"When the ox is in the ditch, there is much work to be done.” In most private clubs, the “ox” is a troubling or confounding situation that could – or should – have been avoided. Noted private club attorney, Robyn Nordin Stowell of the Spencer Fane LLP law offices admonishes clients who have not called before putting the ox into the ditch. “Clubs are so well managed and led these days that after-the-fact guidance should be unnecessary,” she says.

Want to keep the ox out of the ditch at your club? Attend to four practices that reduce risk and keep your club on solid ground.

1. Execute twice-per-year legal reviews with your club attorney.
Meet with your legal advisors to anticipate emerging challenges or issues on which the club and its servant leaders should be anticipatory; Among the concerns one should voice are:

• Board Minutes - In your review of our board meeting minutes, do you see any matters of concern or legal risk that should be corrected? Board minutes should be reviewed to minimize misstatements which could pose future risks to the club or its directors.
• Membership Program and Representations – Membership demand since the pandemic has filled most clubs still using membership documents that were created before CY 2020 when most clubs were aggressively seeking more members.
• Governance and Disciplinary Practices – The board should review its disciplinary practices to ensure that those practices conform to current standards of best practice…and state statutes.

2. Conduct an annual risk assessment with your property and casualty insurance provider.
One of the most rapidly increasing costs for most private clubs is property and casualty insurance…if you can obtain it. With rates increasing as a reflection of the overwhelming risks insurers are experiencing – whether wildfires, hurricanes, and tornadoes – in addition to the usual slip/fall risks, club leaders should evaluate risks with the understanding that most insurance premiums are a factor of annual club revenues adjusted (multiplied) by a risk factor that is established across business segments. Ask your insurance representative to conduct a risk assessment that may result in savings for the club – unless your club is not in safe operating condition.

3. Meet with the club’s auditor 90 days before the scheduled annual audit.
Many club leaders dread the annual audit. Embrace this independent, third-party review of the club’s books as an opportunity to improve operational results, which may reduce financial risks throughout the club. Your auditor sees many clubs and can provide financial benchmarks in addition to sound business advice.

4. Execute an annual evaluation of your club’s cyber security.
“The cyber battlefield never sleeps,” says Joseph Saracino, CEO of Cino Limited, which specializes in cyber security for private clubs. “In today’s world, many of us are sitting ducks, waiting to become the next cybercrime victims to be publicized by the media.” If an ounce of prevention is worth a pound of cure, take aggressive steps to ensure that the club’s members can rely upon a safe haven for themselves and their families.

Planning and acting ahead of the problem are a sure sign of effective servant leadership. Will you wait for the problem to put your club in the ditch or prevent the problem? Pretty easy choice when you think about it.

GGA Partner Henry DeLozier penned this article for BoardRoom Briefs. It appeared in the May 18, 2024 edition.