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Subject: Conflict of interest?
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Author Messages
SashaE1


Posts:110


08/08/2021 2:54 PM  
What do you all think about your HOA’s legal counsel being a Facebook friend with your HOA’s property manager?
JohnT38
(South Carolina)

Posts:794


08/08/2021 3:00 PM  
Posted By SashaE1 on 08/08/2021 2:54 PM
What do you all think about your HOA’s legal counsel being a Facebook friend with your HOA’s property manager?




Are you afraid they are going to plot the demise of the HOA via Facebook?
BillH10
(Texas)

Posts:786


08/08/2021 3:07 PM  
Sasha, can you first define the term conflict of interest then provide hypotheticals which describe how both being on Facebook could be a conflict of interest.

Would you ask the same question if both were members of the same American Legion Post, both held season tickets to the local professional sports team, or they both belonged to Kiwanis or the Chamber of Commerce?
EdwardD4
(California)

Posts:42


08/08/2021 3:18 PM  
If they are truly friends then I see it as a conflict of interest being that the attorney represents the board, and the hoa board represents the members. You can’t talk to attorney without the boards approval, however the friend can talk to the attorney about anything and more like not be charged for it. So if the board has it in for you, like what’s going on in my situation, members can be subject to bias decisions.
JohnT38
(South Carolina)

Posts:794


08/08/2021 3:28 PM  
Posted By EdwardD4 on 08/08/2021 3:18 PM
If they are truly friends then I see it as a conflict of interest being that the attorney represents the board, and the hoa board represents the members. You can’t talk to attorney without the boards approval, however the friend can talk to the attorney about anything and more like not be charged for it. So if the board has it in for you, like what’s going on in my situation, members can be subject to bias decisions.




Wow. So you make them unfriend each other and then they move their 'devious' conversations to phone calls or in person meetings. If they are not discussing HOA business on their Facebook pages then it's nobody else's business.
SashaE1


Posts:110


08/08/2021 3:33 PM  
we are termination with the current property management and our legal counsel is giving us advise to not “ruffle feathers” when discussing following the management contract through the termination date. seems to some of us this attorney is more concerned of the property management than he is of the board. they also refuse to meet without the manager being present. wondering if perhaps since they are connected on Facebook as friends that this somehow might be influencing the advise he’s giving us?? they also get work from this management company as they are the legal counsel for several other properties they manage. we found this legal counsel because the management company recommended them to the board but didn’t disclose they were connected on Facebook so curious if this makes a difference or not.
SashaE1


Posts:110


08/08/2021 3:33 PM  
we are termination with the current property management and our legal counsel is giving us advise to not “ruffle feathers” when discussing following the management contract through the termination date. seems to some of us this attorney is more concerned of the property management than he is of the board. they also refuse to meet without the manager being present. wondering if perhaps since they are connected on Facebook as friends that this somehow might be influencing the advise he’s giving us?? they also get work from this management company as they are the legal counsel for several other properties they manage. we found this legal counsel because the management company recommended them to the board but didn’t disclose they were connected on Facebook so curious if this makes a difference or not.
KerryL1
(California)

Posts:8734


08/08/2021 3:38 PM  
My request to Sasha is the same as Bill's.

Edward, please look up "conflict of interest" at Davis-stirling.com; Says-- think you're in CA, do the same.
BarbaraT1
(Texas)

Posts:591


08/08/2021 3:56 PM  
Posted By SashaE1 on 08/08/2021 3:33 PM
we are termination with the current property management and our legal counsel is giving us advise to not “ruffle feathers” when discussing following the management contract through the termination date. seems to some of us this attorney is more concerned of the property management than he is of the board. they also refuse to meet without the manager being present. wondering if perhaps since they are connected on Facebook as friends that this somehow might be influencing the advise he’s giving us?? they also get work from this management company as they are the legal counsel for several other properties they manage. we found this legal counsel because the management company recommended them to the board but didn’t disclose they were connected on Facebook so curious if this makes a difference or not.





Lots of people are connected to each other on Facebook - it's algorithm will suggest anyone in your contacts. It doesn't mean you are friends with them, close with them, or even engage with them on or offline. I don't think it makes a difference personally, but if it bothers you that much you can change counsel.

