Sometimes the morally right thing to do is not the legally prudent thing to do.
Such is the dilemma facing the Southern Baptist Convention’s Executive Committee as it meets Tuesday, Oct. 5, to vote — for the third time — on whether to waive attorney-client privilege on the investigation of potential mishandling of sexual abuse claims mandated by messengers to the SBC annual meeting in June.
What is attorney-client privilege?
“Attorney-client privilege,” often referred to by legal shorthand as “privilege,” is a special category recognized in federal and state laws. In legal discovery of evidence, according to Cornell Law School, “certain subject matters are privileged, and cannot be inquired into in any way. Such privileged information is not subject to disclosure or discovery and cannot be asked about in testimony. Usually, privileges exist not because of a fear that information provided will be inaccurate, but because there are public policy reasons the information should not be disclosed.”
Attorney-client privilege works to keep confidential communications between attorney and client from being disclosed.
Attorney-client privilege refers to a subset of this legal category of privileged information, which works to keep confidential communications between attorney and client from being disclosed. This kind of privilege may be asserted or invoked to prevent a person or organization from being compelled to hand over certain confidential documents or to prevent an organization’s legal counsel from testifying under oath as to privileged confidential communications.
In the case of the SBC Executive Committee, attorney-client privilege could be claimed to prevent a third-party investigator — Guidepost Solutions in this case — from having access to documents showing how Executive Committee staff or trustees communicated with legal counsel about past knowledge of sexual abuse claims within the denomination.
While the SBC’s position has been that it does not keep files on clergy sexual abusers, several victims of sexual abuse within the denomination have said they communicated with Executive Committee officials or were harassed or mishandled by them. One such instance involves the case of a former employee at Lifeway Christian Resources — one of the SBC’s 11 agencies and institutions — who was wrongly characterized in Baptist Press as having had a consensual affair when the victim claims there was nothing consensual about what happened to her. Baptist Press is part of the Executive Committee staff.
It is likely that other documents exist that show various SBC churches writing for help with sexual abuse cases in their congregations, although how many such documents exist is not known.
Why attorneys fear waivers of privilege
And it is that unknown factor that gives most attorneys heartburn when asked if a client ever should waive privilege.
One attorney consulted as background for this piece explained: “As a lawyer, I’m not sure I would ever counsel my client to prospectively waive attorney-client privilege without having fully vetted the documents in question. With runaway juries and massive verdicts not an absurd possibility (both against the SBC Executive Committee and, more importantly, potentially against the SBC as a whole), it might even be a breach of a fiduciary duty owed to the SBC as a whole to waive a privilege that might otherwise shelter the SBC from massive financial losses.”
The risks of waiving privilege without knowing what documentation or conversations could be brought up opens the door to potentially massive litigation.
Other attorneys consulted said the same thing, and this mirrors the very arguments the Executive Committee’s lawyers appear to have been making to them behind closed doors: The risks of waiving privilege without knowing what documentation or conversations could be brought up opens the door to potentially massive litigation.
The lawyer quoted above, who is no longer a Southern Baptist, said this is a case where trustees of a Christian organization may face conflicting obligations: “That doesn’t mean that assertion of the privilege would be a morally good thing to do. It just means that waiver of the privilege may not be legally ethical if it puts the person (or entity) owed a fiduciary duty at financial risk.”
What is a fiduciary?
And there is the other key word to the current debacle: fiduciary.
By federal and state laws, a “fiduciary” is someone who has a legal responsibility to the organization they serve to act always in the best interest of that organization. A guidebook for nonprofit governance published by the state of Tennessee — where the Executive Committee is located — lists three fiduciary responsibilities for trustees of nonprofits.
First is the duty of good faith, which means the trustee “must act in good faith and be fair in your dealings with your nonprofit. You must not take advantage of your organization and its resources. You must be upfront and honest in your dealings with the nonprofit and in fulfilling your other fiduciary obligations.”
