YourABA: November 2013
YourABA November 2013 Masthead

What to consider before joining a board

At some point, you may be asked by a nonprofit or encouraged by firm management to join a board. Before making the commitment, find out more about what is at stake regarding your time, finances and personal liability, said Sarah Carter, an attorney for Ohio-based Speedway LLC, in a recent issue of The Young Lawyer.

Time

Before joining a board, determine how much time you are required to commit. Start by asking how often the board meets and whether participation on a committee is required, Carter said.

"I joined a board that met nine months out of the year, which didn’t seem like a huge time commitment," she said. "Before I knew it, I was asked to join two committees. Now there are some months when I have three meetings, which is more than I anticipated."

Another factor to consider is the board structure: Is it a governing board or an administrative/working board? Members of governing boards review financial information, discuss strategic plans and vote on operational matters, Carter said. In contrast, members of working boards may be expected to assist with hands-on tasks, such as grant writing or other fundraising efforts, which will require more time outside of meetings.

Finances

Many organizations require board members to contribute financially. Make sure you get a clear understanding of this obligation before joining the board, Carter said.

Some organizations may not mandate a specific amount but will require all board members to donate something or attend fundraising events, she said. Other organizations require directors to give a percentage of their income. "Be sure to ask whether employer matching or other third-party donations you obtain count toward your obligation," Carter said.

Liability

"Directors have fiduciary duties to the organization, which become even more complicated when analyzing your role as an attorney versus a board member," Carter said.

Carter recommended keeping the following questions in mind when assessing potential liability:

  • What does your state’s law provide in regards to nonprofit director duties and liability?
  • Does the organization have sufficient directors’ liability coverage?
  • Do your state laws provide for indemnification of directors?
  • How well is the organization doing financially?
  • Is board service covered under your firm’s malpractice policy?
  • Has the organization signed an engagement letter?

If you make the commitment …

If you become a director, you must be mindful of your particular role at any given time, Carter said. For example, meeting minutes may need to reflect when something is privileged, or you may need to abstain from drafting a contract that you voted against.

"Serving on a board can be a very rewarding experience that allows you to make a difference and expand your connections," Carter said. "However, before making the commitment, you must analyze the organization’s expectations and your potential liability."

The Young Lawyer is a publication of the Young Lawyers Division.

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