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HomeMy WebLinkAbout91-005-R ConfidentialI. Issue: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 OPINION OF THE COMMISSION Before: Robert W. Brown, Chair Dennis C. Harrington, Vice Chair James M. Howley Daneen E. Reese Roy W. Wilt Austin M. Lee DATE DECIDED: July 12, 1991 DATE MAILED: July 16, 1991 Re: Conflict, Public Employee, City Solicitor, City, Attorney on Loan, Compensation, Salary Paid by Law Firm, Reconsideration This opinion is issued in response to the timely requests '•received by Esquire E, joined in by Esquire F and Esquire G for reconsideration of Confidential Opinion 91 -005. Whether this Commission should grant reconsideration of Confidential Opinion 91 -005. II. Factual Basis for Determination: 91 -005 -R The city solicitor for the city of A and a member of the law firm of B, jointly requested a confidential opinion 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. Because of the existing financial crisis in the City of A, the city solicitor has insufficient funds 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 is willing 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 have enough legal work, commensurate with the experience and background of these associates, July 12, 1991 Page 2 and therefore proposes to pay their compensation while they work in the city solicitor's office. It was stated that such an arrangement would in no way be contingent upon the associates working in that latter capacity. All three associates would 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. The three lawyers possibly would be asked to return to the law firm as of October 1, 1991 if there is appropriate work for them at that time. The salaries of the three associate lawyers are higher than the salary paid by the city solicitor's office to lawyers of similar experience; however, there is no statute or rule which specifies the level of salaries of lawyers in the city solicitor's office. The law firm is presently performing no legal services for the city; if such a situation would arise between the present time and September 30, 1991, the city solicitor would insulate the three associate lawyers from any contact with the matter. As to any representation by the law firm of clients whose interests would be adverse to the city or who would seek to do business with the city, both the city solicitor and the law firm would make certain that the three associate lawyers would be insulated from any conflict in such matters. Following due consideration of the request, we determined that our prior precedent in Confidential Opinion 90 -014, wherein we held that Section 3(e) of the Ethics Law barred an executive -on -loan to the city wherein his salary would be paid by his corporate employer, was controlling so that the instant loan program by the law firm of its associates to the city solicitor's office would likewise be - -prohibited. Confidential Opinion 91 -005. In the timely reconsideration request of Esquire E, it is suggested that this Commission was not presented with a full description of the on -loan program. In particular, the three associate attorneys were given a choice in working at various public /private entities without any requirement that they work for the city solicitor or any other city agency, that is, the continued receipt of salary /benefits from the law firm was not contingent upon working for the city. The on -loan program was set up for the associates who were informed by the law firm that their salaries /benefits would continue to be paid by the law firm through October 31, 1991 while they worked at the city solicitor's office, I, or other public /private entities acceptable to the law firm. The associates were not told to accept employment with the city but were merely advised that such was one of their options. One associate set up a program wherein half of her time was spent with a private non - profit entity relative to entity H and the other half of her time was spent in the district attorney's office. The foregoing program was selected by her and no one in the law firm contacted the district attorney's office or had any f July 12, 1991 Page 3 discussions /negotiations regarding that program. Following the issuance of Confidential Opinion 91 -005, the one associate is now solely working for entity H since working for the district attorney might be interpreted as being prohibited by the foregoing opinion. The second associate, who had been working in the city solicitor's office, is now working for I. The third associate, who was neither compelled or urged to work for the City of A worked for an on -loan program in City C where her husband works. The third associate set up such a program and is working for firm D, a private non- profit agency in City C. In seeking a reversal of our ruling in Confidential Opinion;91- 005, it is argued that the associates' salaries were in no way contingent upon accepting employment with the city solicitor's office or other city agency. Since working for the city was just one of several options, it is asserted that Section 3(e) is not implicated because the "contingent" element of Section 3(e) is not present in the instant matter. As to Confidential Opinion 90 -014, it is argued that the opinion is distinguishable as involving a situation of an executive -on -loan from a corporation to the city in one particular appointed position for the continuation of his salary. Contrariwise, it is suggested that as to the law firm of B, there were no prior discussions /negotiations with the district`attorney's office regarding the possibility of working in that office. Reconsideration is requested based upon the "non- contingent" aspect of the acceptance of employment. Finally, it is suggested that the on -loan program would provide a valuable contribution to the people of City A and provide a valuable learning experience to, the attorneys who would participate. Esquire G in her timely reconsideration request asserts that Section 3(e) is not implicated in the instant matter because the employment is not contingent upon the assumption or acceptance of public employment. The employment with the city was one of several options offered by the law firm whereby the associates' salaries and benefits would continue to be paid by the law firm. The continuation of salary /benefits was at no time made contingent upon the acceptance of employment with the City of A. Further, the associates . would not work on projects involving the law firm of B. Likewise, upon return to the law firm, the associate attorneys would be prohibited from representing a client on-any matter with which they dealt while working for the city. It is noted that the above arrangement is not unique in that the city law department routinely hires consulting lawyers for representation in a variety of matters. The conflict of interest provisions which are applied to consulting lawyers would also apply to the associate attorneys from the law firm of B. Finally, July 12, 1991 Page 4 since the associate attorneys would be bound by the Rules of Professional Responsibility and subject to an obligation of loyalty. to . the city, it is argued that neither the letter nor spirit of Section 3(e) would be transgressed. Esquire G accordingly requests reconsideration and a reversal of Confidential Opinion 91 -005 III. Discussion: We have been asked to reconsider Confidential Opinion 91 -005. This Commission may exercise broad discretion in determining whether to grant or deny reconsideration , as long as such discretion is exercised in a sound manner. Krane, Opinion 84- 001 -R; PSATS v. State Ethics Commission, 92 Pa. Commw. Ct. 544, 499 A.2d 735 (1985). The general law to be applied to this question is as follows: Regulations of the State Ethics Commission: Section 2.15 Reconsideration of opinions. Any person may request within 15 days of service of the opinion that the Commission reconsider its opinion. The person requesting a reconsideration should present a detailed explanation setting forth the reasons why the opinion requires consideration. 