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October 10, 2006
Using Association Counsel for Personal Advice - That's a No No
Board members and managers sometimes are tempted to seek individual advice from the Association's attorney - the attorney is good, right? They seem fair, right? They would like to fix everything that is wrong, right? So they are the perfect resource when a board member or the manager does not like the direction the board is going, right? Talking to counsel about personal issues with the Board members is acceptable and does not cost a dime personally, right?
Wrong! If the association's attorney is having conversations with one board member who has a personal beef with what is going on with the board, or a complaint about one or more board members, that is a sign, a red flag, for both parties, that may lead to an ethical breach, both on the part of the board member (a fiduciary) and the lawyer (a professional subject to ethical rules). The same exact truth applies if the association attorney is conversing with management about the way management would like things to go, when the Board is going a different direction. The manager should not be seeking legal advice from counsel as to how to protect himself or herself against poor board decisions or failure to act appropriately.
Here is how I think it should work: when the conversations start to turn toward one board member or the manager seeking legal advice as to how to protect "themself", rather than how to get things working as they should: one option for the attorney is suggest to the person who contacted them that they provide the board with the written complaints or concerns, and urge the Board to seek legal advice as to the options, ramifications, or potential problems. If the majority of the Board is not in favor of seeking help to iron out whatever problem is occurring, then the complainant (person seeking help) might want to consider backing off and make the decision as to whether to stay on the board (for the Board member) or continue to manage (as for the manager). Of course it makes sense to seek independent legal advice from an attorney outside the firm representing the Association.
When a board member or manager seeks individual advice from the Association attorney, it leaves the attorney in a dilemma. Should the attorney pump the person seeking help for information? Contact the Board and let it know there is a problem (sometimes considered unsolicited, unneeded advice)? Suggest to the person seeking the advice that they confront the Board? Suggest they get an attorne? Or let it go unless and until the Board seeks legal advice, and respond when/if it does? The answer depends on the circumstances of course.
It could certainly be a confliict of interest, and an ethical breach (in California, I believe, and I would hope in other states) if association counsel provides individual advice to a board member or manager who is trying to protect themselves from situations created by a board, dysfunctional or not. The board member or manager needs to consult with other counsel. That is NOT to condemn the actions of the association attorney to try and get to the root of any problem that needs to be resolved. The attorney has the responsibility to act in the best interests of the corporation, its client, and not any individual member of it, if they have provided services to the Association and are considered the attorney for the association by the Board.
If circumstances have changed and the attorney for the association is no longer the attorney for the association, that does not automatically mean they are free to represent others with a beef against the association. Informed consent and waiver of any conflict is necessary (yes, that is a legal mouthful) if the attorney has provided services in the past and has any knowledge that would put the association at a disadvantage in any other actions that might arise. Managers and board members who have a dispute with the Board or grave concerns about the actions of the Board should consult with INDEPENDENT LEGAL COUNSEL, and not try to get the Association's counsel to answer their questions about what is needed to protect themselves. Some attorneys forget this in their zest to protect managers or Board presidents rather than analyzing what is best for their clients.
Posted by Beth Grimm at October 10, 2006 11:16 AM