Here at Church General Counsel, we're starting a focus over the next several weeks about dealing with sexual harassment in the church as the #MeToo movement spreads like wildfire through our society refusing to pass over the church. How the church works to prevent sexual harassment in the workplace is crucial, and we'll have resources and further discussion on this topic over the next few weeks. But the second aspect of a good sexual harassment strategy is how to deal with it if a claim is made.
Churches must respond to claims of sexual harassment with a thorough investigation. However, there are many great reasons why churches should not conduct them internally.
1. Churches are not naturally qualified to conduct an investigation appropriately. I don't know of any seminary that teaches a class on fact finding investigative techniques. I know plenty of law schools that do, however. Attorneys are trained in how to build a case, and before the case can be built on the law it must be built on the facts. As such, attorneys must know how to conduct good witness interviews, collect documents and other evidence, and otherwise conduct a solid investigation.
2. Internal investigations can lead to hurt feelings and further conflict. Someone is going to disagree with your conclusion if you do the investigation by yourself. This can cause church members to be upset with you, and you didn't do anything but due diligence in investigating a sexual harassment claim as you should. It can cause more strife on staff. However, if you have an outside attorney conduct the investigation, it brings a formality to the process that relieves you of personally carrying the weight of the decision without an independent recommendation.
3. The content of the investigation can gain extra protections. This is the great benefit of attorney-client confidentiality and privilege. Attorney-client confidentiality just means that an attorney must keep information gained from the attorney-client relationship strictly confidential in a vast majority of circumstances. As such, the things that church staff, members, and others say to the attorney are usually protected. Attorney-client privilege goes further to prohibit a court from requiring an attorney to disclose that information. This is a great protection that you won't get with any other investigator.
4. The results of the investigation can also gain extra protections. This means that whatever the attorney discovers could be protected from anyone else getting access to it. This is because a doctrine known as attorney work-product. It is an exception to the discovery rules - rules that provide for the provision of evidence from one party in litigation to the other in hopes of settling a case or allowing the other party to prepare for trial on equal ground. Except in rare situations, the work of an attorney cannot be "discovered" by an opposing party such that not only communications, but the result of an investigation are protected from disclosure.
At Church General Counsel, we highly recommend our clients utilize our services to conduct investigations in sexual harassment and other personnel matters. Here are some ways we can help:
Cory and Stephanie Epps have released their first Christmas EP called Love Has Come to Save. Church General Counsel managing attorney Josh Bryant was able to walk them through the process of obtaining copyrights on their work. Cory and Stephanie Epps are phenomenally talented, and they wrote one of those songs that tells the entire story of Christmas in a new and refreshing way. It starts before Christ left the bliss of heaven and goes all the way through His ultimate victory on the cross, interspersed with the praise that this loving gift deserves. Bryant has joked that the song is Dove Award worthy. After you listen, we think you'll see it isn't a joke - Cory and Stephanie Epps have written an amazing song about the Love that's come in Jesus' birth. Their arrangement of other Christmas classics don't disappoint either.
Churches do things like this all the time, and while no musician or pastor should get greedy with what they create, the pastoral process is inherently creative. Whether you are preparing a sermon, creating graphics, or writing a Dove-worthy Christmas song, you should take steps to protect the integrity of your intellectual property. Monetizing your intellectual property is not inherently greedy. It is a means by which God can provide for your family or church, perpetuate His work from a financial standpoint, and otherwise extend the reach and influence of your work. Managing Attorney Josh Bryant has experience in several aspects of intellectual property law, including copyright, trademark, and other areas that generally don't apply to churches. The intellectual property services he offers are all part of the monthly subscription service churches use to retain Josh Bryant or other attorneys through Church General Counsel. Pastors and musicians can get intellectual property and other assistance independent of their churches at www.josh-bryant.com.
Get Cory and Stephanie Epps' new album on iTunes here.
Get Love Has Come to Save on Google Play here.
Mergers and Acquisitions (M&A) are a niche in the law that have special rules, procedures, and requirements. There are lots of reasons why churches would engage in M&A activities - church revitalization, pastorless churches, homeless churches, the economy of scale that a larger church can provide to a smaller congregation in a multi-site model. But in this post, let's take a look at the legal requirements to make it happen, which if followed precisely and thoroughly with the advice of a qualified attorney can help ensure a successful merger or acquisition.
