Your association will be hacked. Are you ready?

You often hear lawyers talking about risk -- potential legal and other problems that can arise for an association. Well, there is one new risk that isn’t just a possibility: Your association will suffer a cybersecurity breach at some point in the future, and you’d better be ready.

On March 24, 2015, the United States Court of Appeals for the Fourth Circuit issued a published opinion in Professional Massage Training Center, Incorporated (PMTC) v. Accreditation Alliance of Career Schools and Colleges, d/b/a Accrediting Commission of Career Schools and Colleges (ACCSC), in which PMTC filed a civil lawsuit against ACCSC for alleged violation of due process after ACCSC denied PMTC’s application to renew its accreditation. As further explained below, the Fourth Circuit’s ruling is significant for both accreditation and certification organizations, as it affirms judicial deference to decision making by credentialing bodies. The opinion is available online.

Over the last few years, cyber attacks on businesses have become a regular occurrence. The banking, retail, gaming and health care industries have all fallen victim to cyber attacks. The news media has been replete with stories about for-profit businesses experiencing security lapses or breaches by hackers, but nonprofit certification programs can also be targeted.

On an almost daily basis, we hear about a high profile company falling victim to a cyber-attack.  While the news media has been replete with stories about high profile, for-profit businesses falling victim to computer hackers, nonprofit associations are now also a prime target for cyber criminals.  

Nonprofit organizations are becoming increasingly active in global activities, which are very complex because of cultural, linguistic, operational, and risk issues. Adding to the complexity are legal issues. When does United States law apply, and when does the law of the local country apply? And what exactly are local laws that nonprofits have to watch out for? It’s not possible to know the laws of all the countries around the world, so how does one manage some of the key legal risks?

The majority of Canada’s Anti-Spam Legislation (CASL) went into effect on July 1, 2014, and this has many U.S. associations and nonprofit organizations concerned. We are not Canadian lawyers, but we can tell you what we know about the new law.

The Supreme Court will hear a case this fall as to whether state licensing boards composed of regulated professionals are entitled to  the ‘state action’ exception to the antitrust laws.
 

In recent years, the Antitrust Division of the Department of Justice and the Federal Trade Commission (FTC), the two federal agencies charged with antitrust enforcement, initiated very few enforcement actions involving associations.  In 2009, however, the Obama Administration publically promised that the days of relaxed anti-trust enforcement were gone and that it would employ vigorous antitrust enforcement efforts as a necessary means of reviving the economy.  Two key cases filed by the FTC against trade associations in 2013 show that the FTC is committed to upholding its enforcement promise and that associations are not exempt from enforcement action. 

A new privacy code for apps tries to help consumers understand what is really happening with their data.

The National Telecommunications and Information Administration of the U.S. Department of Commerce announced a new Short Form Notice Code of Conduct to Promote Transparency in Mobile App Practices this summer, and industry groups are busy commenting on pros and cons. The code is voluntary, but would be applicable to apps that associations and nonprofits develop.

Co-Author: Jennifer Kirkpatrick Howard, a producer at Lockton Companies and a risk management consultant and insurance broker, jkhoward@lockton.com.

Choosing insurance coverage for a chapter or affiliate can be overwhelming. Here are a few tips to help you get started in figuring out what coverage is right for your chapters.

Books, publications, websites, white papers, conference proceedings, magazines and newsletters constitute some of the most valuable property that associations have. These materials may be protected by the copyright laws, and it’s critical that associations maximize such protection. It’s important to make sure both that the organization owns or has adequate rights to use and publish any materials, and also that it has the ability to maintain control of them for purposes of ensuring their integrity and maximizing value to the organization.

The New York State Legislature recently passed the Nonprofit Revitalization Act of 2013 (the “New Act”), which contains several amendments to the New York Not-For-Profit Corporation Law.  If signed by Governor Cuomo, provisions of the New Act will become effective July 1, 2014 and will apply to nonprofit corporations that are incorporated in New York.¹ 

As user-generated content becomes a growing source of information on the Internet, associations should be mindful of the potential legal problems that relate to using user-generated content.  For example, if John Smith posts comments on an association’s website or social media page, can an association use John Smith’s comments in the association’s newsletter without contacting John Smith for permission? 

“Intellectual property (IP), in the form of copyrights, trademarks, lists of members, attendees, exhibitors, and others are often an association’s most valuable property. And in this modern internet era, everything is electronic, so understanding and implementing the rules, best practices, and protections for IP of nonprofit organizations and associations is critical. We thought it was timely to help associations protect their IP by giving them a clear, concrete reference book to turn to,” says the co-author of the just published Intellectual Property for Nonprofit Organizations and Associations, Jefferson Glassie.

Jeff and his co-authors Eileen Johnson and Dana Lynch are attorneys with the boutique law firm, Whiteford, Taylor, and Preston, in Washington, DC.

Many nonprofit Section 501(c)(6) organizations set up separate foundations to carry on certain charitable or educational activities for the parent organization.  We have helped many nonprofit organizations set up subsidiary foundations--this is very common and can enhance the activities and fundraising options for the parent organization.  Provided below is background information on setting up a foundation.

Many association executives have asked questions about the proper scope and content of board meetings. It’s important to keep minutes in accordance with legal and organizational governance best practices.  Here are some thoughts about keeping board meeting minutes. 

Legal audits provide a good opportunity for nonprofit organizations and associations to prevent unexpected liability by addressing and resolving problematic issues before they escalate.  Risks of liability are a serious concern for nonprofit organizations and associations.  A legal audit is particularly important if the association or nonprofit organization has recently undergone a change in management, so that preexisting problems are not attributed to the new leadership.

What is the work-for-hire doctrine, and how does it apply to associations?

The work-for-hire doctrine is a statutory provision under the Federal Copyright Act that acts to transfer copyright ownership in certain cases. However, the doctrine is often misunderstood.

The United States imposes embargoes against several countries, including most prominently Cuba, Iran, Sudan, and Burma.  These sanctions programs, administered by the Office of Foreign Assets Control (OFAC), are very broad and essentially prohibit any business dealings by U.S. persons and organizations with those countries, though the Cuban sanctions are the most restrictive.  There is, however, a general exception under the law for transmission of information, which applies to many nonprofit organization and association activities. 

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