Steps to Minimize Legal Risk

STEPS TO MINIMIZE LEGAL RISKS 

It is undisputable that litigation is costly to museums in both time and money. Depending on the type of litigation, it can also be an emotional hardship. The statistics relating to litigation and small businesses (including museums) is staggering. It has been estimated that 90% of all businesses experience a lawsuit at some point in their lifespan, and the average liability suit costs at least $54,0001. 

You can’t 100% avoid being involved in litigation. However, you can minimize the risk of such a threat and mitigate your exposure to damages by adopting the following tips:  

• Use well-drafted contracts.  Ensure that your deals with other organizations, employees and vendors are formalized in express and clear written contracts that have been prepared—or vetted by—your lawyer. Well-written contracts will clearly set forth each of the party’s expectations, can shift risk of loss to the other party, expressly limit your liability, protect your intellectual property, and give you an easier way to terminate the relationship that you have decided is no longer to your benefit. 

• By-laws. Have well-drafted bylaws, keep them current, and strictly follow all provisions. Good bylaws are an essential part of securing and maintaining non-profit status. According to the IRS, bylaws are the “internal operating rules of an organization.” Your bylaws help your board of directors agree upon processes and rules for your organization before disputes occur. If your bylaws are incomplete, your nonprofit might face a dispute it has no clear path to deal with, and someone could end up seeking Court intervention.  

• Educate your staff. Human resources policies are useful for directing internal conduct and customer service, but training and education are needed to enforce those policies. Ensure that everyone employed by your museum understands what is and is not appropriate conduct.  

• Protect your customers’ data. Businesses are required to keep records of certain employee data, and the data you collect from customers can be a marketing game changer. Crooks are also interested in this data, and if a data breach occurs, you could be sued. On a related note, you should have an up-to-date online Privacy Policy and Terms of Use. These policies should accurately reflect what you actually do with the data. For example, if you share data with any affiliates or vendors, the Policy must disclose that. Don’t make the mistake of just copying another museum’s policy that does not reflect what you actually do. Making false representations in the Policy is worse than not having one at all (and they are both bad). 

• Get permission to use IP of others (and protect your own). If you intend to use the creative copyrightable work, a trademark of another organization, or the likeness, image, name of an individual, make sure you get the appropriate permission (e.g. license or release). You should make sure the terms of the license or release allow you to do everything you want to do with the material. For example, if you want the permission to digitize it, use it on your website, or in marketing material, expressly state that in the license. Further, to help minimize the risk of infringement of your own intellectual property, take applicable steps to protect it, which could include: (1) federally registering trademarks; (2) federally registering copyrights; (3) provide clear guidelines to those using your copyrights and trademarks; and (4) use the appropriate copyright and trademark notices to put third parties on notice of your rights.  

• Keep facility clean and free from dangerous conditions. Keeping your facility clean and free of obvious dangers can help avoid injury to visitors and staff. If someone notifies you of a dangerous condition (for example a wet floor), remedy the situation as soon as possible. Being on notice of the hazard, and not doing anything about it, can lead to a viable lawsuit for negligence. 

• Maintain sufficient insurance. Stuff happens! The proper insurance coverage helps fill the gaps the steps above can’t cover. Your organization probably has general liability insurance that protects you against slip-and-fall accidents and other injury claims. However, you should consult with your insurer to make sure you are well-protected against breach of contract claims or claims of discrimination, harassment, retaliation, wrongful termination, data loss, fine arts etc. Ensure that your insurance portfolio accurately reflects the full range of business lawsuit risks. In addition, when you have special events, you should contact your insurer and discuss “special event” insurance, especially if there are any inherently risky activities involved. Finally, you may enter into contracts that require that you have very specific coverage (for example, in traveling exhibition agreements).