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Is it typical for nonprofit to pay for CEO’s personal attorney?

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Is it typical for nonprofit to pay for CEO’s personal attorney?

Is it typical for a nonprofit to pay for the CEO's personal attorney? The personal attorney was hired due to an investigation currently being conducted by the Attorney General due to financial irregularities. The board has hired an attorney, but due to concerns by the CEO that this attorney does not represent her interests, she has hired her own. As a member of the board, I recently found out that the board chair allowed the agency to pay for her personal attorney.

The legal interests of the CEO and the organization in an investigation can be very different.  The organization, for example, in order to get rid of the problem quickly and with a minimum of organizational damage could very easily throw the CEO under the bus, as they say.  The CEO may need separate counsel to prevent that from happening and your bylaws probably authorize — or even require — it under the indemnification provisions.  The CEO may also be entitled to separate representation under your insurance policy, without regard to specific bylaw provisions.

Tuesday, August 18, 2015

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