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101 Ways To Improve Your Cooperative

CHAPTER THREE: DEALING WITH LITIGATION

        A Board needs to understand the workings of litigation in order to maximize its chances of prevailing, whether it is suing or being sued. The typical Director knows little or nothing of this crucial area, so this is designed to provide some tips on how to oversee lawsuits.

30. First, the Board needs to come to grips with the fact that litigation is a fact of life for corporations, and cooperatives are no different. You will be sued. You will find it necessary to sue. Thus, Boards need to get accustomed to thinking about litigation and planning for it.

31. Under new federal and state court rules, there is now “e-discovery” which means that the other side has a right to access emails and text messages. Social media is now a good source of information as well, so watch out. Keep that in mind. It can be embarrassing to you, and harmful to the cooperative.

32. Be prepared for claims against the cooperative, and take steps to preserve evidence. An example is slip and fall cases. If someone falls on your premises, create evidence to document it. Have a snow removal record. Take photographs and videos. Interview witnesses through your Attorney. Make sure there is a camera in the office or available to the maintenance staff.

33. Realize that lawsuits usually happen some months or even years after the incident. You must develop a system to keep all your records that are relevant. Consult with your Cooperative Attorney to establish a record retention schedule, adopted by the Board and inserted in the Board Policy Book.

34. Make sure that you and the key people know where the records are kept. They should be stored off-site, and not forgotten. An index needs to be kept. This is an item that should be noted in the Board Policy Book discussed above.

35. Understand why litigation takes so long, and costs so much.

36. If the case is against the Cooperative, you may have insurance. When the lawsuit is filed, immediately get it to the Cooperative Attorney who does two things right away: works with Management to determine if there is insurance and if so, gets it to the insurance carrier for defense; and since there is limited time for responding, work with the plaintiff’s attorney to secure an extension while the insurance company is assigning the case for defense, or if necessary, file an answer and affirmative defense along with any other necessary pleadings to protect the Cooperative.

37. If the insurance company is defending the Cooperative, realize that unless the Board injects itself into the case, the insurance claims adjuster will simply work the case with the insurance company attorney which may lead to bad results. You have the right to direct the Cooperative Attorney to serve as co-counsel in order to “shadow” the case and make sure the Cooperative’s interests and goals are protected. This becomes important when you may have other members who will bring future lawsuits if they see the chance for quick money. Moreover, most lawyers, including those hired by the insurance company, do not understand housing cooperative law and your Attorney can be most helpful in making sure that this specialized area of the law is made known, as well as helping bring forward relevant witnesses and evidence, and making your position known during negotiations. Otherwise, you may get a letter in the mail telling you that the case is settled and the plaintiff got paid, thus opening the floodgates of more lawsuits. At least get a confidentiality agreement with some teeth in it if you settle.

38. If the Cooperative is the plaintiff against a member, early involvement of the Attorney is an absolute necessity. It is important to build a case by having the Attorney conduct an investigation, interview witnesses, and direct the massing of evidence. While the Management Agent plays a supporting role, it is the Attorney’s job to make sure that there is enough admissible evidence to win.

39. Another important doctrine in law protects the work product of the Attorney, so communications concerning the case that is directed to or comes from the Attorney will not likely be discoverable by the other side – whereas, if the communications do not involve the Attorney, it will be available to the other side. Use this cloak to protect the Cooperative by involving the Attorney as soon as litigation appears likely and then start labeling communications accordingly.

40. If the Cooperative is seeking to sue a member, remember that the Rules of Evidence requires witnesses with firsthand knowledge. Hearsay evidence or not having witnesses is fatal to your case. Thus, you will have to deal with people who will talk to you but refuse to testify.

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