1. Preliminary Negotiations
These discussions center around theological and ministry philosophy alignment. You'll talk about the history, recent pastoral leadership, polity, church health, facilities, and other options of the church to be acquired or merged. You'll brainstorm obstacles to the merger or acquisition, such as theological differences that you've discovered, debt, property, or opinionated and quarrelsome members. You'll discuss generally how decisions will be made in the merged or acquired church, and talk through things like how deacons, members, small group leaders, and the like will be transferred. Even at this stage, you should have an attorney (or attorneys) involved, because from these discussions a legal-ish document needs to be drafted. Although not a legal requirement, prayer should be a part of or precede this process.
2. Letter of Intent
Attorneys will need to draft this non-binding letter or Memorandum of Understanding that outlines the discussions that took place in preliminary negotiations, assuming that the leaders involved agreed that the merger or acquisition should go forward in the process. It is also beneficial to sign confidentiality agreements at this point in the process, as the next phases of the M&A process will involve financial disclosures that should remain confidential. Such agreements help give both parties a sense of security that in the event that God forecloses the transaction, neither will disclose the other party's financial situation.
3. Legal Due Diligence
This is where attorneys and accountants get more heavily involved in the transaction. At minimum, it is important to have an accountant prepare three documents based on a review of the merged or acquired church's financial books: an income or profit and loss statement, a balance sheet, and a cash flow statement. Depending on the assets involved, a full blown audit may be more advisable. This should involve a review of the foundational documents of both churches to determine the proper procedure of obtaining approval from boards of directors, elders, committees, congregations, and others who must approve the merger. Contracts, deeds, leases, insurance policies, and other legal documents that the merged or acquired church is subject to should be gathered and reviewed by attorneys to determine the ongoing liability of the remaining church after the transaction is complete. This needs to be a very open, full disclosure of all legal and financial obligations and benefits of the church to be merged or acquired. From this process of due diligence, all other aspects of the transaction flow.
4. Final Negotiations
Leaders from both churches should then meet for final negotiations to hammer out the last details of the merger or acquisition based on all that was learned. An attorney must be involved in these negotiations to draft the final merger agreement, also known as a Plan of Merger. The topics to be covered in these final negotiations are covered in step 5 below.
5. Plan of Merger or Acquisition
The result of the legal due diligence and final negotiations is a Plan of Merger. This is a contract that will eventually be filed with the Secretary of State in the state in which the primary office of the remaining church will reside. It will specify each church's representations and warranties that were made in the legal due diligence process. It will specify what each church promises to do. It will set forth the next steps in terms of getting the approval of elders or congregations, depending on the polity of the churches involved. It will set a "closing date" by which time approval must have been obtained in order to move forward (see step 7 below). While this is a binding contract, it does not bind either party to merge, acquire, or be acquired. It only binds each church to proceed in getting approval for the transaction. If one of the churches cannot get that approval, the contract is void. Do not try to draft this on your own - please get an attorney to do it.
6. Church Approval
Once the Plan of Merger is signed by the pastors or leaders of each church, both churches will proceed to seek approval of the deal, depending on the polity of the church. Some churches will seek approval of the congregation by a vote. Some will require the approval of an elder board and the congregation. Some will require the approval of a denominational office at the state, regional, or national level. Some may even require approval of several committees and the church as a whole. This all depends on the articles of incorporation and/or bylaws of each church, as well as the rules in place in your state. Get the counsel of an attorney to determine what votes are required, as in most cases the final Articles of Merger or Acquisition will require specifics as to vote totals and approval processes before the merger or acquisition will stand.
7. Closing Date
Once both churches have obtained the necessary approval to close the deal by the date set in the Plan of Merger or Acquisition, the closing date will come. Although not a legal requirement, by now it is a good idea to have already had a joint service, fellowship, or other event to build relationships and celebrate God's activity in your churches. On this day, property is legally transferred from one church to the other or to the newly merged church. The final documents will be signed that effectuates the merger or acquisition. Once this date passes, all that remains is the official filing of the necessary paperwork to make the transaction a matter of public record.
8. Articles of Merger or Acquisition
The paperwork that must be filed is called Articles of Merger or Articles of Acquisition. This dissolves the appropriate legal entities, creates the appropriate new legal entities, and finalizes the transaction in the eyes of the state government which oversees the formation, merging, acquisition, and termination of legal business entities, including churches and non-profits. The Articles will include the plan your churches put together in step 5 and statements of voting procedures and outcomes obtained in step 6. Once filed, the process is complete and two distinct legal entities have become one.
At first glance, this seems like a burdensome process. In some cases, you'll blow through 2-3 of these steps in one meeting. In other cases where two larger churches merge, it may take more time. However, these are steps necessary to ensure that both sides are fully informed of what they are getting into administratively and financially. It provides a clear process for both churches to obtain the approvals and buy in necessary to ensure that the merger or acquisition is successful. It provides time for prayer and consideration of the Spirit's guidance. With the assistance of an attorney, it provides the certainty that the transaction meets all of the law's requirements, and that God's church comes out of the deal stable and secure.