Second is the duty of loyalty, which means “you must act with undivided loyalty in the best interests of your nonprofit organization and that you not seek to benefit personally from the activities or resources of the nonprofit you serve.”
Third is the duty of care, which means “you must act reasonably, as a prudent person in similar circumstances would, that you are familiar with the nonprofit’s activities and financial condition, and that you participate regularly in board meetings. It is the job of the governing board to oversee the work of the chief executive officer of the nonprofit and to make sure that the organization is faithfully carrying out its charitable purpose without extravagance or waste.”
And then this warning: “Under Tennessee law, you may be personally liable to the nonprofit for the harm it suffers if you breach your fiduciary duties. Board members also have a duty to disclose material information to the rest of the board. If you are aware of information that you believe could affect or require a board decision, you must share it with your fellow board members, unless you cannot legally do so.”
Staff of a nonprofit organization — particularly the CEO and top officials — may be held to the same standards. For example, if the president of a nonprofit was aware of allegations of sexual abuse and either ignored them or sought to bury them, that executive could be held liable for bringing harm on the nonprofit, for not being a good fiduciary.
In the case of the SBC, both the president, Ronnie Floyd, and the past chairman, Mike Stone, have been publicly accused of working to thwart the fair treatment of alleged victims of sexual abuse within the denomination.
Refusing to deal with a difficult problem— whether it be sexual abuse, embezzlement or something else — may ultimately bring harm to the organization, and those who looked the other way may be held liable.
Refusing to deal with a difficult problem— whether it be sexual abuse, embezzlement or something else — may ultimately bring harm to the organization, and those who looked the other way may be held liable.
“Whatever (if any) fiduciary duties the SBC trustees or board members owe to each other, they certainly owe a fiduciary duty — a duty to stand in the shoes of, and act in the best interests of the SBC as a whole,” said one attorney consulted for this article. “That’s the whole point of a fiduciary duty, tasking the fiduciary with acting in someone else’s best interests even when those conflict with self-interest.”
To whom are Executive Committee trustees accountable?
Now there’s a third layer of consideration to the Executive Committee’s dilemma, which boils down to asking whether its trustees are accountable foremost to the Executive Committee or to the SBC in annual session.
An Oct. 4 letter from Executive Committee legal counsel to trustees made a case that there is no difference between the two choices: “You should understand that duty to be owed both to the Executive Committee and to the Convention. That duty is to act in the best interests of both corporations. In our opinion, the interests of these two corporations are the same.”
On one hand, that’s an easy leap to make because the Executive Committee serves, by its bylaws, as the convention ad interim, meaning when the convention is not in session — and it is in session only two days a year — the Executive Committee is charged with keeping things running by doing the will of the convention.
Yet never before has there been a case where the convention in annual session told an agency to do something it later determined to be not in the best interest of the entity or the convention. That is exactly the argument being made by the Executive Committee’s attorneys: That waiving privilege will endanger not only the Executive Committee but also the convention at large.
BNG has received a verified copy of a letter sent to Executive Committee members Oct. 3 by two trustees, Joe Knott and James Freeman, making this case.
“We do not agree that we must follow orders from the Convention that could have deleterious effects on or missionaries and their funding.”
“Specifically, and among other things, we do not agree that we must follow orders from the Convention that could have deleterious effects on our missionaries and their funding — especially (if) relevant information on the issue was not available to the Convention. We cannot refuse to consider relevant information that was not available to the Convention.
“Some of us do not believe the Convention knowingly voted or intended to cancel our liability insurance when they directed an audit. Others on the EC believe whether the Convention intended it or not, we have no choice on the issue and must the take actions, which we have since learned are unprecedented and could have disastrous effects on our purpose and mission.
“One group of trustees believe we are essentially employees (unpaid, voluntary employees, but employees nonetheless) of the Convention. If we are, we have a duty to obey orders from the Convention and there is no place for independent investigation, study and decision.
