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September 22, 2006
Who Gets to Call the Attorney for the Association in an HOA?
A reader sent me this question, and I think it is a good one. Here is the scenario (a common one): "Our board president consulted with an attorney regarding questions that the rest of the board were not knowledgeable about. The bill came to $600.00 for several phone calls and a consultation. Can the president meet with legal counsel wtihout other board members present and expect the HOA to pay for it? Please help. This doesn't seem fair."
When I get a call from any board member, especially the president, I believe that I have a right to assume that if the person is an officer, he or she has the authority to call me and ask for advice, but I generally ask anyway whether they are a board member, an officer, and if they are authorized to seek advice. Depending on the answer, I may
1. Ask for written confirmation of the authority and the questions, and possibly for the name or names of my authorized contacts.
2. Include the advice given a statement that I asked and was told the officer was authorized, to memorialize it.
3. Ask for written board approval signed by a majority of the board members, or all of the board members in some cases.
4. Come to an agreement to represent the board member if the association is not one of my clients and the board member is seeking advice related to their position on the board or the association.
The answer for the question of the authority to contact the attorney comes either from the documents or, if not specific, sometimes from past practices that have been acceptable to the Board members. Sometimes (many times in fact), authorized practices are not memorialized in writing but just happen over the course of time. When they are questioned, it is time to consider a written policy on the subject.
Whether it was inappropriate for the president to seek legal advice would depend on many things. It would depend on what the governing documents for the association say, what the nature of the inquiry is, and what past practice has been accepted. Usually the president can seek legal advice, but sometimes there are limitations on the authority. If any board member objects to this practice, he or she can propose that the Board adopt a policy with some parameters and limitations. However, it is not helpful to make the authority so limiting that in an emergency situation, someone on the board and especially the president, who generally has more power and authority than the other board members, cannot get legal advice. Preventive legal advice can save an association thousands of dollars.
The same question could be asked of the manager's authority to contact legal counsel. That should be made clear to the manager. And it should be discussed. When a manager contacts me about an association problem, I always try to remember to ask if he or she is authorized to contact me about the problem. I do specifically ask if the problem involves the manager or something the manager believes he or she should do but the board does not seem to concur. Some attorneys have a problem understanding that their representation is to the Board, not management (unless contractually it is otherwise clarified), and so go forward to help the manager to the detriment of the Board. I like to know everyone is on the same page before doling out legal advice. And it is important for counsel to be clear about who the client is.
But in the case above, I have to say the answer to the question is - it depends on the circumstances, the situation, the particular questions the president needed answered, the urgency, the documents and the common practices of the Association and Board.
Posted by Beth Grimm at September 22, 2006 11:45 AM