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HomeMy WebLinkAbout91-005 ConfidentialI. Issue: • STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 OPINION OF THE COMMISSION Before: Helena G. Hughes, Chair Robert W. Brown, Vice Chair Dennis C. Harrington James M. Howley Daneen E. Reese Austin M. Lee DATE DECIDED: May 23, 1991 DATE MAILED: June 10, 1991 91-005 Re: Conflict, Public Employee, City Solicitor, City, Attorney on Loan, Compensation, Salary Paid by Law Firm This opinion is issued in response to your confidential request of April 10, 1991. Whether the Public Official and Employee Ethics Law imposes any prohibition or restrictions upon a city solicitor from utilizing attorneys on loan to the city from a law firm. II. Factual Basis for Determination: A joint confidential opinion is requested, both by the city solicitor for A and by a member of the law firm of B, as to the propriety of the city's prospective utilization of attorneys on loan from the law firm for a period of time to handle some of the work load in the city solicitor's department. Noting that the city of A is in a financial crisis, such that the city solicitor does not have the funds necessary to hire the number of lawyers needed to handle the city's legal work load to the disadvantage of the city and its citizens, the law firm of B proposes to send three of its associate lawyers to the city solicitor's office for a period commencing immediately and ending on September 30, 1991. The law firm does not, at the present time, have enough legal work of an appropriate kind for the experience and background of these associates and therefore would pay their compensation while they work in the city solicitor's office, which in no way would be contingent upon their working in that latter capacity. The law firm has made it clear that all three associates will receive their full salary and benefits from the law firm for the six -month period from April 1, 1991 through September 31, 1991, after which they would no longer work for the city. It is possible that the Page 2 three lawyers would be asked to return to the law firm as of October 1, 1991 if there is appropriate work for them at that time. Although the salaries of the three associate lawyers are higher than the salary paid by the city solicitor's office to lawyers of similar experience, there is no statute or rule which specifies the level of salaries of lawyers in the city solicitor's office. While noting that the law firm is presently performing no legal services for the city, you advise that if such a situation would arise between now and September 30, 1991, the city solicitor would insulate the three associate lawyers from any contact with the matter. Further, although it is true that the law firm would represent clients whose interests would be adverse to the city or who seek to do business with the city, both the city solicitor and the law firm would make certain that the three associate lawyers involved would be insulated from any conflict as to such matters. You conclude by jointly requesting advice from the Commission as to whether the city solicitor could receive the benefit of the three associate lawyers under the above facts and circumstances. III. Discussion: As the solicitor for the city of A, you are a public employee as that term is defined under the Ethics Law. 65 P.S. 402; Davis Opinion 89 -012. As such, your conduct is subject to the provisions of the Ethics Law. The following terms are defined under the Ethics Law. Section 2. 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. "Conflict" or "conflict of interest" 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 or his immediate family or a business with which he or a member of his immediate family is associated. 65 P.S. 5402. Section 2. Definitions. "Authority of office or employment." The . actual power provided by law, the exercise of which is necessary to the performance of duties Page 3 and responsibilities unique to a particular public office or position of public employment. 65 P.S. S402. Section 2. Definitions. "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or has a financial interest. 65 P.S. §402. Sections 3(a) and 3(e) of the Ethics Law provide as follows: Section 3. Restricted Activities. (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 P.S. §403(a). Section 3. Restricted activities. (e)(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 Page 4 or official action of the prospective public official or employee would be influenced thereby. (4) This subsection shall not be applied retroactively. 