Presentation is loading. Please wait.

Presentation is loading. Please wait.

Non-Profits Need Pro Bono, Too: What You Need to Know in Order to Ethically Represent a Non-Profit 1.5 CLE Credits in Ethics & Professionalism Presented.

Similar presentations


Presentation on theme: "Non-Profits Need Pro Bono, Too: What You Need to Know in Order to Ethically Represent a Non-Profit 1.5 CLE Credits in Ethics & Professionalism Presented."— Presentation transcript:

1 Non-Profits Need Pro Bono, Too: What You Need to Know in Order to Ethically Represent a Non-Profit 1.5 CLE Credits in Ethics & Professionalism Presented for the ACC-GNA New York, New York February 25, 2014 Maurice Segall, Director of NY and Fairfield, CT Programs, Pro Bono Partnership, Inc. Elizabeth Guggenheimer, Deputy Executive Director/Director of Institutional Advancement, Lawyers Alliance for New York Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc.

2 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 2 About Pro Bono Partnership Coordination and resource center dedicated to supporting in-house and private corporate lawyers engaging in pro bono activities. Our clients are nonprofit organizations (not individuals) throughout NY (excluding NYC), NJ and CT. To be eligible, the organization must be: Nonprofit and tax-exempt (or seeking assistance to obtain this status); Serve the poor, disadvantaged, or enhance the community through arts, education, or environmental work; Offer programs that have a discernable impact on the community; and Be unable to pay for legal services without significant impairment of program resources. Visit our website at or call us at (914) www.probonopartner.org

3 About Lawyers Alliance for New York Founded in 1969 as the Council of New York Law Associates, Lawyers Alliance continues to reflect its founders' vision: that lawyers can and should be a vital force for change Lawyers Alliance mobilizes talented business and transactional lawyers from every discipline to help make New York City a better place to live and work. More than 1400 attorneys from corporations and law firms volunteer each year Clients are nonprofit organizations that are improving quality of life in New York City neighborhoods. They are engaged in affordable housing, economic development, children and youth services, community arts, urban health, and other vital programs to benefit low-income New Yorkers Lawyers Alliance’s staff-supported pro bono program provides nonprofits with legal guidance on corporate, tax, real estate, employment, intellectual property, regulatory, and other operational and organizational issues Visit our website at or call us at www.lawyersalliance.org Copyright 2014 Pro Bono Partnership. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership. 3

4 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 4Introduction This presentation is designed to address possible ethical issues attorneys face when providing pro bono representation to a nonprofit organization. The same ethical rules apply to representing a pro bono client as a paying client. NY Rules of Professional Conduct (the “Rules”) guide ethical issues: –The Rules set minimum standards of conduct. –As of 4/1/09 the Rules replaced the prior old Disciplinary Rules. –The Rules follow the ABA Model Rules format/numbering system.

5 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 5 Part I: Pro Bono Representation

6 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 6 Pro Bono Representation Lawyers have a duty to promote access to the legal system and administration of justice. (Rules Preamble) Lawyers should aspire to provide at least 20 hours of pro bono legal services yearly. (Rule 6.1(a)(1)) Lawyers are strongly encouraged to provide pro bono legal services to benefit poor persons. –Includes pro bono assistance to charitable organizations serving the poor (Rule 6.1(b)(3)) Lawyers/firms should also provide financial support to organizations that provide legal services to the poor. (Rule 6.1(a)(2))

7 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 7 Pro Bono Representation NY-admitted attorneys can receive CLE credits for pro bono work performed through an accredited CLE provider. Pro Bono Partnership and Lawyers Alliance are accredited CLE providers for provision of pro bono CLE credits; see or for more information. For more information, visit:

8 Pro Bono Representation Pro Bono Representation As of December 4, 2013, attorneys registered as authorized in- house counsel in New York are able to provide pro bono services, provided they are admitted in another state or the District of Columbia and they are in good standing. See Amendment to Part 522 of the Rules of the Court of Appeals. Copyright 2014 Pro Bono Partnership. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership. 8

9 Copyright 2014 Pro Bono Partnership. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership. 9 Part II: The Board as the Client

10 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 10 The Board as the Client The lawyer owes a duty to the corporation, not to individuals associated with it or employed by it. (Rule 1.13) When a lawyer represents a nonprofit corporation, the board of directors is the client, not the Executive Director (ED) or other staff. The lawyer should clarify this with Board and the ED. Board members should sign the engagement or retention letter.

