Board president may rue attorney meeting

Question: I’m the president of my association’s board. I decided to hire an attorney to advise me about rewriting our CC&Rs; and answer other questions I had about some unrelated matters. I chose an attorney who came highly recommended by a trade group. In his office, he told me he also represents our management company, but if that didn’t bother me it didn’t bother him. I said it was OK, then spent several hours listening to him advise me on a lot of different things.

It was like a mini-seminar. He explained how to silence owners who complain without getting sued and showed me the right way and the wrong way to do that. I learned how to persuade the board we need to redo our CC&Rs.; I also learned some things about our management company that I wouldn’t have otherwise known. He told me not to tell the board everything that we talked about in his office.

One owner asked to view the books and records to see how much I spent at the attorney’s office. She learned the attorney’s name and that I saw him without a motion by the board and that I went alone. She’s now making a big deal out of this. I’m not bothered by what she thinks because she’s a nobody, but the other board members want to know: Did I do anything wrong?

Answer: Aside from the attorney’s mini-seminar on how to silence homeowners without getting sued, he should have advised you what to do once the homeowners discovered you breached your fiduciary duty to them and jeopardized the association’s business.

As a volunteer board member you are not exempt from acting in compliance with your fiduciary duties including fully understanding what your obligations are to the board, titleholders and association. This includes performing due diligence, avoiding impropriety and not disenfranchising the minority.

Acting on behalf of the board without proper board authority is a breach of that fiduciary duty. Being president does not give you a special right to act alone on any matter, including seeking legal advice for the association.

In the association’s case, the entire board must consent, not merely the president. The “client” in this relationship is the association, not you and not the board alone. Contrary to the attorney’s advice, you have a duty to inform the entire board of everything he told you.

That this same attorney represents the management company creates an immediate conflict of interest for him and places your association in a dubious position. It is a breach of confidentiality if the attorney told you anything about the management company.

Under Rule of Professional Conduct 3-310, an attorney shall not accept representation of more than one client in a matter in which the interests of the clients potentially conflict without the informed written consent of each client.

The management company is a third-party vendor. As such, the association’s interests and the management company’s interests are never the same. Should the association have to sue the management company it would be in a weakened position, and that attorney might be prevented from representing both sides.

The decision to discuss association business with this attorney was foolish and imprudent. Your decision to unilaterally waive the conflict of interest without board approval could subject you to personal liability because that is a decision you cannot make alone. Your poor judgment may have exposed the association to damages by disclosing what could easily be considered proprietary, even confidential, association information.

This attorney owed your association the highest duty to make a complete disclosure of all facts and circumstances necessary to enable you to make a fully informed decision regarding representation. This would include all areas of potential conflict and advising you to seek independent legal advice prior to consulting with him.

Without written consent, Rule 3-310 makes it clear that an attorney shall not accept or continue representation of a client where the attorney has or had a legal, business, financial, professional or personal relationship with another person or entity the attorney knows or reasonably should know would be affected substantially by resolution of the matter.

Questions can be sent to P.O. Box 11843, Marina del Rey, CA 90295 or e-mailed to noexit@mindspring.com.