Joining a corporate board means more than just attending a few extra meetings. Before any lawyer agrees to serve as a corporate director or officer, he or she should consider the fact that “there may be some serious perils involved for the attorney,” says Julie Brook, writing in the Continuing Education of the Bar of California blog.
Here are some of her top concerns for lawyers eyeing the boardroom:
- Insurance: “Playing both attorney and director roles may create problems with respect to insurance coverage,” says Brook. If the lawyer, who is also a director, is providing legal services to the company and liability results, there could be interpretation issues under the company’s insurance policy and the attorney’s malpractice insurance.
- Exposure: An attorney’s firm can also be exposed to liability if the lawyer is serving on the board as a “deputy.” Brook notes, “The firm could be jointly subject to the same liability exposure as the attorney-director, and any resulting liability would probably not be covered under the firm’s malpractice policy—a potential nightmare to all concerned.”
- Agency: Courts could find a firm liable for the ongoing acts of an attorney-director. To minimize this risk, she suggests the lawyer explain to the board that when acting as a director, he or she is doing so individually and not as an agent of the firm.
