PRACTICAL POINTERS FOR LAND TRUSTS When Facing a Lawsuit or Other Legal Challenge of Any Size PRACTICAL POINTERS FOR LAND TRUSTS When Facing a Lawsuit or Other Legal Challenge of Any Size and March 2013 Copyright © 2013 Land Trust Alliance All Rights Reserved ISBN: 978-0-943915-32-6 Cover photograph: Bird Walk on John Ross Trail, Goshen Land Trust, by Joyce Mowrey PLEASE NOTE: This document presents a general discussion of legal issues provided by the Land Trust Alliance as a tool to help land trusts. It is not legal advice. Neither the Land Trust Alliance nor the Vermont Law School is able to provide legal advice to readers of this document, nor does either organization intend to provide legal advice through these materials. If your land trust requires legal advice or other expert assistance, please seek the services of competent, licensed professionals with expertise in the area of law at issue. Acknowledgments Vermont Law School Land Use Institute Alice Baker, Land Use Institute Research Associate Mary Beth Blauser, Land Use Institute Research Associate Katherine Garvey, Land Use Institute L.L.M. Fellow Quincy Hansell, Land Use Institute Research Associate Todd Heine, Land Use Institute Research Associate Kirby Keeton, Land Use Institute Clinician Rebekah Smith, Land Use Institute Research Associate Kinvin Wroth, Land Use Institute Director Land Trust Alliance Lorraine Barrett, Conservation Defense Coordinator Sylvia Bates, Director of Standards and Research Mary Burke, Online Learning and Curriculum Manager Renee Kivikko, Director of Education Leslie Ratley-Beach, Conservation Defense Director Reviewers Nora Beck, Membership Manager, Tennessee Parks and Greenways Foundation Fran Cole, Board Member and President, Bear Yuba Land Trust (CA) Melanie Lockwood Herman, JD, Executive Director, Nonprofit Risk Management Center Kalen A. Kingsbury, Associate Director and General Counsel, Piedmont Land Conservancy (NC) Contents INTRODUCTION, 1 PART I: MANAGING RISKS AND THE COSTS OF LITIGATION, 5 Identifying and Managing Risk, 5 Preparing to Manage Risk, 32 Maintaining Good Relationships, 37 Anticipating the Costs of Litigation, 45 PART II: HIRING AND WORKING WITH AN ATTORNEY, 54 When to Hire an Attorney, 54 Finding the Right Attorney, 55 Interviewing Attorneys, 61 What to Expect, 65 Practical Pointers on Managing Attorneys, 67 Privileged Information, 68 Conflicting Legal Advice, 70 Multiple Representation Arrangements, 74 PART III: MANAGING A LEGAL CHALLENGE, 76 Facing Litigation: Lessons from Land Trust Experience, 77 Steps in a Lawsuit, 81 After the Settlement or Trial, 111 CONCLUSION, 113 Resources for Land Trust Lawyers, 115 Additional Resources, 117 Glossary, 121 INTRODUCTION RESPONsiBilitY Your land trust’s most important responsibility is to uphold the conservation promises you made to supporters, landowners, the IRS and your community. Conservation easements are only paper and ink if your land trust does not honor their intent. As a property owner, a land trust is also responsible for making sure it defends its fee-owned properties from trespass, encroachment or other legal challenges. A land trust that fails to meet its obligations will risk losing future donations of land and money from community members who want their contributions to make a difference. Additionally, a land trust that does not vigilantly defend against situations that place conservation property at risk may be faced with an increase in the number and extent of challenges and violations as developers, landowners and others perceive laxity in the protec- tion of conservation values and the public interest. In addition to losing the community’s trust and jeopardizing protected land, a land trust that fails to protect its easements may face the wrath of the Inter- nal Revenue Service. The IRS requires that all land trusts have the commit- ment and capacity to monitor and enforce their conservation easements forever. Many conservation tax attorneys interpret this requirement to mean that all violations, even technical ones, must be addressed in a manner proportional to the damage to conserved resources. Certainly the IRS has emphasized that a land trust’s willingness to enforce its conservation easements is an essential component of perpetuity under the federal tax code. Usually a proportional and 1 INTRODUCTION appropriate response is something less than litigation and always more than ignoring even a small issue. Your land trust must have the resources and resolve to meet these challenges. PrEParEDNEss With protected land in the millions of acres and more land under easement transferring to successor landowners, violations will occur and land trusts must address all of them. Even the best-prepared land trust will eventually experience a major dispute that requires its personnel to exercise anger management and sound negotiation skills. As of 2011, land trusts experience an easement viola- tion in approximately one out of every 20 easements, according to an analysis of the historical total number of reported violations.1 