Serving as a Director of the Client
There are numerous reasons why our client may ask us to serve on their Board of Directors – remember, even LLCs can have Boards. 📖 Read this excellent article by Jacob Jeifa, A Good Board is Worth the Investment for Your Growing Business, Inside Entrepreneurship Law blog (Oct. 12, 2020). One reason is to elevate the reputation of the Board. Another reason is that a client may believe they can get some free legal advice during Board meetings. Maybe the reason is that the client does consider the attorney as part of its team and so it makes sense to have the attorney on the Board. (Note that an attorney can attend Board meetings without being a Board member. I was a regular attendee at most of my clients’ board meetings.)
Is it a good idea to serve on the client’s Board? One benefit is being present at the meetings. The more you know and understand your client, the better you can represent them. However, Professor Felix J. Bronstein points out another advantage in his paper: “Society in general … benefits from dual service. Dual service is very effective in helping ‘women and minority lawyers to crack the glass ceiling [by] obtain[ing] clients … and … gain[ing] prominence and respect in the profession.” Felix J. Bronstein, The Lawyer as Director of the Corporate Client in the Wake of Sarbanes-Oxley, 23 Journal of Law & Commerce 53 (2004) quoting John F. X. Peloso & Irwin H. Warren, The Lawyer-Director, Implications for Independence, 1998 ABA Section on Litigation Report of the Task Force on the Independent Lawyer 14.
There could, however, be potential conflict of interest issues. As said previously, anytime an attorney wears more than one hat, there is a potential for a conflict. A director’s fiduciary duties could conflict with the lawyer’s ethical duties to provide competent, professional legal advice.
Additionally, think about the attorney-client privilege. Intertwining business advice with legal advice will nullify the privilege. So, if your client goes to court, anything so intertwined must be disclosed.