Or you can ask for the rationale behind the lawyers advice to not ruffle feathers. My experience with management company contracts is that there is often a penalty for early termination so the advice to see it through may be intended to protect you. But then I generally assume the best of people and don't go looking for reasons to accuse them of wrongdoing.


Also, this is a small industry. There aren't many HOA management companies or lawyers specializing in HOA law. Most managers have worked for more than one management company too. So your odds of finding a new lawyer with zero connections to a management company are slim.
MelissaP1
(Alabama)

Posts:10595


08/08/2021 5:18 PM  
Do you want it to be a conflict of interest to justify your opinion of the relationship of MC and Lawyer? Our Accountants' lawyer was our suggested lawyer. He went to High School with our accountant. I don't see that as any reason either one of them is not capable of doing their job.

Sounds to me just trying to create something to make it something.

Former HOA President
CathyA3
(Ohio)

Posts:2607


08/09/2021 5:52 AM  
Facebook friends by itself is not a conflict of interest. And you should differentiate between being "friends" on their personal pages vs. "liking" or "subscribing" to professional pages.

In order to be a problem, one or both parties has to benefit materially in some way on an issue that's facing your HOA. It's very possible that the PM may recommend the attorney to other HOA clients of theirs, but that's not your HOA's business and it in no way impacts your relationship with either party. That's just business connections.

It's possible that the PM and the attorney are personal friends. But the PM has no authority to make HOA decisions - if I were on your board, I'd be aware of it just on the off chance something happens but otherwise let it go.

I'd be a lot more concerned if a board member were personal friends with or a client of the attorney since I don't think they can be totally impartial no matter how hard they try to be - if this were the case I would say find a new attorney for the HOA.

(When I was on the board, I subscribed to our attorney's Facebook page because they would post relevant news for their clients. But they were not personal friends, and the only benefit the attorney would have gained was indirect via things like recommendations to whoever asked for my opinion. I got nothing out of it except the latest news.)
CathyA3
(Ohio)

Posts:2607


08/09/2021 6:10 AM  
One reason an experienced HOA attorney may advise against "ruffling feathers" is that they've seen many working relationships damaged because somebody gets a bee in their bonnet over something and allows it to get in the way of behaving professionally.

When it comes to HOA stuff in general, dysfunctional folks come in two flavors. One is the lack of knowledge about governing docs, state laws, limits of authority, etc. The second is the inability to control their emotions and conduct themselves professionally. Occasionally you'll get both flavors together and boy, are you in for a treat then! These folks can do a lot of damage without contributing anything positive. And HOA attorneys have seen this situation play out may times - if they educate their clients as part of their service, then warning about potential missteps is not a surprise.
KellyM3
(North Carolina)

Posts:1811


08/09/2021 12:18 PM  
Posted By SashaE1 on 08/08/2021 3:33 PM
we are termination with the current property management and our legal counsel is giving us advise to not “ruffle feathers” when discussing following the management contract through the termination date. seems to some of us this attorney is more concerned of the property management than he is of the board. they also refuse to meet without the manager being present. wondering if perhaps since they are connected on Facebook as friends that this somehow might be influencing the advise he’s giving us?? they also get work from this management company as they are the legal counsel for several other properties they manage. we found this legal counsel because the management company recommended them to the board but didn’t disclose they were connected on Facebook so curious if this makes a difference or not.




"Not ruffling feathers" by terminating a property management contract is excellent legal advice and advice that represents the best interests of your dues payers. I would not be concerned about Facebook connections nor express concern about the previous referral to the attorney as the management and the attorney have a trusting professional relationship.

If your board directly engages the attorney, the attorney will simply send the invoice to the property manager and you can approve the payment.
EdwardD4
(California)

Posts:42


08/10/2021 12:57 AM  
What if the board wants to investigate the management property? Has anyone thought of that? That’s why I mentioned if they are truly friends, I would say the board should look for another attorney to represent them. It may not be a conflict of interest but may be unethical. At an executive meeting with legal counsel complaining that the management company (not present) is not doing their fiduciary right in whatever it may be to manage the property, would do you think the likely outcome will be if they are “truly friends?”


Avoid Conflicts. The association's attorney, as legal counsel to the association, should never represent other persons or entities that could have conflicting interests with the association.

