At last week’s Executive Committee meeting there were a lot of terms and concepts involved that represent unfamiliar territory for most of us as Southern Baptists. This Q&A is designed to address the most pressing questions we face as the EC Officers and SA Task Force work this week for an agreement on how to proceed.
1. Why is it important for the Executive Committee to waive privilege?
Attorney-client privilege is a legal rule that allows the clients of attorneys to keep confidential any legal advice that their attorneys provide them.
First, it is important because the motion that was passed during the 2021 Southern Baptist Convention (SBC) says the review of the Executive Committee (EC) should follow the best practices prescribed by the 3rd-party independent reviewer. The motion specifically addressed that the practices include but not be limited to the waiving of attorney client privilege. Given the deliberation involved in passing this motion, it is clear that the convention supported waiving privilege regardless of the exposure it might create.
Further, waiving-privilege is the only way to ensure the investigation actually leads to a full and thorough report about the EC’s handling of sexual abuse cases. Without making any judgments about how EC has handled sex abuse in the past 21 years, it is apparent that the SBC wants a transparent and thorough review of the EC on this issue.
With a topic as sensitive as sex abuse, it is certain that EC staff and trustees have consulted with attorneys about how to handle these matters. If the EC has responded in the past to abuse wrongly, it is likely that the action and decisions entailed interaction with attorneys. If privilege is not waived, any number of emails, documents, materials, and conversations would be unavailable to Guidepost as it conducts the investigation.
Waiving attorney-client privilege is especially important when you consider the EC’s staff structure for the past two decades. During this period of time, Augie Boto served as both general counsel and executive vice president. Boto was involved in every major issue the EC dealt with during the time frame under review. Because it is unclear when Boto acted as general counsel and when he acted merely in his staff capacity, it is important that privilege is waived so that the entirety of his communication can be reviewed.
It is accepted best-standards practice to waive privilege in this type of assessment and it is in line with existing precedent to waive privilege. The only risk to the EC in waiving is if the external audit finds that the EC has been involved in or covered up abuse.
We should remember that on September 9th, the EC released a statement that said: “the Executive Committee leadership is not opposed in principle to requests for the waiving of attorney-client privilege consideration when it is relevant, it is appropriate, and it is in consultation with the third party commissioned to conduct the inquiry, Guidepost.”
2. Should we be concerned by the claims made from Executive Committee staff and some committee members that if privilege is waived they will lose their insurance?
One of the points of contention from EC lawyers and staff has been the issue of insurance coverage. They have argued that the EC will be “uninsurable” if they agree to waive attorney-client privilege. They have also used this argument to convince many EC trustees that it would be a breach of their fiduciary duty to take any action that would cause the EC to be without insurance coverage.
There are a couple points that must be understood in response to this argument. First, this is a purely speculative argument being put forward by EC lawyers and staff. It would be shockingly rare for there to be any provisions in the EC’s insurance policy that would void coverage because of waiving attorney-client privilege.
Second, even if this were true, it is irrelevant when it comes to potential liability for past misconduct. Trustee Rod Martin argued on Twitter that this was an important consideration because, “If we void our insurance, and the investigation finds victims, who will pay them?” Mr. Martin fails to point to a specific clause in the EC’s insurance policy that would “void” their insurance. Furthermore, if the investigation finds wrongdoing, it is not a current or future policy that would cover liability for that wrongdoing, it is the policy that was in place at the time of the wrongdoing.
The threat of “voiding” insurance or being “uninsurable”, particularly when not supported by an actual policy, is often used as a scare tactic. Even if the EC were to lose coverage, it would still be obligated to follow the will of the messengers. But the argument being made by EC lawyers and staff appears to be a speculative concern that is not supported by facts.
3. What is the Executive Committee’s fiduciary duty?
In the legal briefing EC members received on Monday afternoon, they were told that a vote to waive attorney-client privilege would be a vote to breach their fiduciary duty. Over the past week, this is a term that has been weaponized by EC lawyers and staff to intimidate EC members.
It is important to first clarify what fiduciary duty is not. It is not merely a duty to mitigate risk. The impression given by EC lawyers and staff is that any action taken that results in legal liability of financial exposure is a breach of fiduciary duty. This is a limited definition of fiduciary duty that is not consistent with Tennessee law or case law.
Fiduciary duty is often broken down into three components: duty of care, duty of loyalty, and duty of obedience. When assessing duty of care, one must look at issues like prudence and due diligence. For the EC, it means that trustees are engaged and informed. Last week’s meeting with its extensive debate was certainly a fulfillment of the member’s duty of care.
Second, we must consider the duty of loyalty. This can be assessed by board members answering a simple question: “Am I acting in the best interest of the organization or in my own best interest?” The factors involved in answering this question cannot be purely financial. If a trustee has done their due diligence and believes they are acting in the best interest of the organization, then they have fulfilled their duties of care and loyalty.
