board isn’t the client. If the lawyer provides a legal opinion, they may now be liable for incorrect advice, without being aware of it. The lawyer has allowed mission-creep to increase their risks of receiving a legal malpractice complaint or Bar grievance.
Risks to insurance coverage and other protections
Expanded liability has an impact on insurance coverage, too. If the lawyer is covered by an insurance policy with a firm, that policy may not include the legal opinion provided by the lawyer to the board that they’re on. The lawyer could be left to defend a claim related to their service on the board on their own.
Other board members might believe that their communications with the lawyer-board member are privileged. This would be true if the lawyer were the general counsel for the organization, not a board member. Generally speaking, the communications with the lawyer-board member are not privileged at all. From a discovery standpoint, they are certainly discoverable in litigation.
Protect yourself, your firm, and the board, from risks
The best way to avoid the risks of mission-creep is to have the description of the role you play in writing. The lawyer needs to make sure the board knows that the lawyers is not the board’s lawyer, or the company’s lawyer. The lawyer should also be very careful to avoid giving legal advice—this could be a tough temptation to resist! Although the lawyer could give their personal professional opinion, they should always follow it up with an opinion from outside counsel. An opinion from outside counsel comes with attorney-client duties and obligations. It also comes with a policy of insurance for legal malpractice keyed to the specific area(s) being inquired about… right?
Chandler & Moore Law is happy to assist you or the board you’re working on with defining your role and your duties. Please feel free to call to discuss your particular situation.