Management's Attorney. Associations should never hire an attorney that also represents the association's management company. If most of the attorney's business comes from the management company, he/she will put the management company's interests ahead of the association's. The same is true for board members.

Director's Attorney. If a board member wants the board to hire his personal attorney to serve as the association's corporate counse, the board should decline. The association's legal counsel must be free of any conflicts of interest so he/she can provide sound advice to the board.

Corporate Counsel. As corporate counsel to the association, the association's attorney does not represent the board, individual directors, or owners. The association's legal counsel represents the association as a corporate entity.

Corporations have a separate legal identity and enjoy the benefit of the attorney-client privilege. Evidence Code section 951 defines a "client" as the "person" who "directly or through an authorized representative, consults a lawyer for the purpose of retaining the lawyer ...." The term "person" includes a corporation; indeed, it may extend to an unincorporated organization "when the organization (rather than its individual members) is the client." (Smith v. Laguna Sur.)
This is also the position taken by the California State Bar in Rule 3-600(A) of the Rules of Professional Conduct:

In representing an organization, a member shall conform his or her representation to the concept that the client is the organization itself, acting through its highest authorized officer, employee, body, or constituent overseeing the particular engagement.
As a result, even though members pay the attorney's legal fees through their dues, members do not have the right to call or email the association's attorney with questions. Nor can directors presume the attorney represents them individually:

In representing a corporation, an attorney's client is the corporate entity, not the individual shareholders or directors, and the individual shareholders or directors cannot presume that corporate counsel is protecting their interests. (La Jolla Cove v. Superior Court (2004) 121 Cal.App.4th 773.)
Communication With Board. The association's attorney interacts with the board because the association speaks and acts through its board of directors (Corp. Code §300(a); also see Authority of Board & Members). Normally, such communications are through the president and manager and are subject to attorney-client privilege. See "Following Legal Advice."

No Director Confidences. Because the attorney acts as legal counsel for the corporation rather than individual directors, the attorney generally cannot agree to keep communications with one director secret from other directors. There are exceptions, such as when one director is in litigation with the association or an executive committee has been formed to deal with a particular issue.

No Right to Inspect. Because communications, i.e., letters, emails, etc., between the board and legal counsel are privileged, members do not have the right to inspect those communications.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.
EdwardD4
(California)

Posts:42


08/10/2021 1:01 AM  
I meant association manager not management property.
CathyA3
(Ohio)

Posts:2607


08/10/2021 5:12 AM  
Posted By EdwardD4 on 08/10/2021 12:57 AM
What if the board wants to investigate the management property? Has anyone thought of that? That’s why I mentioned if they are truly friends, I would say the board should look for another attorney to represent them. It may not be a conflict of interest but may be unethical. At an executive meeting with legal counsel complaining that the management company (not present) is not doing their fiduciary right in whatever it may be to manage the property, would do you think the likely outcome will be if they are “truly friends?”

... snip ...



Actually in this instance it's the attorney that's the problem, as he would breach attorney-client privilege if he disclosed this information to *any* third party. He's the one who has a fiduciary duty to his client, who would be violating whatever code of conduct he agreed to when becoming an attorney, and who could be sanctioned.

Any duty that the PM has to the association doesn't quite rise to that standard, although blabbing about confidential information is unprofessional at best. (Has anyone seen PM contracts that contain a confidentiality or non-disclosure clause? I can't remember seeing one, although PMs may have licenses with codes of conduct containing something similar.) People should remember that many PMs are not HOA employees, they are employees of the management company who are providing specific services as outlined in their contract - just like any other vendor. It's a different professional relationship. That may change if the PM is actually employed by the HOA (employment law is way above my pay grade).

In cases like this, it would be up to the board to decide which of the two of these folks they should dump. If they truly believed that neither could be trusted to zip lip when necessary, then I'd say the professional relationship is too damaged and both should be shown the door.

KellyM3
(North Carolina)

Posts:1811


08/10/2021 5:30 AM  
Your auditors would investigate the property manager's role in the HOA board's operation since what would really need inspection is financial operations. Besides, if you're using the HOA board attorney for investigations, the board is so lazy that it asks the property manager to launch and organize an investigation of itself.

Roll up those sleeves!


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