Recent events have demon- strated that even land trusts that hold land in fee will face legal challenges from adjacent property owners and those who have a political or financial motive for challenging conservation groups. Your land trust should assume that you will need to address some type of a challenge every year. Addressing violations, upholding permanence and defending against chal- lenges need not be an embarrassment to anyone involved or necessarily a precur- sor to contentious relationships within the community if handled well. It is prudent for land trusts to prepare themselves to defend what they have worked so hard to protect. If your land trust has not yet faced a challenge, the first one might be intimidating, so it is best to prepare your land trust well in advance. While many violations can be addressed internally and handled expeditiously, some present greater challenges and may ultimately result in litigation. This toolbox will lead you through the steps involved in a legal challenge, so you understand the process before you have to face it with an easement or property 1. In 2005 the overall national violations rate was an estimated 5 percent, and in 1999 the rate was 7 percent, based on Land Trust Alliance census data. The 2010 census data show a rate between 5 and 6 percent for the years 2006–2010. These rates include all violations, even technical ones, to the ex- tent that land trusts track and report violations to the Alliance. The Alliance believes that these rates are underreported because not all land trusts respond to the census. For those that do report, most do not track every violation and most do not have a comprehensive database, relying instead on staff and volunteer memories. However, based on those few organizations that do use a tracking system and track all violations, a 5 to 7 percent rate is a fair estimate. 2 INTRODUCTION on the line. Part I presents the most common threats land trusts currently face—including easement violations—and offers both advice on managing these risks and tools your land trust can use to prevent, mitigate or resolve disputes. This section also includes summaries of actual cases, along with refer- ences to where you can find the full judicial opinion. Part I also provides infor- mation so that you can anticipate the costs of these challenges. Part II provides advice on when and how to hire an attorney and on managing a contract with an attorney. Part III offers strategies to prevent, mitigate or resolve disputes, describes litigation strategies and ends with lessons learned from land trusts that have experienced legal challenges. Additional resources, including publi- cations and helpful links, can be found following Part III. This toolbox will help you build skills so that you are prepared to oper- ate calmly, confidently, efficiently and effectively in the face of legal -chal lenges. Although this toolbox focuses primarily on the challenges of defending conservation easements, the litigation issues and strategies are applicable to fee-owned lands. PurPOSE The purpose of this toolbox is to help land trust board members, staff and volunteers to successfully manage challenges, disputes and litigation. Land trust personnel who lack formal legal training but who are looking for more information about managing risk and dealing with legal challenges in land conservation should be able to use it easily. The toolbox includes defi- nitions of formal legal terminology so that the lessons are accessible to the reader without legal training (roll the cursor over these terms to see defini- tions). The toolbox also includes examples of conservation defense lawsuits. The examples are summarized for clarity and so that an educated layperson will be able to understand them. Where possible, each example has a cita- tion for those who wish to refer to the original legal text. For additional background on easement violations and legal defense, see chapter three of Managing Conservation Easements in Perpetuity. [http://learningcenter .lta.org/ltalrn/stewardship/managing_ces_in_perpetuity/] For numerous judi- cial opinions, articles, briefs and other conservation defense legal material, see 3 INTRODUCTION the Conservation Defense Clearinghouse on The Learning Center. http://tlc[ .lta.org/clearinghouse] We have used the term managing risk instead of avoiding risk because the former refers to the broader process of being aware of and taking steps in response to risk or in response to existing circumstances. The only way to entirely avoid the risk of litigation and its cost would be (1) to never sue anyone and (2) to stop doing anything that might cause someone to sue you. Obviously, land trust work means those two options aren’t realistic. To fulfill their public service mission, land trust boards, employees and volunteers must manage these risks effectively by countering the threats of loss and leveraging the opportunities for gain. This toolbox will teach you to analyze and manage risk so that your land trust acts smartly as it implements its mission.