HomeMy WebLinkAbout15-547 Confidential
ADVICE OF COUNSEL
July 24, 2015
15-547
This responds to your letter received June 16, 2015, by which you requested a
confidential advisory from the Pennsylvania State Ethics Commission (“Commission”).
Issue:
Whether the Public Official and Employee Ethics Act (“Ethics Act”), 65
Pa.C.S. § 1101 et seq., would impose prohibitions or restrictions upon an attorney
whose law firm handles A cases exclusively, and who plans to sell his law firm or merge
it with another law practice and commence employment with the Commonwealth of
Pennsylvania as the B of Governmental Body C within Commonwealth Agency D; and
in particular, whether such attorney would be permitted to: (1) accept installment
payments from the lawyer/law firm which would acquire his interest in his law firm; (2)
accept legal fees paid pursuant to Es and Fs for cases handled by his law firm that
ended before or were awaiting decision when he accepted the aforesaid
Commonwealth employment position; or (3) have involvement with cases handled by
his law firm that were pending decision at the time he accepted the aforesaid
Commonwealth employment position.
Facts:
You request a confidential advisory from the Commission based upon
submitted facts, the material portion of which may be fairly summarized as follows.
You are an attorney, and you currently run a small law firm (the “Firm”) that
handles A cases exclusively.
You have been offered a position with Commonwealth Agency D as the B of
Governmental Body C. You have submitted copies of a position description for the
position of B of Governmental Body C and the job classification specifications (job code
\[number\]) for the position of B of Governmental Body C, both of which documents are
incorporated herein by reference.
You state that the mission of Governmental Body C is to assist the A in
determining whether Gs are eligible for Hs and/or I. The A will first review a J for Hs to
determine if the basic requirements of K eligibility are met. An eligible J is then
forwarded to Governmental Body C for determination of an L’s M eligibility for Hs under
the N. The determination of Governmental Body C is appealable to the A.
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July 24, 2015
Page 2
You state that as the B of Governmental Body C, you would supervise the review
and determination of A eligibility. You further state that you would not have direct
authority over the outcome of individual cases.
You plan to sell the Firm to or merge it with another law practice and to negotiate
a sales or merger agreement that will set compensation for your interest in the Firm.
You state that if you negotiate a merger agreement, it will be in anticipation of you
leaving the Firm and being paid for your interest in the Firm. You further state that it is
likely the lawyer/law practice which acquires the Firm will want to pay compensation for
your interest in the Firm in installments extending into the period following the
commencement of your employment as the B of Governmental Body C. The lawyer/law
practice which acquires the Firm will have involvement with Governmental Body C.
You state that by the time your employment with Governmental Body C begins,
you will have outstanding legal fees for Es or Fs not yet paid by A for cases that ended.
You state that all such amounts will be paid to you directly by the A and that the A can
take up to \[amount of time\] to pay such amounts. You further state that you will also
have cases awaiting decision by the A for which all the work is done.
Based upon the above submitted facts, you pose the following questions:
(1) Whether, after accepting employment as the B of Governmental Body C,
you would be permitted to accept installment payments from the
lawyer/law practice which acquires the Firm;
(2) Whether you would be permitted to accept legal fees paid pursuant to Es
and Fs from the A for cases that ended before you accepted employment
as the B of Governmental Body C;
(3) Whether you would be permitted to accept legal fees paid pursuant to Fs
from A for cases that were awaiting decision by the A when you accepted
employment as the B of Governmental Body C; and
(4) Whether you would be required to abstain or recuse yourself from
involvement with cases that were awaiting decision by the A when you
accepted employment as the B of Governmental Body C.
Discussion:
It is initially noted that pursuant to Sections 1107(10) and 1107(11) of
the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester
based upon the facts that the requester has submitted. In issuing the advisory based
upon the facts that the requester has submitted, the Commission does not engage in an
independent investigation of the facts, nor does it speculate as to facts that have not
been submitted. It is the burden of the requester to truthfully disclose all of the material
facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a
defense to the extent the requester has truthfully disclosed all of the material facts.
Upon assuming employment as the B of Governmental Body C, you would
become a public employee subject to the provisions of the Ethics Act. This conclusion
is based upon the position description and the job classification specifications, which
when reviewed on an objective basis, indicate clearly that the power exists to take or
recommend official action of a non-ministerial nature with respect to one or more of the
following: contracting; procurement; administering or monitoring grants or subsidies;
planning or zoning; inspecting; licensing; regulating; auditing; or other activity(ies) where
the economic impact is greater than de minimis on the interests of another person.
Section 1103(a) of the Ethics Act provides:
§ 1103. Restricted activities
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July 24, 2015
Page 3
(a)Conflict of interest.--
No public official or public
employee shall engage in conduct that constitutes a conflict
of interest.
65 Pa.C.S. § 1103(a).
The following terms related to Section 1103(a) are defined in the Ethics Act as
follows:
§ 1102. Definitions
"Conflict" or "conflict of interest."