11 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 11 Overview of Nonprofit Organizations Board of Directors Executive Director Remaining staff Members (sometimes)

12 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 12 The Board as the Client Actions Taken Against the Best Interests of the Corporation (Rule 1.13(b)) If the lawyer knows that an individual associated with the organization is engaged in action, intends to act, or refuses to act in a manner that is (i) a violation of a legal obligation to the organization or a violation of law that reasonably might be imputed to the organization, and (ii) is likely to result in substantial injury to the organization, then the lawyer shall proceed as is reasonably necessary in the best interests of the corporation. The lawyer shall consider: –The seriousness of the violation and its consequences; –The scope and nature of the lawyer’s representation; –The responsibility in the organization and the apparent motivation of the person involved; –The policies of the organization concerning such matters; –Any other relevant considerations.

13 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 13 The Board as the Client Actions Taken Against the Best Interests of the Corporation (cont’d) Measures taken shall be designed to minimize disruption to the organization and the risk of revealing information to people outside the organization. Measures taken by the lawyer may include: –Asking for reconsideration of the matter; –Advising that a separate legal opinion on the matter be sought to present the appropriate authority in the organization; –Referring the matter to a higher authority in the organization, including referral to the highest authority that can act on behalf of the organization (if warranted by the seriousness of the matter).

14 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 14 The Board as the Client How do you know if an action (or inaction) is in the “best interest of the organization”? Rule 1.13, comment 3 - when the Board of Directors makes decisions for the nonprofit, the decisions ordinarily must be accepted by the lawyer, even if their utility or prudence is doubtful. Decisions concerning policy and operations, including ones entailing serious risk, are not within the lawyer’s province. However, if the lawyer knows that the organization is likely to be substantially injured by action of an officer or other constituent that violates a legal obligation to the organization or is in violation of the law that might be imputed to the organization, the lawyer must proceed as is reasonably necessary in the best interest of the organization. Rule 1.0(k) - the lawyer’s knowledge can be inferred from circumstance, and the lawyer cannot ignore the obvious.

15 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 15 The Board as the Client Board Disputes If the board is divided or is involved in a fight over control, the lawyer for the corporation may be disqualified from further representing the corporation. (See Schmidt v. Magnetic Head Corp., 101 A.D.2d 268 (2d Dept.1984) The lawyer may withdraw representation if there is a significant board dispute. –Rule 1.13(c)- if, despite the lawyer’s efforts, the highest authority that can act on behalf of the organization insists upon action, or a refusal to act, that is clearly in violation of the law and is likely to result in a substantial injury to the organization, the lawyer may withdraw. –Rule 1.16(c)(7) - lawyer may withdraw if the client fails to cooperate in the representation or otherwise renders the representation unreasonably difficult for the lawyer to carry out representation effectively.

16 Part III: Withdrawing Representation Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc.

17 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 17 Withdrawing Representation The rules that apply to withdrawing from representation of a paying client also apply to pro bono representation. Rule 1.16(b) - governs when a lawyer must withdraw from representing a client (mandatory withdrawal). Rule 1.16(c) - governs when a lawyer may withdraw from representing a client (permissive withdrawal).

18 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 18 Withdrawing Representation Rule 1.16(b) – Mandatory Withdrawal when: The lawyer knows/reasonably should know that the representation will result in a violation of these Rules or other law; or The lawyer’s physical or mental condition materially impairs his/her ability to represent the client; or The lawyer is discharged; or The lawyer knows/ reasonably should know that the client is bringing the legal action, conducting the defense, or asserting a position in the matter, or is otherwise having steps taken, merely for the purpose of harassing or maliciously injuring any person.

