The Oklahoma Bar Journal December 2024

legal advice. Without this clarity, fellow directors may be confused as to “which hat” the attorney is wearing and misconstrue any statements as legal advice. Additionally, prior to undertak ing the dual role, an attorney should also verify any limits on D&O insurance coverage or their own malpractice insurance for board ser vice. Both the attorney and nonprofit organization should understand where liability protections may be limited from this dual capacity. Finally, where an attorney undertakes this dual role, any legal counsel provided should be in line with the Oklahoma Rules of Professional Conduct and compe tent representation. The attorney should keenly uphold their inde pendent judgment and analyze sit uations where material limitations may preclude their ethical repre sentation of the nonprofit orga nization. In the end, termination of either role may be necessary to avoid ongoing conflicts of interest.

“[t]he line between [acts as a director and acts as legal counsel] is entirely too fine to permit the professional obligation as a lawyer and the fiduciary obligation as a director to be placed in conve nient separate boxes.” 33 Hence, knowledge obtained in this dual role may be imputed to additional members of the attorney’s law firm and the attorney-client privilege limited where an attorney may ethically be required to resign as legal counsel for the organization. 34 this role of director, an organi zation may request the attorney provide legal advice. Though not precluded by the Oklahoma Rules of Professional Conduct, an attorney should clarify the expec tations for this dual capacity. In an ethics opinion by the American Bar Association, a written memo randum prepared by the attorney is recommended to outline the distinctions in the attorney’s role as legal counsel and service as a director. 35 Expectations should also be clearly discussed initially as to the role of an attorney as a director. If a nonprofit organization stip ulates that it desires the attorney to serve as its legal counsel, the attorney may determine that the dual role creates distinct conflicts of interest, and service as a purely independent director is desired. Attorneys serving in this dual capacity should routinely state in which capacity they are speaking and make sure that is captured in corporate minutes. If the attorney is offering legal advice, inform fel low directors in advance that any scheduled meetings are only for CONCLUSION Nonprofit organizations fre quently solicit attorneys to serve on their Board of Directors. Within

of interest or material limitations that may result in their decision to step down as a director. 26 CONFIDENTIALITY AND ATTORNEY-CLIENT PRIVILEGE Within this dual role, an attor ney must maintain confidentiality and refrain from compromising the attorney-client privilege of the nonprofit organization. The Oklahoma Rules of Professional Conduct dictate that an attorney should not reveal information relating to a client’s representation without their informed consent. 27 This duty of confidentiality is similar to a director’s duty as a fiduciary to maintain confidential information of the nonprofit orga nization. 28 The challenge arises when the attorney gives legal and business advice as a director. The American Bar Association issued an ethics opinion high lighting several cases in which attorney-client privilege was lim ited because a corporate director acting as legal counsel provided purely business advice. 29 Thus, to maintain attorney-client privilege, an attorney should clarify that a meeting is solely to provide legal advice and refrain from offering business or financial advice, except where it affects legal considerations like the application of the business judgment rule. 30 Additionally, an attorney may have a duty to dis close information to third parties that may limit this privilege. For instance, within the role of a direc tor, the attorney has an obligation to disclose information to an audi tor of the nonprofit organization. 31 But within the role of legal counsel, this disclosure would be impermis sible without the informed consent of the nonprofit organization. 32 As underscored in Marco v. Dulles ,

ABOUT THE AUTHOR

Jennie A. Hill is a skilled attorney with Nonprofit Solutions Law PC and serves as managing attorney. She represents

tax-exempt entities from formation to dissolution and advises nonprofit entities on employment, board governance, for-profit joint ventures and excess benefit issues. Ms. Hill graduated with distinction from the OU College of Law, where she served on the editorial board of the Oklahoma Law Review and was inducted into the National Order of Scribes. Ms. Hill is also the author of “The Cost of Benevolence: Effective Legal Counsel for Nonprofit Entities” in Law Practice Today .

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.

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THE OKLAHOMA BAR JOURNAL