The Oklahoma Bar Journal December 2024

E thics & P rofessional R esponsibility

The Dual Role of Attorney and Director: Ethical Implications for Nonprofit Board Service By Jennie A. Hill N ONPROFIT ORGANIZATIONS FREQUENTLY SEEK THE EXPERTISE of attorneys to serve as members of their Board of Directors. The Board of Directors is legally responsible for ensuring the nonprofit organization operates according to its mission, safe guards its assets and operates in the public interest. 1 Directors serve as fiduciaries who must uphold the duties of care, loyalty and obedience throughout their board service. 2

throughout their service as direc tors of nonprofit organizations.

Similarly, the Oklahoma Rules of Professional Conduct prescribe duties an attorney must uphold in their service to a client. 3 Attorneys serving as directors may be explic itly requested to provide legal counsel to the nonprofit organiza tion, or a presumption may exist by other directors that opinions offered by such attorney are, in fact, legal advice. The conundrum of the dual role – attorney and director – likely triggers conflicts between these roles, especially concurrent conflicts that require thoughtful examination by an attorney. 4 The Oklahoma Rules of Professional Conduct under score that an attorney in this dual role must ensure the duality will not compromise the attorney’s “independence of professional judgment.” 5 To address potential

conflicts, clarity should be sought as to the expectations of both the organization and the attorney for the attorney’s role on the Board of Directors. Attorneys should clarify whether the nonprofit organiza tion desires their involvement as an independent director or as legal counsel for the organiza tion. Initial clarity will aid the attorney in determining where the dual role may run afoul of the Oklahoma Rules of Professional Conduct or result in conflicts of interest that disable the attorney from serving in either capacity. This article will highlight the concurrent conflicts that may arise in an attorney’s service as a direc tor and will discuss ways to miti gate such conflicts. Additionally, it will underscore the ethical impli cations attorneys should consider

DUTIES OF A NONPROFIT DIRECTOR Nonprofit organizations gen erally seek directors who provide the necessary expertise and expe rience for effective oversight of the management and operation of the nonprofits. Directors must uphold the primary duties of loyalty, care and obedience in fulfilling their roles and obligations to the non profit organization. 6 The Board of Directors bears ultimate responsibil ity to ensure the nonprofit organi zation operates in accordance with relevant law in serving its clientele, utilizing donor funds and interact ing with the broader public. 7 The duty of care requires a director to stay informed, remain

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

16 | DECEMBER 2024

THE OKLAHOMA BAR JOURNAL