19 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 19 Withdrawing Representation Rule 1.16(c) – Optional Withdrawal when: Withdrawal can be accomplished without material adverse effect on the interests of the client; The client persists in a course of action involving the lawyer’s services that the lawyer reasonably believes is criminal or fraudulent; The client has used the lawyer’s services to perpetrate a crime or fraud; The client insists upon taking action with which the lawyer has a fundamental disagreement; The client deliberately disregards an agreement or obligation to the lawyer as to expenses or fees; The client insists upon presenting a claim or defense that is not warranted under existing law, and cannot be supported by good faith argument for an extension, modification, or reversal of existing law;

20 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 20 Withdrawing Representation Rule 1.16(c) –Optional Withdrawal (cont’d) The client fails to cooperate in the representation or otherwise renders the representation unreasonably difficult for the lawyer to carry out employment effectively; The lawyer’s inability to work with co-counsel indicate that the best interest of the client likely will be served by withdrawal; The lawyer’s mental or physical condition renders it difficult for the lawyer to carry out the representation effectively; The client knowingly and freely assents to termination of the employment; Withdrawal is permitted under Rule 1.13(c) or other law; The lawyer believes in good faith, in a matter pending before a tribunal, that the tribunal will find the existence of other good cause for withdrawal; The client insists that the lawyer pursue a course of conduct which is illegal or prohibited under these Rules.

21 Part IV: Limited Pro Bono Representation Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc.

22 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 22 Limited Pro Bono Representation Rule 6.5 addresses lawyers’ participation in short- term pro bono legal services programs. –“Short term legal services” are services providing legal advice or representation free of charge as part of a program with no expectation that the assistance will continue beyond what is necessary to complete an initial consultation, representation, or court appearance.

23 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 23 Limited Pro Bono Representation Rule 6.5 Lawyers that participate in short-term/limited scope programs organized by the Court, government, bar association or nonprofit legal services organizations must comply with certain Rules only in specific circumstances: –Because a lawyer who is representing a client under limited circumstances is not able to systematically check for conflicts of interest, lawyers shall comply with Rules 1.7, 1.8 and 1.9 (conflict of interest: current clients and former clients) only if the lawyer has actual knowledge at the time of commencement of the representation that the representation of the client involves a conflict of interest. –Lawyers shall comply with Rule 1.10 (imputation of conflicts of interest) only if the lawyer has actual knowledge at the time of commencement of representation that another lawyer associated with the lawyer in a law firm is affected by Rules 1.7, 1.8 or 1.9.

24 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 24 Limited Pro Bono Representation Lawyers providing short term limited legal services must secure the client’s informed consent to the limited scope of the representation. –Pro Bono Partnership and Lawyers Alliance addresses this in its client engagement letters and during initial call/meeting with the nonprofit client and the volunteer attorney. The representation is subject to Rule 1.6 governing confidentiality.

25 Part V: Lawyer as Board Member and Counsel Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc.

26 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 26 Lawyer as Board Member and Counsel Lawyers who serve on nonprofit boards are often asked to give legal advice to the corporation. –Not ethically prohibited, but there are arguments for and against serving in a dual role. –Legal issue often arise that are outside of the attorney/board members’ area(s) of expertise. –Rule 1.7, comment 35 - a lawyer for a corporation who is also a member of its board should determine whether the responsibilities of the two roles may conflict. –Consideration should be given to: the frequency with which such situations may arise; the potential intensity of the conflict; the effect of the lawyer’s resignation from the board; the possibility of the corporation’s obtaining legal advice from another lawyer in such situations.

27 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 27 Lawyer as Board Member and Counsel Directors have fiduciary duties to the corporation. Duty of care - reasonable person standard Attorneys serving on a nonprofit board should expect to be held to a higher standard of care when legal matters within his/her area of expertise arise in governance of the corporation, even if the corporation is not the attorney’s client; can’t simply “check your legal expertise at the door.” Duty of loyalty Watch out for conflicts of interest, particularly if the corporation becomes a paying client of your firm. Duty of obedience Is the corporation fulfilling its stated purpose? Are restricted funds used as required? (Note that unlike for-profits, most nonprofits have detailed mission statements that narrowly prescribe the activities of the corporation.)

28 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 28 Lawyer as Board Member and Counsel Serving on a board and serving as pro bono counsel can raise various ethical issues regarding: –Professional judgment –Conflicts of interest –Attorney-client privilege The lawyer must always make clear in which capacity he/she is acting.