If Church General Counsel can be of any assistance as your church goes through this process, please contact us!
My Momma always told me never talk about religion or politics - at least someone's momma told me that. Here we are about to talk about both in one post. The political activity of churches has been in the news a lot this year since President Trump has allegedly repealed the Johnson Amendment that prohibited 501(c)(3) tax exempt organizations from politicking from the pulpit. Did you know that isn't exactly true? The President doesn't have the authority to change congressional legislation. By executive order, he changed the way it is to be interpreted by the IRS. As has been proven time and time again over the last several administrations, with the stroke of a pen that interpretation can again be changed. Here are some reasons to have your Church General Counsel review your political activity policy.
- A written policy on employee political activity is wise.
First of all, a written policy on employee political activity is wise. Do you want your staff or your church to support a particular party or candidate from the pulpit? Does such conduct align with the vision and mission of your church? Is it ok for your staff members to run for office? Can church funds be used for political purposes? What about church resources - could they be used on behalf of a political candidate? Is it ok for church staff to use church time to lobby or campaign? These are all questions which your personnel committee, elders, and/or senior pastors need to answer and put in writing so that everyone is aligned with the direction of church leadership.
Secondly, it is important that you have a political activity policy that is flexible and can be changed quickly. Right now, the Executive Order on the Johnson Amendment prohibits the IRS from finding a church guilty of violating the Johnson Amendment if it could not also find a secular institution guilty. How that would play out if litigated is far from certain since churches have a much bigger pulpit (pun intended) than most 501(c)(3) organizations. Nevertheless, this is just an executive order that cannot overturn congressional legislation. As quickly as it was signed by President Trump, it could be revoked by Congress, the courts (if challenged), or a subsequent president. As such, you need the ability to quickly update, disseminate, and educate others on a policy that aligns with the law as it changes. Managing Attorney Josh Bryant stands ready to help your church comply with this law.
Third, churches need to be fully informed of the repercussions of violating IRS regulations for 501(c)(3) tax exempt organizations. If prosecuted, a church could lose its tax exempt status. That means that every donation made to your church is no longer deductible by your donors. It could hurt your annual giving and ultimately shut the doors to your church. Now, we don't want to be alarmists, and to be fair this is something that has not been tested. However, the law clearly states that you could lose your tax exempt status if found guilty of violating this law. Churches are wise to render unto Caesar in this regard.
Finally, your church needs to understand that there is a difference between endorsement of a particular candidate or party and issue advocacy. You can preach on abortion or poverty until you are blue in the face as long as it doesn't appear that you are endorsing a particular candidate or political party. The government can even complicate this though, as the law up until know has allowed the government to infer violation based on a number of factors even when the content of the message appears on its face to be simply issue based and not directed toward any given party or candidate. Josh Bryant has worked with churches on this issue before, and he can help your church ensure compliance with this unusual law.
There are many different best practices that you could engage in to protect your church from this risk. While we don't want to stifle political speech, we do want to make sure your church is protected from undue government interference. Subscribe to Church General Counsel today for more information.
Jesus said, "Let the little children come to me." It is a sad state of affairs that given such a command we have to talk about a policy that protects kids. Nevertheless, year in and year out, the abuse of kids and vulnerable adults is the top reason why churches end up in court. Since churches get sued most frequently on this issue, the question isn't "why have an attorney review our child protection policy?" The question is, "why wouldn't you?" Here are a few good reasons your church needs a child and vulnerable adult protection policy written by an attorney.
- Your church needs a policy that protects children and vulnerable adults from sexual predators.
Let's start with the main reason you need a good child and vulnerable adult protection policy: sexual abuse in the church hurts the cause of Christ, especially when its victim is a child. The church should be a beacon of hope that points to Christ, not the object of criticism because church leaders did not have a good policy in place to protect kids when they know how prevalent sexual abuse in the church has been up until now. Your church must have a robust policy that does everything it can to prevent abuse from ever occurring.
Secondly, you need a policy that aligns with what most liability insurance companies want. Josh Bryant has experience working with insurance companies on obtaining supplemental sexual incident coverage that is not covered by most general liability policies. Insurance companies are in a great position to know how sexual abuse in the church has occurred in the past, and know exactly what kind of policies they want to see before underwriting an insurance policy.