51 Pa. Code 2.15. Based upon the additional facts that have been submitted, we believe that material facts were not supplied in the original request. - Accordingly, reconsideration of Confidential Opinion 91 -005 is granted. As previously noted, the solicitor for the city of A is a public employee under the Ethics Law. In addition, the attorneys on -loan from the law firm of B to the city would also be public employees under the Ethics Law. Davis, Opinion 89 -012; Maunus & Thau v. SEC, Pa. , 544 A.2d 1324 (1988). Section 3(e) of the Ethics Law provides: 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 July 12, 1991 Page 5 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. (4) This subsection shall not be applied retroactively. 65 P.S. S403(e)(1). In reviewing Section 3(e), we initially note that the conduct of the one associate attorney who is on -loan from the law firm to the City of C is not restricted by the above provision of law since that particular associate is not a public employee and secondly the out -of -state employment is not public under the Ethics Law. We will therefore confine our commentary to the remaining two associates, one of whom is working in the city solicitor's office but is now working at entity I and the second of whom was working for entity H and district attorney's office but now is exclusively working with entity H. As noted in Confidential Opinion 90 -014, the above section of the Ethics Law restricts an individual from either accepting or soliciting a severance payment or anything of value contingent upon the acceptance of public employment. In the Confidential Opinion, supra, we determined that Section 3(e) prohibited a city mayor from utilizing an individual on loan from a corporate employer and appointing that individual to a position with the city wherein the individual's salary would be paid by the corporate employer. We concluded that such an arrangement would be an acceptance or assumption of public employment contingent upon the continuation of the individual's salary from the corporate employer contrary to Section 3(e) of the Ethics Law. In arriving at that determination, we concluded that there were preexisting discussions and negotiations July 12, 1991 Page 6 prior to the assumption or acceptance of public employment and that the salary received by the individual from the corporate employer was higher than that set by ordinance for the appointed individual in that position. The specific question before us is whether the proffered additional facts warrant a different result from that in the Confidential Opinion 90 -014 or whether we are bound to follow our prior precedent in that Opinion, even with the additional proffered facts. Under the additional facts which have been submitted, we feel that such activity as to these two associates would not be barred by Section 3(e) of the Ethics Law. It has been stated that the associates were not told either explicitly or implicitly that they should accept employment with the City A. In addition, the associates were informed by the law firm of B that their salaries would continue with benefits through October 31, 1991 by working for either the city solicitor's office, entity I or other public or private entities acceptable to the firm. In such circumstances, we believe that the operative element of Section 3(e), namely, that the acceptance of public employment be "contingent" upon the receipt of anything of value is lacking under these circumstances. It is clear that the associates were given a series of options: working in the city solicitor's office, the district attorney's office, which is a separate elected office, or any other public or private entity acceptable to the law firm. In actuality, one associate did split up her time between the district attorney's office and entity H while the -other attorney worked in the city solicitor's office until Confidential Opinion 91 -005 was issued which caused him to work for entity I. Based upon the unique factual situation in this case, and in particular the latitude allowed by the law firm as to the associate lawyers to choose among various options for employment either in the public and private sector and either in or out of state, we must conclude that the "contingent" element of Section 3(e) of the Ethics Act is not present in the instant matter. Accordingly, we conclude that Section 3(e) of the Ethics Law would not bar such activities as to these two associate lawyers. Although the two associate attorney would be on -loan to the city solicitor's office, the district attorney's office or other city agency, the law firm is a business with which they are associated as that term is defined under the Ethics Law. Accordingly, the two associates attorneys would have a conflict as to any matters involving the law firm and /or any clients of the firm. See Miller, Opinion 89 -024. As a consequence, they could not participate or be involved in any matter regarding the firm and /or clients and in such instances, they would have to comply with the disclosure requirements July 12, 1991 Page 7 of Section 3(j) of the Ethics Law which provides: • Section 3. Restricted activities (j) Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being taken, publicly announce and disclose the nature of his interest, as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body required to abstain from voting under the provisions of this section makes the majority or other legally required vote of approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise provided herein. In the case of a three - member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest, and the remaining two members of the governing body have cast opposing votes, the member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 P.S. 5403(j). Therefore, in the event that a conflict would arise, the two associate attorneys would have to remove themselves and comply with the disclosure requirements as noted above regarding notifying the public employer as well as filing a written memorandum to that effect. Parenthetically, since the two associate attorneys from the firm would be working in public employment, it would be necessary for them to file the Financial Interests Statements pursuant to the requirements of Section 4(a) of the Ethics Law, 65 P.S. 404(a). 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 July 12, 1991 Page 8 addressed is the applicability of the Rules of Professional Conduct. IV. Conclusion: Under Section 3(e) of the Ethics Law, two associate attorneys from a private law firm could be utilized by the city solicitor, district attorney or other public entities for a period of time wherein their salaries and benefits would be paid by their law firm . since the acceptance of such employment would not be contingent upon the solicitation or acceptance of anything of value. The two associate attorneys would be considered public employees subject to the filing requirements of the Financial Interests Statements. In addition, the two associate attorneys would have a conflict as to any matter involving the law firm or its clients and would have to observe the disclosure requirements of Section 3(j) of the Ethics Law. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. Confidential Opinion 91 -005 is vacated. 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. This letter is a public record and will be made available as such. By the Commission, Robert W. Brown, Chair