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Selecting an Attorney or CPA
How should a church quickly find an attorney when the insurance company won't cover a lawsuit?
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A church dismisses an employee for violating the church's employment standards. The dismissed employee sues the church for wrongful discharge and discrimination. The church delivers the lawsuit to its insurance company. Several days later, the insurance company issues a letter to the church, informing it that the lawsuit is not covered under the church's insurance policy. The church board is left with the task of quickly locating an attorney to file an answer to the lawsuit and defend the church. How should it do so?

Start by completing the following exercise to test your knowledge. Then read on for a summary of this topic.

  1. A good way for a church to find a CPA to conduct an audit is to contact other churches in the community that have annual audits and obtain references.
    True or False
  2. Churches that are sued should immediately submit the lawsuit to their insurance company to determine if it is covered under the church's insurance policy.
    True or False
  3. If a church is sued, and its insurer determines that the case is covered under the church's insurance policy, then the insurer rather than the church is responsible for retaining an attorney and defending the church.
    True or False
  4. If a church is sued, and its insurance company denies coverage, then the church must select its own attorney and pay all legal fees incurred in the defense of the case.
    True or False
  5. Selecting attorneys to represent a church on the basis of personal acquaintances of individual board members is not always a good idea.
    True or False

There are occasions when a church board must hire an attorney or CPA. Here are some examples:

* A church board hires a CPA firm each year to conduct an audit of the church's financial statements and records.

* A church dismisses an employee who later sues the church for discrimination. The church board discovers that the church insurance policy does not cover employment practices, and so it is forced to hire an attorney to defend the church in the lawsuit.

* A church receives a $100,000 gift in the will of a church member who died recently. The church is immediately contacted by an attorney representing the deceased member's heirs, demanding that the church renounce this gift in favor of the heirs. The church hires an attorney to represent its interests.

* A local tax assessor informs a church that a vacant tract of land that it owns is going to be placed on the tax rolls. The church hires an attorney to establish that the property is exempt from taxation.

Posted:
December 18, 2008

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