HomeMy WebLinkAbout95-003 UnknownI. ISSUE:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
OPINION OF THE COMMISSION
Before:
Daneen E. Reese, Chair
Roy W. Wilt
Austin M. Lee
Allan M. Kluger
John R. Showers
Rev. Joseph G. Quinn
Boyd E. Wolff
DATE DECIDED: 02/23/95
DATE MAILED: 03/10/95
II. FACTUAL BASIS FOR DETERMINATION:
95 -003
Re: Public Official /Employee, Attorney, Executive Branch,
Executive -level State Employee, Section 3(i).
This Opinion is issued in response to your confidential
advisory request on February 8, 1995.
Whether Section 3(i) of the Public Official and Employee
Ethics Law imposes any prohibition or restrictions upon an attorney
seeking to practice law or pursuing endeavors in the private sector
when he as an executive -level state employee was involved in
recruiting businesses to locate or expand in Pennsylvania and in
arranging financing for such relocations and expansions through
Commonwealth loan and grant programs.
You have served as A from 1987 to 1994. In the foregoing
positions you were involved in recruiting businesses to locate or
expand in Pennsylvania and in arranging financing of such
relocations or expansions through Commonwealth loan and grant
programs. Although the extent and nature of your activities varied
substantially from case to case, you typically had involvement in
telephone calls or meetings with prospective businesses and
structured financial packages to ensure that various state agencies
Confidential Opinion, 95 -003
March 10, 1995
Page 2
worked together to present high - quality economic development
proposals.
After resigning from your public position, you now intend to
engage in the private practice of law and in other endeavors in the
private sector. You seek clarification as to the application of
the Ethics Law to your activities as an attorney.
After quoting Sections 3(g) and 3(i) of the Ethics Law, you
reference Article V, Section 10(c) of the Pennsylvania Constitution
regarding the power of the judiciary to supervise the conduct of
attorneys in Pennsylvania. As to the Rules of Disciplinary
Enforcement and Rules of Professional Conduct of the Pennsylvania
Supreme Court, you state that both sets of rules contain provisions
regarding conflicts of interest on the part of attorneys. You cite
Disciplinary Rule 1.11, "Successive Government and Private
Employment" relative to the specific limitations on the conduct of
attorneys who enter private practice after leaving government
service. The Comment to that Rule is quoted as follows: "This Rule
prevents a lawyer from exploiting public office for the advantage
of a private client."
You state that the Ethics Law rules are different from those
of Disciplinary Enforcement and Professional Conduct in that the
Ethics Law is more restrictive in some respects while in others the
Supreme Court rules are more stringent. Regarding Section 3(g) of
the Ethics Law, you argue that the Pennsylvania courts have
resolved the issue of the apparent conflict between the Ethics Law
and the Supreme Court's disciplinary rules in the case of
Pennsylvania Public Utilities Bar Association v. Thornburgh, 62 Pa.
Cmwlth. Ct. 88, 434 A.2d 1327, (1981), affirmed 450 A.2d 613, 498
Pa. 589 (1982). After excerpting a portion of the opinion in the
above case, you reference Waiert v. State Ethics Commission, 491
Pa. 255, 420 A.2d 439 (1980) wherein the Supreme Court ruled the
Ethics Law unconstitutional regarding an application to judges who
subsequently entered private practice. You also cite Maunus v.
Commonwealth State Ethics Commission, 518 Pa. 592, 544 A.2d 1324
(1988) which upheld the validity of the financial disclosure
requirements upon Commonwealth employed attorneys.
After stating that neither this Commission nor the courts have
construed Section 3(i) of the Ethics Law in the context of its
application to the private practice of law, you argue that judicial
precedent interpreting Section 3(g) should be equally applicable to
Section 3(i) in that both Sections involve conflicts arising as to
the succession from public to private employment: both Sections
apply to public officials after public service has ended; both
Sections impose limitations on the activities of former public
officials for a specific time period; both Sections deal with areas
where the Supreme Court has acted to regulate the conduct of
Confidential Opinion, 95 -003
March 10, 1995
Page 3
attorneys; and both Sections impose a second and possibly
contradictory set of regulations upon attorneys who are subject to
the disciplinary rules promulgated by the Supreme Court.
You do not believe that the question is whether an official
who helped recruit economic development prospects for the
Commonwealth is exempt from any limitations on the subsequent
practice of law, but rather whether any additional rules, other
than those promulgated by the Supreme Court, have application. In
this regard, you reference that an attorney is subject to the
restrictions contained in Disciplinary Rule 1.11 and other relevant
Rules of Disciplinary Enforcement and Professional Conduct. Since
the courts have held that Section 3(g) does not apply to attorneys
after they leave government service, you express your belief that
the same reasoning should apply to Section 3(i) of the Ethics Law.