29 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 29 Lawyer as Board Member and Counsel Professional Judgment If the lawyer is pro bono counsel to the corporation, he/she cannot: –Use the position of director as a feeder for his/her private practice. (Opinion No. 589, N.Y.S. Bar Assoc. Comm. On Prof. Eth. (Mar. 18, 1988) –Represent the corporation in any action in which he/she has a personal proprietary interest. Example: In re Edel 182 Misc.2d 878 (Surr. Ct. 1999). Lawyer may have acted improperly in probating a will giving a large gift to a charitable institution when the lawyer served as a director for the institution and the institution used the lawyer’s firm for legal services.

30 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 30 Lawyer as Board Member and Counsel Conflict of Interest Rule 1.7, Comment 35: “If there is material risk that the dual role [of counsel and board member] will compromise the lawyer's independence of professional judgment, the lawyer should not serve as a director or should cease to act as the corporation's lawyer when conflicts of interest arise. The lawyer should advise the other members of the board that in some circumstances matters discussed at board meetings while the lawyer is present in the capacity of director might not be protected by the attorney-client privilege and that conflict of interest considerations might require the lawyer's refusal as a director or might require the lawyer and the lawyer's firm to decline representation of the corporation in a matter.”

31 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 31 Lawyer as Board Member and Counsel Lawyer as Board Member and Counsel Conflict of Interest (cont’d) ABA Formal Ethics Opinion identifies four possible conflict situations: 1)Lawyer asked to pursue objectives of the organization that as a director she opposed; 2)Lawyer asked to opine on board actions in which the lawyer participated; 3)Board takes action affecting the lawyer’s firm (such as whether to retain the firm); 4)Lawyer is representing an organization in which both the organization and board members are parties Independent representation for directors when controversy between organization and lawyers.

32 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 32 Lawyer as Board Member and Counsel Attorney-Client Privilege Issue for attorneys serving on a board of directors - determining when s/he crosses the line from acting as a director and offering business advice, to providing legal services to the corporation, which establishes the attorney-client relationship and attendant duties. The attorney must exercise reasonable care to protect the attorney- client privilege and related privileges. Lawyers are required to disclose to the board that serving as a director as well as attorney for a corporation can jeopardize the attorney-client privilege. (Opinion No. 589, N.Y.S. Bar Assoc. Comm. On Prof. Eth. (3/18/88))

33 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 33 Lawyer as Board Member and Counsel Attorney – Client Privilege (cont’d) The lawyer needs to warn of the potential loss of privilege when the lawyer is on the board. –When the lawyer speaks to the board as counsel, s/he should communicate that fact, and remind the board of methods of preserving the attorney-client privilege. –When the lawyer speaks to the board as director, s/he should communicate that to the board. –These communications should be noted in the minutes.

34 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 34 Lawyer as Board Member and Counsel Protection from Liability: Insurance Issues for the Lawyer/Director D&O insurance can provide protection for board members, including the lawyer/director. –Policies are often limited to claims arising solely out of service as an officer or director. Professional liability coverage can provide protection for lawyer/director acting in role as lawyer. –Generally does not cover claims arising out of a lawyer’s service as a director. Note: Each carrier may claim that coverage does not apply if role of lawyer/director unclear.

35 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 35 Lawyer as Board Member and Counsel Best Practices to Minimize Risk for the Lawyer/Director Set clear expectations of both the lawyer/director and the corporation regarding legal representation. Confirm that the corporation’s governing documents address issues of liability, indemnification and conflict of interest. Confirm that the corporation has the appropriate directors & officers insurance coverage. Confirm Lawyer’s professional liability coverage.

36 Copyright 2014 Pro Bono Partnership, Inc. All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership, Inc. 36 IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. This presentation is provided by Pro Bono Partnership, Inc. and Lawyer’s Alliance of New York as general information. It should not be construed as, and does not constitute, legal advice on any specific matter, nor does this presentation create an attorney-client relationship. You should seek advice based on your particular circumstances from an independent legal advisor.


Download ppt "Non-Profits Need Pro Bono, Too: What You Need to Know in Order to Ethically Represent a Non-Profit 1.5 CLE Credits in Ethics & Professionalism Presented."

Similar presentations


Ads by Google