*Sigh*

[jducoeur]

The annoyance of the SCA's bureaucracy entirely aside, I am occasionally reminded of why it is a very bad idea, in today's litigious world, to have a single, rigid corporate umbrella with a nice big target painted on it, so that a single lawsuit can take not just the Corporate money, but the Kingdoms' as well.

The arguments that led to the dissolution of the ILF and formation of LARPA -- with its loose corporate umbrella and lots of little independent corporations underneath -- were an unholy pain in the ass. (And more about chains of command than legal liability, truth to tell.) But on days like this, it all seems worthwhile...

Comments

[mikekn]

We may get some of that from the subsidiary corporations (though that is not the reason behind them). Still I wonder if the East would have been able to survive the lawsuit if we were on our own.

[goldsquare.livejournal.com]

Repeat after me: "Corporations are like airbags".

The purpose of the Corporation is to shield the individual volunteers and paid staff from being personally on the hook for damage to their personal lives.

Repeat after me: "people shoot at targets". If the East Kingdom were the corporation, there might not have been such a lawsuit at all - there is no reason to spend the lawyer-money up front if there is no chance for recovery of damages.

Repeat after me: "The SCA deserves it". They did not follow due standards of care, they did not govern themselves well, they did not manage their own situation properly. The SCA is lucky as hell that the filing parties took less than 20% of what they could have recovered.

It will be interesting when people realize that this is not "18%" of the "Kingdom" bank balance - but 18% of every group in every domestic US Kingdom...

[mikekn]

Actually 18% of every group in every North American Kingdom. Though that is just how the Kingdom invoice amount was calculated, not how is must be paid.

Drachenwald has already volunteered a donation, and several Kingdoms are looking at ways to help those Kingdoms less able to gather the funds.

I suspect there would still have been a lawsuit no matter the organization or size of the corporation. The size of our target is as big as our liability insurance.

[goldsquare.livejournal.com]

The liability insurance is one issue. (Both E&O and CGL)

But, as in this case, the total assets of the organization are also very significant.

These sorts of torts are very much "business decisions", because in general the attorneys that represent the plaintiffs do so on a contingency basis, and not on a flat fee basis.

The firms look carefully at this, as an investment: because if they don't win or settle on favorable terms, they don't get paid back properly. The families may be emotional, but the attorneys use their heads, and calculators - not their emotions.

(I do not know if, in this case, the attorneys are paid on contingency, but I rather suspect they are.) Net assets of 6 million plus, plus the insurance of about the same, make for a target that is sure to pay out - even if the insurance companies don't cover anything.

It's a calculus.

[estela-dufrayse.livejournal.com]

Ummm, in Canadian Provinces there are different laws regarding transfer of money both across provincial lines as well as across the border to the United States. Some provinces may not be as able as others to help out in this situation. It would behoove local Senechals to look into their own Provincial laws before making a commitment financially that could hurt the groups even more.

We may not be able to volunteer a donation...or it may have to be worded just as that, A donation.

[jducoeur]

It will be interesting when people realize that this is not "18%" of the "Kingdom" bank balance - but 18% of every group in every domestic US Kingdom...

That'll happen pretty fast, given that the official deadline for payment is apparently 10 days.

I assume Council will talk about it tonight. Convenient that the timing is such that we can at least talk about it before having to send a check, although I don't see any likelihood that it will change things WRT the immediate crisis -- legally, it's pretty cut-and-dried...

[goldsquare.livejournal.com]

Council will talk - it does.

But the only question is "as much as they ask for, or more?" :-)

I do not know what the various bank accounts look like, but I would suspect the real question is "does Carolingia protect its Cantons or not".

[lady-guenievre.livejournal.com]

Are people really not aware of that? It seems that realization took about 10 minutes, here. But perhaps that was just my first thought as my Barony was my first care.

[jducoeur]

Not sure, but it would be easy to miss. A lot of the publicity has been worded in terms of, "Kingdoms must kick in 18% of their cashable assets" -- and many people (at least here) think of "Kingdom" and "Barony" quite separately. So it would be easy to miss the implication that this includes local branch bank accounts.

(I suspect most treasurers get it. But I'd bet a lot of local members wouldn't.)

[jducoeur]

Aside from Tibor's points, there's a key observation that smaller corporations are easier to replace. That's important -- a well-designed corporation for a club like ours generally needs to have *some* assets to do its work, but shouldn't be the be-all and end-all of the activity.

So if the East Kingdom, Inc got sued out of existence, it would hurt, but it would also be easier for us to pick up the pieces and start over.