You appeared at the executive session on February 23, 1995 and
proffered the following additional information. You have actively
been involved in inducing companies to come into Pennsylvania since
1987 with your involvement varying from minimal to close personal
involvement. If you become "of counsel" to a law firm, you
question which set of rules applies to your conduct. Since you are
a partner in a venture capital firm, you do not question that the
Ethics Law would apply to that particular conduct.
The Pennsylvania Supreme Court, pursuant to the Judiciary
Article of the Pennsylvania Constitution, has promulgated rules as
to the conduct of attorneys. You believe that Sections 3(g) and
3(i) of the Ethics Law are inconsistent with the judicial rules in
some respects. For example, there is a judicial rule that a lawyer
serving as a public official shall not negotiate for private
employment with any person involved as an attorney or party in a
matter in which the lawyer is participating personally and
substantially. A matter includes a contract. In your governmental
office, you construed the above judicial rule to mean that no
lawyer may negotiate with a law firm while he was still working for
the state. The above is a rule regulating the conduct of a lawyer
through the Rules of Professional Conduct; a parallel rule does not
appear in the Ethics Law.
The rules of the Ethics Law, like Section 3(i), seem to be in
conflict with the Pennsylvania Supreme Court Rules. Those court
rules deal with actual conflicts or matters that the lawyer as a
governmental official participated in rather than the entity as a
whole. Further, the Pennsylvania Supreme Court Rules permit for
screening in a law firm so that the attorney with the conflict may
work for the law firm but not on the specific matter.
As an example, you were quite involved in bringing 3 to
Pennsylvania by contacting DER for permit issuance, PIDA as to
Confidential Opinion, 95 -003
March 10, 1995
Page 4
financial proposals, etc. If you were to work with an
international law firm, you ask whether you may work for the firm.
If the court rules apply, you would only be concerned with the
specific transaction as to which you were involved regarding B. If
Section 3(i) of the Ethics Law applies, you believe you would have
to list everyone you were involved with in the past and compare
that list with the list of every client in the law firm.
You state that the PUC Bar Association case, which applied to
the predecessor Section of 3(g) of the Ethics Law, did not address
the prohibition contained in Section 3(i). After expressing your
belief that Section 3(i) of the Ethics Law is incompatible in some
respects with the Pennsylvania Supreme Court Rules, you seek a
legal opinion as to whether the holding in the above case extends
to Section 3(i) of the Ethics Law.
III. DISCUSSION:
As A, you were a public official /employee within the
definition of those terms as set forth in the Public Official and
Employee Ethics Law and the Regulations of this Commission. 65
P.S. §402; 51 Pa. Code §11.1. In addition, since you were an
executive -level state employee as that term is defined under the
Ethics Law, you are subject to the requirements of Section 3(i) of
the Ethics Law, infra.
Because you have posed a very narrow question as to the
applicability of Section 3(i) to your conduct, the focus of our
inquiry will be specifically limited to only that question.
Section 3(i) of the Ethics Law provides:
Section 3. Restricted Activities
(i) No former executive -level State
employee may for a period of two years from
the time that he terminates his State
employment be employed by, receive
compensation from, assist or act in a
representative capacity for a business or
corporation that he actively participates in
recruiting to the Commonwealth of Pennsylvania
or that he actively participated in inducing
to open a new plant, facility or branch in the
Commonwealth or that he actively participated
in inducing to expand an existent plant or
facility within the Commonwealth, provided
that the above prohibition shall be invoked
only when the recruitment or inducement is
Confidential Opinion, 95 -003
March 10, 1995
Page 5
accomplished by a grant or loan of money or a
promise of a grant or loan of money from the
Commonwealth to the business or corporation
recruited or induced to expand.
Generally, Section 3(i) does not restrict a former executive -
level state employee from either employment, the receipt of
compensation or representation as to a business or corporation
provided h did not actively participate in recruiting or inducing
that busin ss or corporation to open a new facility or branch in
the Common ealth or participate in inducing that business or
corporation to expand an existing plant or facility when
accomplished by a grant or loan of money or a promise of a grant or
loan of money from the Commonwealth of Pennsylvania.
