By Robert M. Meisner, Esq.
Listen up, board members: The community association attorney does not work for you.
The attorney is accountable to the entity that hired him or her, namely the community association itself. The board members govern the association, but they are not the client.
Some community association board members believe the association attorney should be directly accountable to them as individuals since they hire and supervise the attorney, but this is a legal and practical miscalculation and a potential conflict of interest.
I remember being at a board meeting several years ago, when many of the board members were under the misguided impression that I was at their individual disposal. They were facing a recall effort, and one board member was wondering what the defense strategy would be. Another inquired about my legal advice in regard to her remaining on the board.
Think about it another way. If an attorney represented the association and individual board members, what would happen if one of those board members violated association bylaws or rules? The attorney would be prevented from taking the necessary legal action against that person on behalf of the association. Since the interest of the individual homeowner is distinct from the corporate entity of the community association, individual board members should seek separate, independent counsel.
The board should appoint a board member to serve as the liaison between the attorney and the full board. This relationship saves time and eliminates confusion by limiting communication to two individuals as opposed to having the attorney communicate and deal with each board member.
However, there can be a downside to this arrangement. Several years ago, a board president who was serving as the legal liaison didn’t like the advice I was giving the association on a particular matter and decided to withhold my recommendations from the rest of the board. This seriously hindered the proper functioning of the association. Once the lack of communication came to light, there was a backlash against the president, and the board chose another member to act as the legal liaison.
Had the president been sued for breaching his fiduciary duties, he may not have received the protection of certain directors and officers liability insurance, which is negated in some states for intentional acts or omissions such as this.
Community managers also should note that the attorney is not beholden to him or her. I’ve seen managers think otherwise, particularly in instances when the manager has been instrumental in getting the attorney hired by the association.
Potential trouble between attorneys and association boards arises when board members shun the advice of their attorney. They often do not seek the necessary legal advice—and at their legal peril—because they believe it will cost them too much money or they are intimidated by the legal system.
Boards should avoid this mindset. The attorney’s opinion should be respected and considered during the decision-making and policy-making process. The board is more likely to be protected from liability if it makes a reasonable decision based on the advice of the association’s legal counsel.
Another potential area of conflict arises when the board refuses to follow sound business practices.
Board members need to understand that they essentially are running a business. Board members must rely on the governing documents and applicable laws when running the association, not on their personal beliefs and opinions; the association attorney must ensure that the governance of the association is undertaken in strict adherence to the documents and the laws.
In some states, courts will not interfere with a board’s decision if it is made in good faith and can be defended under the standards of the business judgment rule. You can avoid running afoul of this rule if you don’t have a personal interest in the outcome of the decision, have learned enough about it that you believe the decision is appropriate under the circumstances and believe that the decision is in the best interests of the association.
There’s quite a large burden of responsibility placed on the volunteers who comprise association boards. There must be a solid, mutually-supportive working relationship between the board and the association attorney so the board can properly establish sound legal policies. If the attorney stays accountable to the association, and that board values the attorney’s opinion, the relationship can and should blossom to the benefit of the community association and its members.
“On the Board: Legal Aid” appeared in Common Ground, the national magazine for the Community Associations Institute. Reprinted with permission.