At some point you will be asked by a non-profit entity or “encouraged” by firm management to join a board. Before you commit to this undertaking, you should find out more about what is at stake regarding your time, finances, and personal liability.
Before joining a board, you must 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. I joined a board that met nine months out of the year, which didn’t seem like a huge time commitment. 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 a governing board review financials, discuss strategic plans, and vote on other operational matters. They may focus on other specific areas during committee meetings, but overall the non-profit staff is responsible for running the organization. In contrast, members of a working board 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.
Many organizations require board members to contribute financially. Make sure you get a clear understanding of this obligation before joining the board. Some organizations may not mandate a specific amount, but will require all board members donate something and/or attend fundraising events. Other organizations require that directors give a percentage of their income. Be sure to ask whether employer matching or other third-party donations you obtain count towards your obligation.
Directors have fiduciary duties to the organization, which become even more complicated when analyzing your role as an attorney versus a board member. It is important to keep the following questions in mind when assessing your potential liability:
- What does your state’s law provide in regards to non-profit 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? Even if you do not charge for your services, many malpractice carriers require an engagement letter be signed before attorneys provide legal advice.
If you become a director, you must be mindful of your particular role at any given time. For example, the minutes of a meeting 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. However, before making the commitment, you must analyze the organization’s expectations and your potential liability.