65 P.S. §403(e). Sections 3(b) and 3(c) of the Ethics Law provide in part that no person shall offer to a public official /employee anything of monetary value and no public official /employee shall solicit or accept any thing of monetary value based upon the understanding that the vote, official action, or judgement of the public official /employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has or will be any transgression thereof but merely to provide a complete response to the question presented. As to Section 3(a) of the Ethics Law quoted above, although you are a public employee, the issue before us involvs the propriety of the utilization of attorneys from the law firm to the city for a period of time which conduct does not fall within the ambit of Section 3(a). Accordingly, we will limit our analysis to Section 3(e) of the Ethics Law. As to Section 3(e) of the Ethics Law quoted above, this provision of law restricts an individual from either soliciting or accepting a severance payment or anything of value contingent upon the acceptance of public employment. As we noted in Confidential Opinion 90 -014, the operative phrase in this section is "contingent." In the cited confidential opinion, we concluded that the city mayor was prohibited under Section 3(e) of the Ethics Law from appointing an individual to a position with the city where the current corporate employer would continue to pay his salary since the individual would be accepting something of monetary value contingent upon the acceptance or assumption of public employment. In that analysis, we concluded that there were pre- existing negotiations and discussions prior to the acceptance or assumption of public employment and that the salary received by the individual would be higher than that set by ordinance. We determined that the contemplated activity was prohibited by Section 3(e) of the Ethics Law: "In applying the facts of this matter to the provisions of Section 3(e), we believe that such an arrangement would be prohibited under the Ethics Law. We note that the individual is being considered for this appointment and further that the Mayor is contemplating having this individual serve on an executive -on -loan status. Under the circumstances, we must assume that there have been discussions or negotiations between this individual, the Mayor and possibly the corporation as to the source of payment of the salary. Therefore, because of the pre- existing Page 5 negotiations or discussion prior to the acceptance of assumption of the public employment, we believe that the requisite "contingent" element exists which would prohibit such an arrangement. In addition, the salary for this position is set by ordinance. If the individual were to take his corporate salary which exceeds the amount set by ordinance, such would be a subsidization of his salary: This we believe was the exact situation that the Legislature was attempting to avoid through the implementation of this provision. We also note that these two enumerated exceptions set forth in Section 3(e)(2) have no application. The two exceptions relate to payments received from pre- existing employment agreements or payments received as a result of a termination or withdrawal agreement." Id at p.5 In the instant situation, we believe the above opinion is dispositive of the issue before us. We fail to discern any meaningful difference between the instant matter and Confidential Opinion, 90- 014. In both cases, the employer (corporation or law firm) would have had discussions with the city official /employee (mayor or city solicitor) which establishes the "contingent" requirement under the Ethics Law. In addition, the salary for the attorneys exceeds the compensation paid for attorneys in the city solicitor's office. Although it is true that in the Confidential Opinion the salary for the position was set by ordinance which is not the case in the instant matter, the salaries paid by the law firm would be higher than the compensation paid by the city for its staff attorneys. We believe that the instant matter is substantively within the ambit of Confidential Opinion 90 -014. Consequently, the proposed activity is prohibited based upon the clear legislative intendment for this section of the Ethics Law. Simply stated, the situation exists that these attorneys, as associates of the law firm, would be accepting public employment contingent upon the acceptance of the monetary value as to their respective salaries through the continuation of their salaries which might otherwise terminate. Such proposed activity is prohibited by Section 3(e) of Act 9 of 1989. See Confidential Opinion 90 -014. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law; 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 Law. Specifically, not addressed is the applicability of the Rules of Professional Conduct. Page 6 IV. Conclusion: Under Section 3(e) of the Ethics Law, three associate attorneys from a private law firm could not be utilized by a city solicitor's office for a period of time wherein their salary and benefits would be paid by the law firm. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. Pursuant to Section 7(10), the person who acts in good faith on this opinion issued to him shall not be subject to criminal or civil penalties for so acting provided the material facts are as stated in the request. such. This letter is a public record and will be made available as Finally, any person may request the Commission to reconsider its Opinion. The reconsideration request must be received at this Commission within fifteen days of the mailing date of this Opinion. The person requesting reconsideration should present a detailed explanation setting forth the reasons why the Opinion requires reconsideration. By th /Commission, ; 'Helena G. Hughes, Chair Commissioners Dennis C. Harrington and James M. Howley dissent.