That's really the heart of my point: intertwining the Society so tightly with a *single* Corporation is an incredibly bad idea, because that Corporation gets difficult to replace. With a network of associated and cooperating, but functionally and legally separate ones, the likelihood is higher that the damage would be severe but limited, and easier to recover from.

(I still prefer the Masonic model: completely independent jurisdictions state-by-state, with their own assets and corporations, held together through a network of treaties. Works quite well...)

[goldsquare.livejournal.com]

It does not have to have assets... other than modest cash flow.

Consider, 6 non-profits, each with geographic exclusivity, whose major capital assets are all the property of a shared corporation, and which are leased or rented from that shared corporation.

A: That saves them from having 5 sets of feast service gear.

B: It allows them to shield their assets from judgments, since no one party has more than 20% of the property.

There are hidden complexities there ("what if we want to run 2 events at the same time with the same physical assets?" "how do we pay for upkeep and maintenance" "how do we add new assets to the shared pool" "what happens if the shared corporation loses a judgment").

I can think of several ways to address each of those, but have not thought them all through. :-)

[jducoeur]

Yep. The main point is making sure that there is enough separation that a lawsuit against one corporation *probably* doesn't hit all of them seriously. Within that context, there is a lot of room for variable models.

In the LARP case, the conclusion was that the only really *important* asset was the Intercon brand. So LARPA, the central organization, owns the brand and licenses it to local corporations that actually run the various conventions. (And also runs some central communications, which is a good use for such a corporation.) *Much* better model legally, and works much better than the old centralized corporation used to...

[mikekn]

Do you think the subsidiary corporations will help in that sense? Or do their ties to SCA Inc. tie them to each other? (If someone sues SCA Maine, could SCA Illinois be on the hook)

[jducoeur]

I don't know the subtleties there well enough. My sense, though, is that the subsidiaries are "owned" by the SCA, Inc to enough of a degree to put them into some legal risk -- quite a different situation from cooperating but nominally peer corporations, as it works in both LARP and Masonry.

(But IANAL, and I don't know the corporate structure of the subsidiaries well enough to feel like I have an informed opinion regardless...)

[goldsquare.livejournal.com]

Like many things, the technical answer is "it depends", but in the absolute overwhelming majority of cases, the answer is "no, the two would be separate".

A large portion of that relates to how independent the ownership of the various organizations are. Note that in the SCA's FAQ they mention how all the domestic affiliates are wholly owned by the SCA - so they are included in the settlement. But also note that foreign affiliates, and even allied affiliates like the Outlands and West Kingdom's land funds are completely separate, and not affected.

The courts look at functional independence - but given how well established that law is, there is no real difficulty in navigating those waters.

[estela-dufrayse.livejournal.com]

this exact idea caused many of us to lose our SCA lives a few years back, here in Ruantallan...not as easily said as done.

[jducoeur]

Oh, it's *quite* a pain in the ass. It wasn't simple even for the ILF/LARPA, and that was a much, much smaller club in every respect.

That said, we're getting a good illustration of the danger of our current model. There's every likelihood that we will eventually be forced to change models, simply because of the SCA as we know it getting sued out of existence from under us, at which point we probably have no choice. I just think it's worthwhile to start changing our structure voluntarily and in a gradual and measured way, rather than in the chaos of the moment...

[cvirtue.livejournal.com]

I wonder if the settlement had been more damaging, would they be instructing the kingdoms to sell off the crowns and other regalia.

[goldsquare.livejournal.com]

Of course! Once judgment has been entered, the SCA must pay the money - and if it has to sell every last paper clip and staple to do so, that is not of interest to the courts.

[cvirtue.livejournal.com]

Of course of course, but I was thinking more of what that announcement would look like.


So I wonder if the subdivision proponents will be girding their loins again, or if they are too tired of tilting at that windmill. It makes a lot of sense, but those against it are quite emotional.

[cellio]

Indeed. Many people, Cariadoc most prominently, have been saying that for decades, and been accused of being paranoid by the masses. :-(

[goldsquare.livejournal.com]

He's changing his name to Cassandra. :-)

You and I might, as well. :-)

[calygrey.livejournal.com]

"He's changing his name to Cassandra. :-)"

Hey!

[And now for another 'Cassandra' prediction: this WILL happen again.]

[cellio]

He's changing his name to Cassandra. :-)

You and I might, as well. :-)

I wrote, and deleted, a paragraph about Cassandrafreude. It wouldn't go away though, and people have asked, so it's on its way to turning into a bigger post. Later; choir practice is imminent.

[shalmestere.livejournal.com]

That had occured to me, too :->