I am on a broad of directors for a non profit and we were successful in arguing our case in front of a utility commission over a proposed power line. The intravenors did not pay as much as we thought they would so we were short on our attorney fees. One of the board members paid the original retainer and handled everything with the attorney and ran everything out of his office. I signed on just help money be deposited and distributed. Now the attorney is going to sue us because our non profit status was not processed before the board transferred the engagement from the individual to the board. he says we igned as individuals. Please help!!!
Country relating to Question: United States
State (if USA): Texas
If your non-profit status was not in effect when you signed, then I am afraid the attorney is correct. At this point I am afraid that you are going to have to get the board together to try to approve the payment if money exists or you will have to enter into an agreement with the non-profit through the board to make a loan to the non-profit to cover the fees and be repaid for the action taken on behalf of the non-profit. The board can accept the transfer, but as between the parties who signed the agreement and the attorney, this is a personal guarantee and the deal between the members of the board and the board did not impact the contract with the attorney. Thus, the board members will have to cover the fees and then seek reimbursement through the board and the non-profit, which is permissible.
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Does the person that engaged the attorney originally andd wrote a personal check have any outsized responsibility? Our organization has no money. We are nothing more than a pass through for monies. Would an attorney sue or arbitrate. Is there a difference? The attorney also said at the informational meeting when this all started that as signing up as a board member you have no outsized responsibility. They just needed 5 people to establish a non profit for the other 55 intervenors
Whoever signed the contract with the attorney would be liable jointly and equally unless they have some written agreement specifying some other percentage. The attorney will likely sue and you will have to go against all of the members of the non-profit to seek their contribution for the attorney's fees. What the attorney said and what is stated in the fee agreement may be two different things and you need to read the fee agreement since that is what would control and not what he said.
If there was no fee agreement but just an agreement that Our organization was engaging the attorney but never discussed fees or retainers and the other person wrote a personal check for 30k to retain him first before the board ever came into existance?? There was another attorney involved that was engaged by him but paid in full by us. Our guy also made a personal donation to a state representative wo made a call on his behalf. The person on our board that did this ran everything out of his office and hired someone to handle the day to day. He now says that he has paid to much and we need to pay the rest. He is not clear from the final bill is he?
If there is no signed agreement from any of you, then he has no way to enforce the contract against you personally because there is no proof of personal liability. Without any contracts he has nothing to use in court to prove you owe him and you have a defense against his claims for payment and that the association is liable to pay him the fees since he was engaged by the board on behalf of the association.
The law firm has subsequently dissolved and they have a dissolution attorney handling collecting payments for them if we don't get this settled. The attorney also said we as board members have no outsized responsibilities. If the fee agreement was with the original guy who wrote the personal check and we don't have a fee agreement other than to say, we the board on behalf of our nonprofit and the intervenors engage you, are we in a better position? If the attorney sues us, I plan on writing a letter in the county paper and every other one where there is a power line about getting D&O insurance because most people won't pay and your attorney will sue you if you can't. All facts.
You need to send them a letter telling them there is no such contractual agreement that makes you personally liable and as such if they sue you personally you will file sanctions for filing a frivolous suit. I am afraid that in the meantime your non-profit really needs to come up with the money to pay them because they are liable even according to you and if there is a judgment it would be against them and you would end up needing an attorney to represent the non-profit.
JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law
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