Los Angeles partners Fred Reish and Bruce Ashton authored an article for the Daily Journal titled, “Minimizing Risks for Charity Board Members.”
The article notes that while many lawyers volunteer their time to sit on the boards of charitable organizations with the best of intentions, most do not focus on the legal responsibilities and potential liabilities that come with such appointments.
Fred and Bruce discuss the potential liability of the retirement plan maintained by the entity for its employees under the Employee Retirement Income Security Act of 1974 (ERISA). Under ERISA, anyone who appoints a fiduciary is a fiduciary as well, so the board must be prudent in its selection.
Fred and Bruce say that because of the high standard plan fiduciaries are held to, lawyers who hold board seats “need to pay attention at an oversight level and take reasonable risk mitigation steps to ensure that the officers are carrying out their roles responsibly and, in the case of the retirement plan, prudently.”