What insurance do attorneys need for serving on boards of directors?

Many attorneys serve on boards of directors for nonprofit organizations, corporate clients, or community organizations. This board service creates personal liability exposure that is separate from and not covered by the attorney's legal malpractice insurance. Malpractice policies cover claims arising from the rendering of professional legal services, and board service, even for an attorney, is a governance function rather than a legal services function.

The organization on whose board you serve should carry directors and officers insurance that names board members as insureds. Before accepting a board position, request a copy of the organization's D&O policy and confirm the coverage limits, the scope of covered wrongful acts, whether defense costs are within or outside the limits, and whether the policy covers individual board members or only the organization. Nonprofit D&O policies vary widely in quality, and some low-cost policies contain significant gaps.

If the organization does not carry D&O insurance, or if the limits are inadequate, you face personal liability for claims alleging mismanagement, breach of fiduciary duty, conflicts of interest, regulatory violations, or employment practices violations at the organization level. A personal umbrella policy can provide an additional layer of protection, though umbrella policies vary in whether they cover D&O-type claims.

Be aware of the distinction between serving as a board member in your personal capacity versus serving as the organization's legal counsel. If you provide legal advice to the board, that activity may be covered under your malpractice policy, but your governance decisions as a board member are not. If you serve as both board member and legal counsel, clearly delineate these roles in writing to manage client expectations and insurance coverage boundaries.