Zen and the Art of Corporate Governance: Special Considerations In Counseling Spiritual/Religious Institutions

• Author: Walter A. Effross
• Position: Graduate of Princeton University and Harvard Law School
• Pages: 06

Professor Walter Effross, a graduate of Princeton University and Harvard Law School, clerked for the Supreme Court of New Jersey, practiced with two of the state's largest law firms, co-wrote an amicus brief for the Anti-Defamation League, and was named New Jersey's Young Lawyer of the Year before joining the WCL faculty in 1995. He teaches Business Associations, Negotiable Instruments, Corporate Bankruptcy, and E-Commerce Law & Drafting.

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STUDENTS ENROLLED IN A BUSINESS Associations course quickly learn that its basic elements - fiduciary duties, governance and decision-making procedures, division of power between owners and managers of a business, and attempts to limit personal liability - appear in a wide variety of contexts in everyday life. Principles of business law govern not only family-owned small businesses, but also megacorporations, condominium developments, and universities. Often overlooked, though, is the degree to which religious or spiritual institutions are organized as business associations, and thus are bound by, or can make use of, the laws governing their business forms.

For example, there was widespread speculation in December 2002 that the Archdiocese of Boston, which faced potential liability from victims of sexual abuse by clergymen, would file for corporate bankruptcy protection. A much different organization, the Church of Scientology, explains on its Web site that "[e]ach [Scientology] church corporation is organized on a nonprofit basis with its own board of directors and executives . . . [and that] [t]hese churches together form the stable building blocks of an international network which spans the globe."¹

Michael Downing provides another illustration of the corporate organization of a spiritual group in a fascinating book, Shoes Outside the Door: Desire, Devotion, and Excess at San Francisco Zen Center (Counterpoint Press 2001). In 1983, in the wake of allegations that the American-born Abbot of the Zen Center (which was organized as an S Corporation) had committed financial and sexual indiscretions, one member consulted a lawyer about the Center's possible liability for its Abbot's actions. In Downing's view, "[t]his might be considered the moment that Zen truly took root in America - when the branches of an ancient lineage were grafted onto the well-established stand of civil law and legal precedents." The lawyer's unequivocal response - that under agency law, the institution would be liable...