“Switching Hats: Can a Lawyer Who Represents an Association also Serve as a Member of the Client’s Board of Directors?” – FCAP Managers Report

“Switching Hats: Can a Lawyer Who Represents an Association also Serve as a Member of the Client’s Board of Directors?” – FCAP Managers Report

The short answer: there is no express prohibition against this, but it’s complicated and not recommended for either the association or the lawyer. There are several ethical issues that arise due to the lawyer’s duties to the entity as its counsel, fiduciary duties to the entity as a director, and the lawyer’s personal self interest in both roles.

A board member who is also an attorney can be a great asset for a community association board, as she may have the attention to detail, certain knowledge, and communication skills that are useful to serving on the community’s board. Many attorneys do sit on the boards of their communities and are of great service to their communities. However, this does not substitute the need for independent legal advice from an attorney who specializes and is experienced in community association law.

If a lawyer serves as both director and counsel, the lawyer must be extremely careful in examining which hat—lawyer or director—she is wearing during all communications as she navigates between the two roles. This also needs to be clearly communicated to her fellow board members. For example, an attorney-client relationship may unintentionally arise when the entity reasonably believes that the lawyer-director is acting as its counsel in providing legal advice. Or when acting as counsel, she must take every reasonable step to ensure that the board understands that she is representing only the association itself and that she does not represent any of its individual board members, officers, employees, or anyone else.

Even with careful navigation between the two roles, there are a number of issues that may arise. The first, as briefly touched upon, is that conflicts of interest may arise. A lawyer-director who is personally affected by the legal advice she is giving to the board undermines her capacity to provide objective advice.

The second is in determining the scope of the lawyer’s representation. Generally, a client determines the objectives or goals of the representation, and the lawyer must abide by the client’s decisions. Meanwhile, the lawyer typically determines the means, such as the technical and legal tactical issues, to reach those objectives. However, the lawyer should consult with the client as to the means, as required. For the lawyer-director, this may cause some issues. For example, when wearing the “lawyer hat,” she must abide by the decisions of the entity regarding the objectives, even if as a director, she disagrees. She must also use her best judgment in determining whether to follow certain instructions as to the means of representation. This may put her at odds with her fellow board directors, who may urge her otherwise. On the other hand, the lawyer-director cannot retire her best judgment when putting on her “director hat” especially where she may disagree with the board’s instructions as to the means of representation.

Third, certain courts have held that a lawyer-director is held to a higher standard of care than a non-lawyer-director. When she is wearing her “counsel hat,” she is required to provide competent representation. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation. This may put the attorney in an unintended position where board members are simultaneously shielded from certain liability. The lawyer-director must remind her fellow board members when she is wearing her “director hat” and not providing legal advice, otherwise she will be held to the level of competence required of lawyers. This is especially true if the lawyer does not specialize in community association law, which reinforces the point that community associations should hire independent counsel specializing in community association law even if a lawyer sits on their board.

A fourth issue concerns confidential information. As the entity’s lawyer, the lawyer is required to maintain certain information confidential and privileged. As a board member, the director will have to make certain disclosures. Again, this would require careful switching of hats to determine where legal advice is protected by the attorney-client privilege and when business-related advice is not. The line is not clear and outside the scope of this article.

Given the complexities and importance of the statutory requirements impacting Florida community associations, it is strongly recommended that associations seek independent legal counsel who will best serve the needs of the community.

To read the original FCAP Managers Report article, please click here.

Karyan San Martano is a member of Becker’s Community Association practice and regularly provides legal counseling to the officers and directors, as well as the property manager, on the operation of condominiums, cooperatives, and homeowners associations.