If you are like most directors, taking board meeting minutes is one of the last jobs you want to undertake. The boardroom can get awkwardly quiet when the board chair asks someone to take on the role of recording the meeting minutes. In part, that is due to the reality that recording the important discussion and accompanying decisions while actively trying to participate in the discussion is a considerable challenge. Most of us have brains that are not wired to do two tasks that require focus and concentration at the same time.
But what happens when minutes are so lacking in detail that they fail to demonstrate sufficient deliberation? For that matter, what happens when the minutes go overboard and create a record of every detail discussed? Both can create a legal liability for the organization as well as for individual board members.
When Minutes Are Woefully Inadequate
As a director, you have the legal responsibility to act with due care in your board service. What does that mean? It means that you need to show up, provide legitimate oversight, and use your best independent judgment in making business decisions. For example, imagine that you serve on the board of an organization that serves children. A policy decision is before the board regarding the manner in which some program will be administered. A decision is made and the policy is implemented. Unfortunately, the meeting minutes only state that “discussion ensued” and that the policy was voted upon and passed. Six months down the road, the program staff is following the policy and a child gets seriously injured. As it turns out, the policy was flawed. Now what?
In determining the liability of the board and individual members, the court may look at how well the decision was deliberated and whether the board looked at the potential risks involved—in essence, did you use your best business judgment? In reality, the board decision may have been well deliberated and a thorough analysis undertaken, using the best knowledge reasonably available to the board. However, without adequate documentation, it will be difficult to prove that the board was not careless in its decision making. Well documented minutes could have saved the board considerable heart ache.
How Much Is Too Much?
On the other end of the spectrum, if minutes are too detailed, the information recorded can be used against you. The maxim of “everything you say can and will be used against you” is not strictly reserved for Miranda warnings for criminal custodial interrogations. The general principle is applicable to all areas of law—especially in trying to assign liability to someone for harm incurred. So, perhaps it can be said that everything recorded in writing can and will be used against you given a lawsuit.
Finding the balance is not as simple as implementing a structured formula. Some important questions to ask include: Do the minutes reflect adequate deliberation? Does the information recorded demonstrate that the decision was reasonable given the circumstances? Is the information important enough to preserve a historical record for the organization…or potentially for the court?
Of course, the capacity for legal liability is not eliminated simply by recording or failing to record minutes. Good decision making is vital. And keeping a meaningful record of the decision making process is imperative to minimize personal and organizational risk. Being intentional to maintain the right balance of detail in your board minutes is an important component of effective board leadership.