“Another group of trustees (of which I am one) believe we are trustees, not employees, which means we are empowered and required to use our best judgment to manage the affairs of the institution which we hold in trust for the Convention. We must consider and give proper weight to all the information that comes to us, which may or may not have been available to the Convention as a whole. The trustee is a fiduciary, which imposes on us a legal responsibility to use his or her best judgment to make good decisions on behalf of the institution he, along with other trustees, holds in trust. That duty is non-delegable.”
Sole membership
Complicating this matter still further is a decision the Executive Committee made in 1997, when it asked all SBC agencies and institutions to amend their bylaws to make the SBC the “sole member” of their corporations. Being the sole member means that the SBC alone has ultimate control over the entity’s governance and has the power to elect and remove trustees.
This was sparked by action in state Baptist conventions where entities fearful of the fundamentalist takeover then rolling across the SBC amended their bylaws or charters to becoming self-perpetuating boards. The prime example of this was Baylor University’s break with the Baptist General Convention of Texas. Executive Committee leaders didn’t want seminaries or mission boards following Baylor’s lead and removing themselves from the SBC’s control.
Executive Committee leaders didn’t want seminaries or mission boards following Baylor’s lead and removing themselves from the SBC’s control.
Jeremy T. Coffey of the New York law firm Perlman and Perlman has written specifically about this issue among nonprofit boards.
“A nonprofit sole member structure puts directors of the subsidiary in a challenging position because their fiduciary duties to the nonprofit can sometimes put them at odds with the interests and direction of the sole member,” he advised.
In the SBC’s case, when the request for a bylaws change was made to all entities in 1997, Morris Chapman, the president of the Executive Committee, explained the need: “The issue is one of ownership. Do you or do you not believe the SBC should own the entities that receive Cooperative Program funds?”
One seminary held out for nearly a decade before amending its bylaws. Chuck Kelley, then president of New Orleans Baptist Theological Seminary, said the Executive Committee’s request was a “step toward centralization of control and authority” exerted by the Executive Committee over all elements of the convention. “Southern Baptists always have resisted centralization. … Baptist polity emphasizes influence through trustees” rather than the strong power of the Executive Committee.
Now, that desire for absolute control could backfire, as the Executive Committee stands on the brink of being hung by the noose it crafted.
What’s at risk?
All this legal debate is not just theoretical. The consequences of either waiving privilege or not waiving privilege are huge.
If the Executive Committee continues to resist waiving privilege and giving up its desire to control the investigation of itself, the blowback from pastors, churches and other SBC institutions will be significant. This already includes withholding of offerings and a possible effort at next summer’s annual meeting to unseat recalcitrant Executive Committee trustees.
Multi-million-dollar judgments (see the Catholic Church as an example) could drain denominational reserves and offerings intended for missions and theological education.
One Executive Committee member told Christianity Today he had intended two weeks ago to call for a vote of no confidence in Floyd’s leadership as president of the Executive Committee but held off for now because he believes the committee finally will succumb to the will of the convention.
On the other hand, if the Executive Committee does waive privilege and that results in even a few bombshell revelations of mishandling of sexual abuse cases, the litigation that follows could be costly to the Executive Committee and to the convention at large. Multi-million-dollar judgments (see the Catholic Church as an example) could drain denominational reserves and offerings intended for missions and theological education.
And herein lies the latest fault line among Southern Baptists: Those who believe getting to the bottom of the sexual abuse cases demands what it takes by way of losing reputation and finances versus those who believe the risk of litigation must be mitigated even though they are sympathetic to the cries of the abused.
Related articles:
Who are the key players behind the SBC Executive Committee’s response to a sexual abuse investigation? | Analysis by Mark Wingfield
SBC faces a test of its governance with tug-of-war over sexual abuse investigation | Analysis by Mark Wingfield
SBC Executive Committee hires a firm to investigate itself and report findings to itself