Excluding your status as an attorney, the applicability of
Section 3(i) turns upon whether you actively participated in
recruiting or inducing a business /corporation to open a new
facility or branch or to expand via a grant or loan of money or a
promise of a grant or loan of money from the Commonwealth. Since
you have stated that you were involved in recruiting businesses to
locate or expand in Pennsylvania and in arranging financing of such
relocations or expansions through Commonwealth loan and grant
programs, Section 3(i) would prohibit employment, the receipt of
compensation or acting in a representative capacity provided the
participation was active. We do not have sufficient facts of
record to determine whether your involvement in any one or more
transactions was implicated by Section 3(i). A very detailed
review of Section 3(i), both in terms of analysis and application
of the phrase "actively participated," is set forth in Confidential
Opinion 94 -011.
We must now consider how the additional factor of your status
as an attorney impacts upon the application of Section 3(i).
Pennsylvania Public Utility Bar Association v. Thornburgh,
supra, dealt with the applicability of Section 3(e) of the Ethics
Act of 1978 to former Commonwealth attorneys in the practice of law
following termination of public employment. In the cited case,
Commonwealth Court held that Section 3(e) of Act 170 of 1978, the
predecessor to Section 3(g) of Act 9 of 1989, was an impermissible
intrusion upon the authority of the Supreme Court to regulate the
conduct of attorneys:
We conclude that Section 3(e) of the Ethics Law is an
impermissible intrusion by the legislature into an area
reserved by the Constitution to the Supreme Court and one
where the Supreme Court has acted to regulate the conduct
of attorneys. . . . What is clear is that the Supreme
Court has acted pursuant to its exclusive authority and
Confidential Opinion, 95 -003
March 10, 1995
Page 6
that action effectively annuls the legislature's attempt
to regulate the same conduct as it pertains to lawyers.
Id. at 1331.
This Commission has interpreted the above decision to mean
that there are no prohibitions under Section 3(g) of the current
Ethics Law upon the conduct of former publicly employed attorneys
insofar as their conduct constitutes the practice of law. Spataro,
Opinion 89 -009.
Subsequent to the above decision, the Pennsylvania Supreme
Court in Maunus v. State Ethics Commission, supra, considered the
issue of whether publicly employed attorneys could be required to
file Financial Interest Statements (FIS). The Court ruled that
such a reporting requirement was permissible noting that the Ethics
Law provision did not conflict with any court rule as to the
conduct of attorneys:
Employers in the private sector may properly adopt
professional and ethical standards and in pursuit
thereof, may require certain conduct of its employees,
including attorneys, without running afoul of this
Court's supervisory authority over the bar of this
Commonwealth. Any intrusion upon the power of this Court
to prescribe general rules governing the practice
procedure and conduct of judicial proceedings is viewed
with the greatest of skepticism.
Our conclusion is buttressed by the fact that the
financial disclosure requirement imposed by the Ethics
Act is not incompatible with any of the rules applicable
to attorneys in this Commonwealth.
Id. at 1326, 1328.
* * *
Therefore, to the extent that there is judicial regulation,
Section 3(i) of the Ethics Law cannot be applied to restrict an
attorney in the practice of law as to his employment, his receipt
of compensation or his representation of clients. It is clear from
the PUC Bar Association case that the restriction of Section 3(i)
as to an attorney vis -a -vis representing clients is inapplicable.
The only other restriction imposed by Section 3(i) relates to
employment or the receipt of compensation. Under the principles of
the PUC Bar Association and Maunus cases, such employment as an
attorney or the receipt of compensation (fee) as an attorney are
matters on which the Supreme Court has promulgated rules of
conduct. Accordingly, the restrictions of Section 3(i) are not
Confidential Opinion, 95 -003
March 10, 1995
Page 7
applicable to attorneys in the practice of law.
If, however, the activities intended to be undertaken do not
fall within the category of the "practice of law ", the prohibitions
of Section 3(i) of the Ethics Law would be applicable. An activity
which would not constitute the "practice of law" would be
employment by a business /corporation as a non - lawyer and acting in
a non - lawyer capacity, as for example a lobbyist. However,
assuming that the activities intended to be undertaken are in the
capacity of an attorney, such activities would constitute the
practice of law and the provisions of Section 3(i) of the Ethics
Law, pursuant to the mandate of the Supreme Court's ruling, would
not be applicable. Andrews, Opinion 90 -018.
Lastly, the propriety of the proposed conduct has only been
addressed under the Ethics Law; the propriety of any other statute,
code, regulation or ordinance other than the Ethics Law has not
been considered. Specifically not addressed is the applicability
of the Rules of Professional Conduct.
IV. CONCLUSION:
Section 3(i) of the Ethics Law does not restrict a former
Executive -level state employee who is an attorney as to employment,
the receipt of compensation or representation to the extent that
such activities constitute the practice of law.
This letter is a public record and will be made available as
such.
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 the Commission,
Daneen E. Reese
Chair