How Should Churches Handle Legal Issues?

The last thing church leaders want to invest their time and energy into is responding to legal issues. How should church leaders respond when potential legal issues arise? Of course, it depends greatly on the nature of the issue. Here are some practical preliminary questions to ask, and steps to take.

First and foremost, ask if the issue is one that requires the church to notify law enforcement officials or other government agencies. The primary example of this arises from any suspected abuse of a minor. Every state has mandatory reporting requirements that provide what issues must be reported, and how to go about reporting the incidents. A simple online search can uncover information in each state.

Next, ask if the potential legal issues involve any kind of liability. If so, contact the church’s insurance carrier to report the situation and ask for guidance. Situations that may give rise to liability include employment claims, sexual harassment claims, and personal injury claims. If such claims fall within the scope of the church’s liability insurance coverage, the insurance company may provide a lawyer to help defend the claim, or even prepare for a potential claim. Church leaders should carefully follow any instructions provided by the insurance carrier, or by the lawyer assigned by the insurance carrier. Of course, if a lawsuit is filed against the church and the church’s insurance company refuses to provide a lawyer to defend the claim, then the church should seek its own attorney promptly to ensure the claim is properly defended. In some situations, the church may also want to obtain a lawyer to dispute the insurance company’s denial of coverage for a claim.

Further, ask if the situation is such that the church needs to conduct an investigation into the circumstances giving rise to the claim. Normally, any investigation should be undertaken with the advice of the insurance carrier or legal counsel. In some situations, the church may already have implemented an investigation policy that can be followed to ensure proper techniques are employed. Investigations are often important in employment claims or other claims of impropriety by authority figures in the church.

Another question to ask is whether the potential legal issue could get the attention of the media. If the church has a media and communications policy in place, it should be followed carefully. In sensitive situations, it may be necessary to assign a spokesperson, or hire an outside consultant, to respond to the media, or prepare statements for the media. Care must be taken to respond in a way that is appropriately genuine without jeopardizing the church’s legal defense strategy.

When in doubt about how to respond to potential or existing legal issues, it is always best to seek legal counsel from an attorney licensed to practice law in the church’s jurisdiction. The attorney should be retained promptly to make sure all steps are taken in a timely manner to adequately protect the church’s interests.

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421-0101 
Fax: (888) 876-5101


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