When Tempted to Use a Board-Member Lawyer to Represent the Board, Don't
April 17, 2014 — "What's the old saying?" I asked attorney Bruce Cholst, as we talked about current legal issues. "A man is a fool who…?"
"A man who is his own lawyer has a fool for a client," Cholst replied immediately.
We were talking about an unusual situation in his co-op. It seems a shareholder was angry about odors and noise coming from a neighboring apartment. He said he heard voices through the walls and smelled pungent odors at dinnertime. He complained about heavy footfalls and other things that went bump in the night. His neighbor was allegedly dragging his feet in the matter.
It seemed serious enough for Cholst's board to get involved. It did an investigation and found no merit to the complaints. The shareholder immediately sued the board, saying it was delinquent in enforcing its own rules.
You're can't be
objective. It's your home
and it gets personal.
The co-op board called up its attorney, Steve Sladkus, a partner at Wolf Haldenstein Freeman & Herz. He took on the case for them — but, you may ask, it was so straightforward, couldn't Cholst, a partner at Rosen Livingston & Cholst, have represented them for free? I could almost feel Cholst shudder at the other end of the line when I asked him that. "The American Bar Association has put out warnings on this matter," he said pleasantly. It was at that point that we talked about who is a fool and who is not when you are representing yourself.
It may seem like a no-brainer, but over the years, I've heard of a number of co-op and condo boards that turn to attorneys who are also directors to draft letters, offer advice and liaison with the managing agent on matters of legal concern. The attorneys stop short of going the whole nine yards and representing the cooperative in court, but experts argue that even the non-court work they are doing is dangerous.
"Objectivity, Your Honor!"
"It's not a good idea," Cholst said to me. "To begin with, you're not — you can't be — objective. It's your home and it gets personal." In addition you may have an agenda in the situation — you don't like the guy, or you were bothered by the noise yourself — and your involvement gets compromised. You may also have a vendetta against someone, he notes, "all of which might compromise your case in court." Then, too, you might not be a specialist in co-op and condo law — and not be able to give appropriate advice.
Not that you shouldn't have lawyers on the board — both Cholst and attorney Steve Wagner, a partner in Porzio, Bromberg & Newman, serve as directors at their respective co-ops — it's just that you should use them appropriately. They can be very helpful, assisting their board colleagues in translating legalese and personally interfacing with an outside lawyer, who speaks the same legal language. Just don't rely on them exclusively or as your official legal rep.
When you think about it, it's all common sense. And, incidentally, Sladkus won the case for Cholst's building.
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