1. 1 Managing & Insuring Your Risks in Perilous Times ASAE DC Annual Legal Symposium October 3, 2003 Louis B. Novick, President The Novick Group Jeffrey P. Altman, Partner McKenna Long & Aldridge LLP

2. 2 Presentation Outline Possible Claimants Potential Exposure Areas Costs Associated with Claims & Litigation Prevention & Risk Management Critical Insurance Coverages & Trends Managing Claims General Discussion/Q&A

3. 3 Possible Claimants

4. 4 Possible Claimants # 1 Members Employees Volunteers Certificate holders, registrants, etc. Affinity partners Other advertisers, exhibitors & sponsors

5. 5 Possible Claimants # 2 Vendors Nonmember customers of products & services General public Competitors of members Competing associations Joint venture partners

6. 6 Possible Claimants # 3 Regulatory and Oversight Agencies –IRS- Congress –FEC- State AGs –DOJ/FTC –State Licensing/Regulatory Authorities

7. 7 Potential Exposure Areas

8. 8 Potential Exposure Areas # 1 Contracts Liability assumed/transferred under contract Employment Torts –Bodily injury & property damage –Defamation IP – Trademarks, copyright & patents

9. 9 Potential Exposure Areas # 2 Incorporation, registration & reporting Tax (federal and state/local) –UBIT & Corporate sponsorships –Intermediate sanctions –Permissible political and lobbying activities Election & campaign finance laws

10. 10 Potential Exposure Areas # 3 Finances Antitrust Misc. government regulations –DC master business license & charitable solicitation registration –FCC fax regulations Governance & chapter issues

11. 11 Costs Associated with Claims & Litigation

12. 12 Costs Associated with Claims & Litigation Legal fees & expenses Monetary damages Staff time & organizational diversion Lost members, revenue & opportunities Reputation & ability to stay in business Loss of job/getting fired

13. 13 Prevention & Risk Management

14. 14 Prevention & Risk Management # 1 Make sure you have a contract –Avoids disputes about key terms & conditions because they are all in writing –Makes the deal legally binding –Specifies rights/obligations of each party –Helps ensure proper tax treatment –Specifies remedies

15. 15 Prevention & Risk Management # 2 Use Your Own Contract Forms & Clauses –Develop your own model form –Develop standard clauses to suggest if vendors insist on their forms –Be prepared to educate your vendors about dealing with associations –Use plain English –Consult with legal counsel!

16. 16 Prevention & Risk Management # 3 Key Contract Provisions –Products & services –Schedule & performance benchmarks –Marketing obligations –Ownership and use of lists & other proprietary data –Notices & written changes only

17. 17 Prevention & Risk Management # 4 Key Contract Provisions (cont.) –Independent contractor status –Exclusivity & noncompete –Guidelines & advance approvals –Compliance responsibilities –Indemnification & hold harmless –Insurance Requirements –Termination & dispute resolution

18. 18 Prevention & Risk Management # 5 Special Contracts –Meetings & events Timing, location, attrition & force majeure –Affinity “partners” Relationship (who “owns the book”) Compliance & responsibilities Indemnification & hold harmless

19. 19 Prevention & Risk Management # 6 Employment –Manuals –Training –Patience, fairness & process re hiring, promotion and termination

20. 20 Prevention & Risk Management # 7 Member, Volunteer & Governance –Bylaws –Policies & procedures Financial Antitrust Conflicts, confidentiality & noncompetition Membership lists

21. 21 Prevention & Risk Management # 8 Members, certificants, registrants, etc. –Objective & reasonable criteria –Signed applications & forms –Fairness & due process –Limit scope/avoid risky activities? –Waivers/consents

22. 22 Prevention & Risk Management # 9 General Considerations –Anticipate problems & claims –Involve board & volunteer leadership –Work with lawyer or consultant to avoid or minimize claims –Address small problems before they become big problems & claims

23. 23 Critical Insurance Coverages & Trends

24. 24 Critical Insurance Coverages & Trends Directors & officers Event cancellation Special event liability Package Professional liability Publishing & media liability Umbrella Worker Compensation

25. 25 Managing claims

26. 26 Managing Claims # 1 Carefully investigate all circumstances Resolve small claims before they become big problems Consider mediation or arbitration Invoke indemnification & hold harmless/maintain control if possible

27. 27 Managing Claims # 2 Give prompt & carefully worded insurance notice Actively participate in selection of counsel Exercise oversight & maintain control of insurance defense process if possible Respond to reservation of rights letters Consider coverage suit as last resort