Third, your church needs a policy that perseveres evidence that a defense attorney will want to present to a judge or jury in the event your church is sued after an allegation of sexual misconduct. Unfortunately, churches in which sexual abuse has occurred are more likely to be guilty until proven innocent, and the only things that proves innocence is evidence. You must preserve evidence as best you can, and Josh Bryant has experience in litigation such that he knows what kind of evidence is necessary.
Fourth, your church needs a policy that is as legally defensible as it is operationally manageable. No policy is worth the paper it is written on if the pastors and volunteers responsible for enforcing that policy don't do it. Most pastors and volunteers don't want to be insubordinate to church policy - they simply don't have the time to do much of what a policy requires sometimes. That is why it is important to have an attorney with experience not only in law, but in ministry as well. Josh Bryant can help balance the ministry needs with the legal best practices.
Finally, you need someone to help with your child protection policies like Josh Bryant, who has the experience necessary to get the job done well. When you sign up for our attorney access plan, this is usually one of the first policies that Church General Counsel will review.
It is so important to have a good child protection policy. Members can see more tips on drafting this policy in our members only area, or you can contact us for more information on how we can help you draft a good child and vulnerable adult protection policy.
If you are a church in Arkansas, Josh Bryant is licensed in your state. If you are a church in Texas or Oklahoma, he's developed a network of attorneys to help if we need. Otherwise, you're right. we're not licensed in your state. The good news is, we don't have to be in order to be your "in-house counsel." What? How's that?
- An attorney does not have to be licensed in your state to be your In-House General Counsel.
Rule 5.5 of the Model Rules of Professional Conduct governs what is known as the "Multi-jurisdictional Practice of Law." Organizations and businesses bring in attorneys all the time to work full time for them as "General Counsel." Many Fortune 500 companies have hundreds of lawyers working for them out of their corporate headquarters that aren't licensed in the state of the business because Rule 5.5 allows it.
The thing is, most churches can't afford their own in-house General Counsel at $150,000 per year. But most churches can afford a part-time Church General Counsel, especially at under $150 per month as opposed to the $150 or $200 per hour most attorneys would charge as outside counsel.
There are still limitations. Josh Bryant can't go to court in your state. He can't give opinion on matters that are purely a state law issue. That's ok though. Most of the legal risks churches face are under federal law, like employment issues, taxation, First Amendment, and so forth. Additionally, many of the things he'll advise you on are not inherently matters of legal opinion (although they are formed by legal education and experience). For example, procedural things like the "two adult rule" to protect kids and vulnerable adults in churches isn't necessarily legal advice - it's procedural advice designed to mitigate and manage the risk of going to court because a child or vulnerable adult is abused at your church.
If something came up where you needed a local attorney, your Church General Counsel would manage that relationship for you. It always helps for organizations like churches to have an attorney managing attorneys. Josh Bryant's job would be to lay out expectations to local counsel, provide instructions and get feedback using the legalese we're all trained in, and then communicate that back to you as the decision maker in your church.
This may be a bit confusing, so there will be subsequent podcasts, blogs, and blogs on the subject. Do us a favor - leave any questions you have in the comments below. We'll answer them directly and may also answer them as we produce more content in the future.
What a journey this has been. It's sometimes hard to grasp how God brought me to this point. What started as a career in law born out of having nothing else I could do with a degree in history and political science has turned into a stint in litigation, a season in pastoral ministry, and a sudden realization that God's gifts of a legal degree and experience and a ministry degree and experience created a unique skill set designed to aid His church in balancing ministry and church growth needs with legal compliance and best practices. This is how God has fit me together as only He could perfectly do in spite of my brokenness and frailty.
The long and short of it is this: every church needs an attorney. That is a sad reflection on our world, but it is the world we live in. Many pastors and church leaders would choose to defer to an attorney in their church, if they have one. That's fair enough. But I have practiced only one type of law over the last several years - in house, general counsel for a church of over 2,000 in weekly attendance. I have handled problems with employment, property issues, policy manuals, risk mitigation, legal compliance with consumer protection and medical regulations, state and local ordinances, and many other issues. I have stayed abreast of issues as they affect churches, why churches end up in court, and how to prepare the church to quickly leave court if not avoid it all together. At the same time, I understand that constraints from a church lawyer could stifle ministry. I understand the need to balance legal best practices with ministry needs and church growth strategies and programs. And I can price my services far below what most attorneys would charge if they charged a fee. Why not have a church general counsel?
Let me offer you this video as a way to get to know me. If I can be of any assistance at all, please let me know!
Church General Counsel Managing Attorney Josh Bryant, J.D., M.Div., authors most of the posts in this section. From time to time, he will post articles from others in the field of church growth, administration, and operations.