Use by a public
official or public employee of the authority of his office or
employment or any confidential information received through
his holding public office or employment for the private
pecuniary benefit of himself, a member of his immediate
family or a business with which he or a member of his
immediate family is associated. The term does not include
an action having a de minimis economic impact or which
affects to the same degree a class consisting of the general
public or a subclass consisting of an industry, occupation or
other group which includes the public official or public
employee, a member of his immediate family or a business
with which he or a member of his immediate family is
associated.
"Authority of office or employment."
The actual
power provided by law, the exercise of which is necessary to
the performance of duties and responsibilities unique to a
particular public office or position of public employment.
65 Pa.C.S. § 1102.
Subject to the statutory exclusions to the Ethics Act’s definition of the term
“conflict” or “conflict of interest,” 65 Pa.C.S. § 1102, a public official/public employee is
prohibited from using the authority of public office/employment or confidential
information received by holding such a public position for the private pecuniary benefit
of the public official/public employee himself, any member of his immediate family, or a
business with which he or a member of his immediate family is associated.
In each instance of a conflict of interest, the public official/public employee would
be required to abstain from participation. The abstention requirement would extend to
any use of authority of office including, but not limited to, discussing, conferring with
others, and lobbying for a particular result. Juliante, Order 809.
Per the Pennsylvania Supreme Court’s decision in Kistler v. State Ethics
Commission, 610 Pa. 516, 22 A.3d 223 (2011), in order to violate Section 1103(a) of the
Ethics Act, a public official/public employee:
… must act in such a way as to put his \[office/public position\]
to the purpose of obtaining for himself a private pecuniary
benefit. Such directed action implies awareness on the part
of the \[public official/public employee\] of the potential
pecuniary benefit as well as the motivation to obtain that
benefit for himself.
Confidential Advice, 15-547
July 24, 2015
Page 4
Kistler, supra, 610 Pa. at 523, 22 A.3d at 227. To violate Section 1103(a) of the Ethics
Act, a public official/public employee “must be consciously aware of a private pecuniary
benefit for himself, his family, or his business, and then must take action in the form of
one or more specific steps to attain that benefit.” Id., 610 Pa. at 528, 22 A.3d at 231.
Section 1103(c) of the Ethics Act, 65 Pa.C.S. § 1103(c), provides:
§ 1103. Restricted activities
(c)Accepting improper influence.--
No public
official, public employee or nominee or candidate for public
office shall solicit or accept anything of monetary value,
including a gift, loan, political contribution, reward or promise
of future employment, based on any understanding of that
public official, public employee or nominee that the vote,
official action or judgment of the public official or public
employee or nominee or candidate for public office would be
influenced thereby.
65 Pa.C.S. § 1103(c).
Section 1103(e) of the Ethics Act provides:
§ 1103. Restricted activities
(e)Contingent and severance payments.--
(1) No person shall solicit or accept a severance
payment or anything of monetary value
contingent upon the assumption or
acceptance of public office or employment.
(2) This subsection shall not prohibit:
(i) Payments received pursuant to an
employment agreement in existence prior
to the time a person becomes a candidate
or is notified by a member of a transition
team, a search committee or a person
with appointive power that he is under
consideration for public office or makes
application for public employment.
(ii) Receipt of a salary, fees, severance
payment or proceeds resulting from the
sale of a person’s interest in a
corporation, professional corporation,
partnership or other entity resulting from
termination or withdrawal therefrom upon
the assumption or acceptance of public
office or employment.
(3) Payments made or received pursuant to
paragraph (2)(i) and (ii) shall not be based on
the agreement, written or otherwise, that the
vote or official action of the prospective public
official or employee would be influenced
thereby.
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July 24, 2015
Page 5
65 Pa.C.S. § 1103(e).
Pursuant to Section 1103(e) of the Ethics Act, subject to certain statutory
exceptions, a person is prohibited from soliciting or accepting a severance payment or
anything of monetary value contingent upon the assumption or acceptance of public
office or employment.
Your specific questions shall now be considered.
In response to your first question, you are advised that Sections 1103(c) and
1103(e) of the Ethics Act would not prohibit you from accepting installment payments
from the lawyer/law practice which acquires the Firm subject to the condition that such
installment payments would not be based on an understanding or agreement that your
vote, official action or judgment as the B of Governmental Body C would be influenced
thereby. Cf., Glenn, Advice 93-565. As for Section 1103(a) of the Ethics Act, the
submitted facts are insufficient to enable a determination as to whether the role of
Governmental Body C in matter(s) handled by the lawyer/law practice which acquires
the Firm could facilitate the aforesaid installment payments being made to you.
Therefore, you are generally advised that the acceptance of installment payments from
the lawyer/law practice which acquires the Firm could form the basis for a violation of
Section 1103(a) if you would use the authority of your public position or confidential
information received by being the B of Governmental Body C in order to facilitate such
payments being made to you.
With regard to your second and third questions, you are advised that the Ethics
Act would not prohibit you from accepting legal fees paid pursuant to Es and Fs from A
for cases that ended before or were awaiting decision when you accepted employment
as the B of Governmental Body C.
