How We Saved Our Client From “A Little Board Service" that Became a Nightmare (Part II)

Read Part I (The Hidden Dangers of “A Little Board Service" for Your Resume)

Building a defense, fighting a narrative: How we tackled this PR crisis

In a recent post we discussed the dangers of jumping into "a little board service" for the sake of it. A client found himself in the middle of a shareholder lawsuit he had nothing to do with, at a time when he could not afford any bad PR. That's where we stepped in.

From day one, we treated this as a fundraising and reputation problem, not just a legal one. Our job was to quarterback both the legal and PR response in lockstep, with one priority above all: protect the money being raised.

What we, as deal lawyers focused on investment managers, brought that a pure litigator might not:

• A bias toward avoiding drawn-out litigation, even in a “slam dunk” defense fact pattern.

• A clear understanding of the fact that every week of uncertainty hurt our client’s conversations with investors more than it hurt the plaintiffs.
  

On the legal side, we:

• Pulled in an experienced litigator at an AmLaw 10 firm to stress-test claims and confirm there was no credible theory of liability tied to his actual conduct as an independent director.

• Leveraged his indemnification and advancement rights under Delaware law and his indemnity agreement so the company—not his fund—bore his defense costs while he remained in the case.

• Spoke directly with the founder-defendant and the investor-plaintiff to push for his removal from the caption, focusing on (1) the absence of any factual basis to name him and (2) the unnecessary collateral damage caused by dragging an independent director into what was essentially a founder dispute.

• Coordinated with a seasoned local litigator to lead the charge on getting him formally dismissed from the suit.

On the PR and investor-relations side, we:
1. Ensured every external word—press, investor updates, email language—was aligned with the legal strategy so nothing he said publicly could be weaponized in court.
2. Drafted a clear, firm statement for media and external stakeholders that:
• Reaffirmed his clean track record and narrow governance role.
• Categorically denied involvement in or knowledge of financial misconduct.
• Framed the lawsuit as a misdirected attempt to pull in a “deep pocket,” not a good-faith claim.

The outcome:
• Immediately, he was able to return to investor conversations with a coherent story anchored in facts, governance best practices, and standard Delaware director protections—not rumor and screenshots.
• In the very near term, our litigation colleague successfully got him removed from the suit.

We still can’t control every headline. But we can control the strategy, record, and paper trail that make it easy for sophisticated investors to separate noise from real signals.

If you’re an emerging manager or a professional taking on board roles—especially at early-stage or founder-driven companies, comment “Board” below – and we’ll send you a short “before you say yes to a board seat” checklist tailored for people like you.

Disclaimer. Attorney Advertising - The contents of this article should not be construed as legal advice or a legal opinion on any specific facts or circumstances or investment or fundraising advice. Your viewing and/or use of the contents of this article do not create an attorney-client relationship with Cadet Legal. The contents are intended for general informational purposes only, and you are urged to consult with counsel concerning your situation and specific legal questions you may have. Our past results don’t guarantee future outcomes