Annual Meetings

It was a meeting like many others attorney James Samson, a partner at Samson Fink & Dubow, had attended – there was a great deal of sound and fury (i.e., shareholders yelling at one another, everyone certain that he or she was absolutely right) – but it soon took an unexpected turn. At one point, someone came running down the aisle and jumped on the stage in one leap. “And,” recalls the lawyer, “my 88-year-old board president stood up to defend me. I was afraid she was going to get hit!”

Although that is an extreme case, most professionals, when prodded, can recall similarly notorious examples of annual meetings from hell. Steve Wagner, a partner at Wagner Davis, recalls a dispute between two 80-year-old men who then squared off for a fight (“I stood between them and asked them to calm down”), while others remember verbal tussles, shouting matches, and other examples of adults acting their shoe size rather than their age.

They make for great stories, but are there any lessons to be learned from them that can help you avoid a descent into cooperative or condominium chaos? The answer is yes, and the bottom line is if you don’t plan properly for your annual meeting, you can end up in shouting contests or even physical struggles, and more importantly, nothing substantial will be accomplished. As the annual meeting season approaches, here are 10 tips from experts on how to avoid chaos at your co-op or condo:

4 Stage a Pre-Meeting Meeting

When residents don’t understand why a board action has been taken, they often suspect the worst, especially if the board does not regularly communicate with the owners. You can avoid this by staging a pre-meeting informational meeting. If there are many complicated subjects, you may even decide to schedule several such meetings. “If you don’t communicate what’s going on, anxiety builds up,” says Samson.

4 Hone Your Message

Know what issues are most controversial in your community, and know the facts, which you can use to counter opinions held by strong personalities. Attorney Theresa Racht, a partner at Racht & Taffae, often meets with the board a week or more before the annual session to see and prepare the board for the hot-button issues. “Have your answers ready,” she says. “Don’t get sandbagged.” You may also want to have non-board members who are on committees speak on selected issues, as a way of drawing attention away from the “personality,” i.e., the board (often seen as “the landlord”), and spotlighting the subject, i.e., the need to raise maintenance. “If people are angry at the board, having a non-board member speak keeps the discussion focused on the issues,” says Bruce Cholst, a partner at Rosen, Livingston & Cholst.

4 Take Blame Preemptively

“The board should be sensitive to the fact that it is not always right,” notes Samson. Instead of trying to avoid a sensitive subject, it is better to embrace it as yours: take responsibility for the mistake, explain why it happened (without being defensive), and use humor (if appropriate). Most owners will appreciate your candor and rarely attack. “You’re also presenting the information from your perspective,” notes Racht, “not from the other side’s skewed viewpoint.” Samson recalls a botched lobby redesign in one co-op he represented (“It was really awful”); the president stated the obvious – frankly admitting, “We screwed up” – but was so charming that she disarmed her opponents, and all the venom drained out. “She spent 30 minutes explaining every single thing that was wrong with it,” the attorney notes, and by the time she finished, there was nothing more to say. “Admitting the obvious is very disarming.”

4 Co-opt Your Foes

Often, those with the loudest voice are concerned about a single issue – lobby redesign, or setting up a bike room, or keeping maintenance down – and one way to defuse those human bombs is to suggest they serve on committees investigating the very topics they are most interested in. Such an approach channels the energy of frustration into a more productive stream, so they are working with you to solve a problem dear to their hearts.

4 Use Humor to Defuse Anger

Humor will go a long way toward defusing anger. But remember to be appropriate: sarcastically making fun of an opponent’s position will get a few laughs but will probably also ratchet up the tension levels. Samson, the attorney, recalls two shareholders who got into an escalating shouting match. He ended it with humor. “Why don’t you go outside and have a fistfight?” the lawyer asked with his best deadpan. “The winner can come back to me and tell me what to do.”

4 Send Out an Advisory With the Notice

Cholst suggests that you set up a clear-cut agenda backed up with rules of the road: how speakers will be selected (they must raise their hands, not their voices; they must offer their questions in advance), treat opponents respectfully, follow time limits for speaking, and so on.

4 Be Cool

When hotheads start shouting, you should speak softly and not “start shouting back,” says attorney Stuart Saft, a partner in Dewey LeBoeuf. “You should try to maintain order and answer the questions calmly. Boards have a tendency to get very defensive, and that’s not in anyone’s best interest.” Adds Cholst: “The moment you start acting defensively is when you concede the issue to your opponents.”

4 Let Everyone Have an Opportunity to Speak

People need to vent. If you cut someone off quickly, you will only cause more frustration. And if you don’t allow dissidents to speak at all, you could find a small, vocal minority growing larger as people wonder what the board fears. They might also start listening – outside the meeting room via word-of-mouth and fliers – to the merits of the minority’s complaints. Without a proper forum to respond (like the controlled environment of the annual meeting), you could face angry shareholders/unit-owners in a different setting: a recall meeting.

“Don’t try to shut them up,” notes Saft, “which is the tendency by some boards. It worsens the situation. The rest of the people will think you’re stifling discussion. It’s frustrating for the board, but I say, ‘Let’s deal with them calmly.’”

“Shareholders have a right to air their opinions,” says Samson. “A lot of times it’s not based on fact because no one has paid attention to them and kept them informed. Sometimes it’s just in the structure of the complex: the factions have just come to hate each other and no matter what one side does, the other doesn’t believe in the other side’s good faith. When you get into that area, you start thinking, ‘Therefore, I’ve got the right to conduct myself in an inappropriate manner also.’”

“The longer they go on about their issues, the more the tide can turn against them, as people see how radical their opinions are,” Racht notes. “A lot of support they may have started off with is eroded by the end of the meeting.”

If someone raises an idea or a problem that you can’t address at that point, get his or her name and address, look into it, and get back to that person. “Don’t go out of that meeting and forget about them,” warns Samson. “Don’t disrespect them.”

4 Don’t Nail Him Yet

Be polite in the face of adversity and whatever happens, don’t call the police. Cholst recalls one meeting at a 400-unit building in Queens at which a resident was constantly shouting. “I felt I could control him,” the lawyer recounts, “but the manager was inexperienced and panicked. Without my knowledge, he called the police.” When the cops arrived, however, the dissident got more unruly and it looked to some like the board was unable to control matters and was quashing dissent. Observes Cholst: “The worst possible reaction is to call the police. The action created instant martyrs and increased the strong negative feelings. The action pushed a lot of neutral people into the ‘enemy’ camp. They thought the action was extreme.”

4 Feedback for the Finish

Giving everyone an opportunity to speak is fine in theory, but the meeting can run long. One way to avoid this trap is to announce at the start that you have the auditorium only from 8 to 10 P.M. and schedule the question-and-answer session at the tail. “If you put all the contentious stuff at the end, that will limit it,” says Racht. “Otherwise they could go on for hours arguing and shouting at each other. The business of the annual meeting is the election of directors. They must get that accomplished. Use the tools you have to orchestrate the meeting. Announce at the beginning that you must get through the business of the corporation and then you’ll get their grievances at the end. But limit the time.” As the old saying goes: “Nothing focuses the mind like a hanging.”