Finally, and most importantly in this situation, is the duty of obedience. The duty of obedience requires trustees to comply with the law and their governing documents. As it relates to the EC’s response to the motion passed by messengers at the 2021 SBC Annual Meeting, a duty of obedience requires that EC members comply with a directive from the Southern Baptist Convention. As the sole member of the EC, the Southern Baptist Convention has the right to direct the affairs of the EC. Furthermore, as the entity tasked with carrying out the will of the messengers between annual meetings of the Southern Baptist Convention, the members of the EC have a duty of obedience to adhere to the expressed will of the messengers.
While EC staff and lawyers have attempted to convince EC trustees that they cannot comply with this directive from the Southern Baptist Convention because it would violate their fiduciary duty, the opposite is true. EC members are bound by their duties of care, loyalty, and, in particular, obedience to comply with the motion passed calling on the EC to cooperate with an independent third-party investigation, including waiving attorney-client privilege.
4. Is trauma-informed services within the scope of the approved motion passed by the Executive Committee?
Some EC members suggested last week that the inclusion of trauma-informed care and services in Guidepost’s contract goes beyond the scope of the motion the SBC passed in June. That is not the case. The motion says the review will follow “best-standards and practices” that the commissioned third-party recommends. It has been deemed by Guidepost based on their vast experience in doing investigations like the one the SBC commissioned, that these services reflect best practice. In their list of principles, they include “Trauma-informed Survivor and Witness Interviews.” Providing trauma support while conducting the review fits within the motion.
Care for the survivors provided by the contract does not merely reflect professional best practices for the type of review the SBC commissioned. More importantly, the services model basic Christian ethics “to care for the least of these.” These services are included to ensure that survivors who participate in the review are cared for and supported through their involvement. It guarantees that Guidepost engages people with appropriate compassion and upholds common decency. That we have EC members who do not see the need for these services is shocking. Indeed, their objection to the services points to the very reason the convention called for an assessment of the EC’s handling of sexual abuse.
Further, it should be noted that the SBC’s Credentials Committee recognizes the importance of providing trauma-informed care to survivors, who are involved in an inquiry. The committee offers a similar service to those who file a report. The support is promoted on the submission form that the committees created. The committee retains a mental health center to provide care and support for those who submit a report to the committee.
5. Does the indemnification clause in the Guidepost contract threaten members of the Executive Committee?
During their public deliberation on the Guidepost contract last week, a few EC members claimed that the indemnification clause in the contract exposed the trustees to personal liability. That assertion created some confusion and fear. It is essential to be clear on this concern. The trustees are not exposed to threat personally by the indemnification clause in the contract.
The confusion was understandable. Not everyone is conversant on what an indemnification clause is. The EC staff did not support the trustees by defining indemnification and clarifying the role of the clause.
An indemnity clause is a promise by one party (the indemnifying party) to be responsible for and cover the loss of the other party (the indemnified party) in circumstances where it would be unfair for the indemnified party to suffer the loss. Thus, the clause serves to compensate a party for harm or loss arising because of their relationship with the other party and because of either the other party’s actions or failure to act. The clause effectively shifts the liability away from one party and on to the indemnifying party.
It is the case that the clause functions to mitigate risk. Those clauses fall into two categories. (1) Protect the indemnified party from loss or damage resulting from claims by a third party, not indemnifying party. (2) Protect the indemnified party from loss or damage resulting from the indemnifying party’s breach of contract or warranty.
The indemnification clause in the Guidepost contract is designed to serve the first category. It is a standard clause that indemnifies Guidepost personnel (including contract workers), their officers, and their shareholders to the fullest extent of the law for services provided under the contract, including advancing expenses if they must defend themselves on a claim. Indeed, this is a reasonable clause for Guidepost as they investigate the actions of EC for the potential claims would be a consequence of the information revealed by the review of the EC.
It is relevant also to clarify that the indemnification clause in the present contract is the same as the clause in the engagement letter that the EC signed with Guidepost another investigation of EC the week before the 2021 SBC in June. The EC attorneys previously vetted this clause. They would have assuredly evaluated the risk for the EC and its trustees.
Also, another way that we know the EC trustees are not exposed to threat because of the Guidepost contract is the EC has an indemnification clause for its trustees. In the by-laws for the EC, the trustees are indemnified. It is a good statement that protects the trustees of the EC from someone who sues the EC during their time of service. The statement says trustees will be indemnified for serving as a trustee “against all expense, liability and loss . . . actually and reasonably incurred or suffered by such person in connection with such action, suit or proceeding, to the fullest extent permitted by applicable law.” We are glad this statement is included in EC by-laws. We want those who give of their time to serve our convention to be protected.
This Q&A and research were compiled with the help of friends of SBC Voices.