7 Simple Steps

Most Directors’ and Officers’ (D&O) Liability Claims could be avoided by following a few simple, yet vital steps. Here are 7 simple guidelines to help you…

1. Use Professionals

• Retain professional counsel to review and update your by-laws. Attorneys specializing in non-profit organizations can provide effective and economical legal services.
• Hire only experience and properly insured vendors, contractors and service companies.
• Regularly consult with your accountant to keep financial records in order. Non-profit clubs are not exempt from public scrutiny and scrutiny from the IRS.

2. Follow the Rules

• Require board members to read and understand your club’s by-laws.
• Even though board meeting may be informal, record the minutes of every meeting and follow the procedures and rules.

3. Keep By-Laws Current

• Keep up with the new laws impacting your club.
• Have legal counsel periodically review and update your club’s by-laws.
• Implement changes at your club, pursuant to the by-laws.

4. Elect Qualified Board Members

• Make sure prospective board members know what their position entails. Consider a written job description for each board position.
• Require all board members read the by-laws before taking office.
• Provide training to board members.

5. Do Not Allow Emotions and Personalities to Get in the Way.

• Emotional situations and personality conflicts are unsuitable. Do not allow emotions to control board decisions and resolutions.
• The cause of many problems is that people feel they have not been given the opportunity to speak their mind. People are more likely to feel they have been treated fairly if given the chance to voice their opinion and if they club’s board rules and procedures are followed.
• Do not let a board members dislike for another person or member be part of the discussion

6. Keep Good Records

• Keep detailed minutes of all board meetings. Minutes leave no question about what the board intended.
• Implement a formal document retention policy at your club.
• Keep good records of all correspondence and communications with members, employees, vendors, legal counsel and anyone else.

7. Forward Demand and Claims

• No matter what preventative measures are taken, “claims happen.” When your club receives a demand to do or not to do something, or learns of facts that may lead to a claim, the information should be submitted to your insurer immediately.
• A Directors’ and Officers’ Liability policy is a claims-made policy. Notice must be given to the insurer of the terms and conditions of the policy as soon as practicable to preserve all of your club’s rights under the policy.