Ken R. Butler D&O Advisory - Why Companies and Advisory Board Members Should Purchase D&O/Employment Practices Insurance

Legacy Risk Solutions serves as the independent gatekeeper of their client's risk management and insurance program.

ADVISORY - Why Companies and Advisory Board Members Should Purchase Directors & Officers and Employment Practices Liability Insurance.

Ken R. Butler forwarded this advisory to all clients after observing the increasing trend of small start up companies to use advisory boards rather than a formal board of directors. A copy of the advisory is available by forwarding a request to kenblegacy@aol.com.

Reasons for concern include:

1. Advisory Board Members can be sued and are not automatically protected by corporate indemnification. Extension of corporate indemnification to advisory board members should be confirmed by corporate counsel.

2. Advisory Board Members are subject to litigation for employment practices including improper sexual advances, harassment, and discrimination in hiring practices that may have been the subject of review or supervision by the Advisory Board.

3. Advisory Boards are often treated like a Board of Directors by the President or CEO, reviewing personnell matters, financial performance, interviewing prospective management candidates, etc.