Charities and litigation

It is, as a trustee, easy to spend a sleepless night worrying about one's obligations; the factors one needs to bear in mind when taking decisions on behalf of the charity, not to mention issues arising in relation to personal liability. Similarly, as an executive employee of a charity, there can be an often daunting number of factors to bear in mind when carrying out your job, and fathoming out what acting in the best interests of the charity actually means in practice.

Part of that tricky matrix is how to respond to and deal with litigation. Is it in the best interests of the charity to litigate aggressively – or is it always right to seek to settle? As ever, it depends on the facts – and the Charity Commission has recently published helpful new guidance for trustees on charities and litigation. Whilst relatively high level and containing precepts that (in the main) are hardly rocket science, the guidance does give a very useful sense of what the Commission expects of trustees when a charity is involved in litigation. It is clear that the Commission, rightly, expects trustees to be able to show that they have applied the principles of the Guidance when legal action is under contemplation or discussion.

The guidance covers key principles (protecting assets, assessing economic and reputational consequences of involvement in litigation); managing personal cost and risk, and when (and why) the Charity Commission's consent may be required prior to commencing litigation.

The guidance is accompanied by a checklist of key actions and should be read – by trustees at least – in conjunction with the existing guidance on decision making which can be found here.

This new guidance is essential reading for trustees and executives, and covers a helpful reminder of many of the charity law precepts underpinning these types of issue.