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Attorney has the board in his pocket

September 12, 2004|Stephen Glassman and Donie Vanitzian | Special to The Times

Question: The attorney for our association has lost several cases and has sued and been sued by some of the same associations that recommended him to us. He has consistently given our board bad advice, costing our association a lot of money.

Board members have sold their homes and moved because they were criticized for hiring him and for following his advice, but no board will fire him.

The attorney is available 24 hours a day by e-mail, fax and telephone and encourages new board members to freely contact him, never explaining that he bills by the millisecond. He wines and dines each new board and in the beginning gives them "free" legal advice unrelated to association business.

One board member who moved away told me the attorney "just sort of throws free advice in as a bonus" to owners on the board. Because of the relationship he has with board members, no one wants to be on the board that fires him.

When one board president told him our association would not need his services, he kept calling with advice as if nothing ever happened. He's still on our payroll today.

The attorney talks with one board member daily and has been instrumental in keeping that member on the board. The attorney also receives and counts all the proxies, and no one else is allowed to see them.

As owners we feel helpless but still have to pay. What can happen if this continues?

Answer: Even "free" legal advice is subject to rules of professional responsibility. An attorney is a vendor and, like any other whose business consists of providing a service, can be hired and fired by the board.

Merely because the vendor happens to be an attorney does not absolve the board from performing due diligence in obtaining second, third or even fifth opinions from other lawyers. An attorney should be hired for his or her proven expertise, skill, professionalism, knowledge base and track record.

Board members who accept "favors" from vendors violate their duties owed to the association by benefiting personally. Such favors must be disclosed and shared with all other titleholders, as should gifts purchased by the board for any vendors.

Boards that allow themselves to be swayed or overly impressed by vendors who "wine and dine" may be overlooking their obligation to perform due diligence and should resign.

It is excessive and unnecessary to hire an attorney for the purpose of receiving and counting proxies, especially when the complex may need funds to replace old plumbing, a roof that needs replacing or cracked cement. Surely there are trustworthy owners available to count proxies without billing the association.

Board decisions like this raise suspicion among a membership that is responsible for generating an income to pay the bills or who may want a new board but have been unsuccessful in accomplishing that end.

In the event of a fraudulent election, every motion, resolution, petition or new rule by an illegally elected board may be scrutinized by a court and subject to rescission.

It only takes one owner seeking justice to file a lawsuit questioning board actions. All board directors have a duty to be independent thinkers -- uninfluenced by certain members and other associations or relationships.

Even if boards before this one allowed the practice of being influenced to continue, it does not mean this board follows suit.

That no board wants to be the one that fires this vendor may indicate that all board members enjoy the attorney's perks, despite the potential for personal liability.

Until the ethical backbone of your association manifests itself, expect these conditions to continue at the expense of all the other owners.

Send queries to P.O. Box 11843 Marina del Rey, CA 90295 or NoExit@mindspring.com.

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