In response to your fourth question, you are advised that you would have a
conflict of interest in your position as the B of Governmental Body C and would
transgress Section 1103(a) of the Ethics Act by having involvement with cases that
were awaiting decision by the A when you accepted employment in such position to the
extent you would be consciously aware of a private pecuniary benefit for yourself, a
member of your immediate family, or a business with which you or a member of your
immediate family is associated, and your action would constitute one or more specific
steps to attain that benefit. Kistler, supra. As noted above, in each instance of a
conflict of interest, you would be required to abstain from participation.
The propriety of the proposed conduct has only been addressed under the Ethics
Act; the applicability of any other statute, code, ordinance, regulation or other code of
conduct other than the Ethics Act has not been considered in that they do not involve an
interpretation of the Ethics Act. Specifically not addressed herein is the applicability of
the O or the Rules of Professional Conduct.
Conclusion:
Based upon the submitted facts that: (1) you are an attorney, and
you currently run a small law firm (the “Firm”) that handles A cases exclusively; (2) you
have been offered a position with Commonwealth Agency D as the B of Governmental
Body C; (3) the mission of Governmental Body C is to assist the A in determining
whether Gs are eligible for Hs and/or I; (4) the A will first review a J for Hs to determine
if the basic requirements of K eligibility are met; (5) an eligible J is then forwarded to
Governmental Body C for determination of an L’s M eligibility for Hs under the N; (6) the
determination of Governmental Body C is appealable to the A; (7) as the B of
Governmental Body C, you would supervise the review and determination of A eligibility;
(8) you would not have direct authority over the outcome of individual cases; (9) you
plan to sell the Firm to or merge it with another law practice and to negotiate a sales or
merger agreement that will set compensation for your interest in the Firm; (10) if you
Confidential Advice, 15-547
July 24, 2015
Page 6
negotiate a merger agreement, it will be in anticipation of you leaving the Firm and
being paid for your interest in the Firm; (11) it is likely the lawyer/law practice which
acquires the Firm will want to pay compensation for your interest in the Firm in
installments extending into the period following the commencement of your employment
as the B of Governmental Body C; (12) the lawyer/law practice which acquires the Firm
will have involvement with Governmental Body C; (13) by the time your employment
with Governmental Body C begins, you will have outstanding legal fees for Es or Fs not
yet paid by A for cases that ended; (14) all such amounts will be paid to you directly by
the A, and the A can take up to \[amount of time\] to pay such amounts; and (15) you will
also have cases awaiting decision by the A for which all the work is done, you are
advised as follows.
Upon assuming employment as the B of Governmental Body C, you would
become a public employee subject to the provisions of the Public Official and Employee
Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq.
Sections 1103(c) and 1103(e) of the Ethics Act would not prohibit you from
accepting installment payments from the lawyer/law practice which acquires the Firm
subject to the condition that such installment payments would not be based on an
understanding or agreement that your vote, official action or judgment as the B of
Governmental Body C would be influenced thereby. As for Section 1103(a) of the
Ethics Act, the submitted facts are insufficient to enable a determination as to whether
the role of Governmental Body C in matter(s) handled by the lawyer/law practice which
acquires the Firm could facilitate the aforesaid installment payments being made to you.
Therefore, you are generally advised that the acceptance of installment payments from
the lawyer/law practice which acquires the Firm could form the basis for a violation of
Section 1103(a) if you would use the authority of your public position or confidential
information received by being the B of Governmental Body C in order to facilitate such
payments being made to you. The Ethics Act would not prohibit you from accepting
legal fees paid pursuant to Es and Fs from A for cases that ended before or were
awaiting decision when you accepted employment as the B of Governmental Body C.
You would have a conflict of interest in your position as the B of Governmental Body C
and would transgress Section 1103(a) of the Ethics Act by having involvement with
cases that were awaiting decision by the A when you accepted employment in such
position to the extent you would be consciously aware of a private pecuniary benefit for
yourself, a member of your immediate family, or a business with which you or a member
of your immediate family is associated, and your action would constitute one or more
specific steps to attain that benefit. In each instance of a conflict of interest, you would
be required to abstain from participation.
Lastly, the propriety of the proposed conduct has only been addressed under the
Ethics Act.
Pursuant to Section 1107(11) of the Ethics Act, an Advice is a complete defense
in any enforcement proceeding initiated by the Commission, and evidence of good faith
conduct in any other civil or criminal proceeding, provided the requester has disclosed
truthfully all the material facts and committed the acts complained of in reliance on the
Advice given.
This letter is a public record and will be made available as such.
Finally, if you disagree with this Advice or if you have any
reason to challenge same, you may appeal the Advice to the full
Commission. A personal appearance before the Commission will be
scheduled and a formal Opinion will be issued by the Commission.
Confidential Advice, 15-547
July 24, 2015
Page 7
Any such appeal must be in writing and must be actually
received at the Commission within thirty (30) days of the date of this
Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be
received at the Commission by hand delivery, United States mail,
delivery service, or by FAX transmission (717-787-0806). Failure to
file such an appeal at the Commission within thirty (30) days may
result in the dismissal of the appeal.
Sincerely,
Robin M. Hittie
Chief Counsel