Attorneys choose to serve on boards of directors of organizations for various reasons. Many view such service as an opportunity to support social, cultural or political causes that an organization promotes. Others see board membership as an opportunity to develop skills that are transferrable to the law firm setting. Regardless of the motivation behind serving on a board, becoming a member of the board can increase the attorney's visibility, create connections that lead to new business, and benefit the attorney's reputation in both the legal and business communities. For junior attorneys in particular, service on a board can provide valuable business experience that law firms may not otherwise offer.

While there are numerous benefits to board membership, the role can be fraught with potential risks. A lack of preparation and consideration of certain issues can result in severe consequences for the attorney, the attorney's law firm, and the organization itself.

The Risks Are Varied

Attorneys are trained to view all sorts of problems through a legal lens. Although attorneys serving on boards are typically called upon to act only in their capacity as board members, some find it difficult to turn off their “lawyer's brain.”

For example, the attorney may feel inclined to advise the organization regarding the legal implications of a particular course of action under consideration. This can create some ambiguity regarding whether the attorney is providing legal services to the organization in the context of an attorney-client relationship or whether the attorney is simply acting in her or his capacity as a board member.

Any such confusion can create additional risks. For example, other board members may erroneously believe that communications with the attorney are protected by the attorney-client privilege, even though the organization and the board members are not the attorney's clients. Another concern is that the attorney's law firm may be viewed as supporting or having an association with the organization.

Finally, attorneys might find themselves in an insurance bind. Board members can face a wide variety of potential claims, and the risk for a claim can be heightened if the attorney board member is perceived as rendering legal advice to the organization regarding a course of action. In such circumstances, the organization's directors and officers liability insurance carrier may take the position that coverage is unavailable for any subsequent claim because the attorney was acting in her or his capacity as an attorney. At the same time, the attorney's legal malpractice liability insurer may simultaneously argue that coverage is precluded due to the attorney's role in the organization. As a result, in the worst case scenario, they may even be left without any coverage when faced with a claim.

Additionally, ambiguity regarding whether there is an attorney-client relationship between the attorney and the organization can give rise to an argument that the attorney's service creates conflicts of interest for the attorney's law firm. Such conflicts may be easy to resolve if the attorney is simply a board member, but can create additional risk (or lost opportunities) if there is an argument that the attorney is acting as a legal adviser.

3 Tips to Limit the Risks

Despite these risks, there are steps that law firms can take to ensure that both the attorney and the firm are protected while enjoying the benefits of the attorney's service on outside boards.

  1. Consider a Written Policy

Law firms may consider enacting a written policy governing its attorneys' service on outside boards. What the policy should say will depend on the needs and goals of the individual law firm. Indeed, this policy can vary depending on whether the entity is for-profit or nonprofit, or when the organization is a client of the firm.

The law firm also may consider having attorneys obtain firm approval before agreeing to any board service. This could allow the firm to evaluate the pros and cons of the attorney's service on the board and to re-evaluate the relationship in the event that circumstances change. Many firms will also record the attorney's relationship with the organization in the firm's conflicts clearance database to avoid any potential conflicts with current or future clients.

  1. Manage the Firm's Public Exposure

The law firm may consider prohibiting or requiring advance approval of the use of the firm's name or logo in the organization's marketing, public relations, or external literature. While it may be acceptable to identify the board member's association with the law firm in, for example, a biography on the organization's website, some firms will not permit their names to be used in any way that could suggest the firm endorses the viewpoints of the organization.

  1. Limit the Scope of Service

The law firm may consider requiring that the attorney confirm the following with the organization, as applicable:

  • The attorney will act solely in a business capacity;
  • No attorney-client relationship will exist between the law firm and the organization; and
  • No communications with the attorney will be protected by the attorney-client privilege.

Confirming the scope of the relationship with the organization in advance (and preferably in writing) will help avoid any ambiguity that could lead to negative consequences later. Likewise, in the event that legal issues arise, the attorney can remind other board members that the attorney is acting solely in a business capacity and can recommend that the organization retain outside counsel, where practicable.

Depending on the language of the firm's professional liability insurance policy, it is possible that such insurance may not cover claims arising out of the attorney's service on the board. Firms may consider reminding attorneys of this issue so that the serving attorney may confirm that the organization has adequate directors' and officers' insurance and appropriate indemnification provisions for board members.

By considering and implementing these or similar steps that are tailored to the law firm's unique needs and risk profile, the firm can minimize the risk associated with an attorney's service on outside boards.

Shari L. Klevens is a partner at Dentons and serves on the firm's U.S. board of directors. She represents and advises lawyers and insurers on complex claims and is co-chair of Dentons' global insurance sector team. Alanna Clair is a senior managing associate at Dentons and focuses on professional liability defense. Klevens andClair are co-authors of “The Lawyer's Handbook: Ethics Compliance and Claim Avoidance.”