Application of Conflict of Interest Rules to the Conduct of Government Litigation by Private Attorneys

Application of Conflict of Interest Rules to the Conduct of Government Litigation by Private Attorneys W h e th e r th e A m erican B ar A sso ciatio n 's C o d e o f P rofessional R esponsibility w o u ld bar p riv a te a tto rn e y s, retain ed as c o n tra c to rs to rep re se n t the interests o f th e U nited S tates in railro ad litig ation, from sim u ltan eo u sly re p re se n tin g o th e r p arties w h o se interests are a d v e rse to th o se o f th e U n ited S tates, d ep e n d s on the facts o f each situation. E th ic a l co n stra in ts on p riv a te a tto rn e y s retain ed to c o n d u c t railro ad litigation on b e h a lf o f th e U n ited S tates d o not end w ith th e term in a tio n o f th e railro ad litigation itself. T h e m aking o f litig ation ju d g m e n ts is a fu n ctio n at the c o re o f the P re sid e n t’s A rtic le II d u ty to tak e c a re th at th e law s be faithfully ex ecu ted , and m ust, th e re fo re , be p e r­ fo rm ed b y th o se w h o se rv e u n d er, and are responsible ultim ately to, the P resident. T h e sc o p e o f eth ical restrain ts on p riv a te a tto rn e y s retain ed by th e U n ited S tates d ep en d s upon extent o f n ecessa ry in teractio n w ith an d su p erv isio n by g o v e rn m e n t officials; if clo se in te ra c tio n an d su p e rv isio n can be an ticip ated , likelihood o f eth ical problem s d e v e lo p in g increases. A p p en d ix id entifies and discusses issues u n d e r th e co n flict o f interest law s ap p licab le to th e te m p o ra ry a p p o in tm e n t o f an a tto rn e y in p riv a te p ra c tic e as a g o v e rn m e n t a tto rn e y . February 22, 1980 M EM O R A N D U M O P IN IO N FO R T H E S P E C IA L A S S IST A N T TO T H E A TTO RNEY G EN E R A L This responds to your request for our discussion o f the possible application o f the Am erican Bar A ssociation’s Code o f Professional Responsibility (ABA C ode) to a transfer o f litigation from the United States Railway Association (U SRA ) to a departm ent or agency, such as the D epartm ent o f Justice. This issue has arisen in the course o f this D epartm ent’s preparation o f a feasibility study for Congress on the transfer of U SR A ’s litigation to an agency o f the governm ent. This Office has w ritten tw o earlier m em oranda that bear on that subject.1 At this time, you have requested our discussion o f the following question. Assuming that USRA is abolished and its litigation w ere transferred 1 O ne m em orandum deall directly w ith the issue o f possibly transferring U S R A ’s litigation to the D eparim ent o f Justice. See m em orandum o f A pril 11, 1979, for the D eputy A ssociate A ttorney G eneral, “ Possibility o f Transferring the Litigating Functions o f the United Stales R ailw ay A ssocia­ tion to the D epartm ent o f Justice." A second m em orandum discussed at a general level the application o f conflict o f interest statutes and principles to the conduct o f governm ent litigation by private counsel. See m em orandum o f M arch 23, 1979, for the D eputy A ssociate A ttorney G eneral, “Questions Raised by Proposed A ppointm ent o f L aw yer in Private Practice as a G overnm ent A ttorney for Purposes o f Trying Selected Civil C ases." [Note: T he M arch 23, 1979, m em orandum is published as an appendix to this opinion at p. 441, infra. Ed.) — 434 — pursuant to statute to the D epartm ent o f Justice, and assuming that the Departm ent received authority to hire private attorneys as contractors to represent the interests o f the United States in litigation,2 w ould the Code bar such private attorneys from simultaneously representing in other litigation corporations or other parties whose interests are adverse to those o f the United States? We should stress at the outset that the application o f the ABA Code in this situation, as in others, depends on the particular facts o f each case. O f crucial importance, o f course, is the nature o f the representa­ tion which the private attorneys may seek to undertake or have already undertaken. These facts are, in the first instance, peculiarly within the knowledge o f the private attorneys. Therefore, in this discussion we can only identify the general principles that would apply in a particular case. T hree o f the ABA C ode’s canons o f ethics may bear on a situation in which a private attorney is to be engaged as an independent contractor o f the D epartm ent to conduct railroad litigation. Canon 4 provides that a law yer should preserve the confidences and secrets o f a client learned while representing the client. Canon 5 establishes that a law yer should exercise independent professional judgm ent on behalf o f a client. In particular, such judgm ent should be exercised “solely for the benefit of [the] client and free of compromising influences and loyalties.” Ethical Consideration 5-1. Canon 9 directs that a law yer should avoid even the appearance o f professional im propriety. W e will focus here on Canon 5. It states explicitly the principle that is most directly relevant to your question, namely, that an attorney should not compromise his independ­ ent professional judgm ent by “serving tw o masters” and is obligated to represent each client with undivided loyalty. T he applicable disciplinary rule, D R 5-105, reads as follows: (A) A lawyer shall decline proffered em ploym ent if the exercise o f his independent professional ju d g ­ ment in behalf o f a client will be or is likely to be adversely affected by the acceptance o f the prof­ fered em ployment, or if it would be likely to involve him in representing differing interests, except to the extent permitted under D R 5105(C). 2 W e believe lhat under existing statutes the A ttorney G eneral w ould not have such authority. T he issues surrounding the authority o f the A ttorney G eneral to hire counsel outside the D epartm ent, and the A ttorney G eneral's duty to supervise litigation involving the interests o f the U nited States, are discussed in o u r A pril II, 1979, m em orandum for the D eputy A ssociate A ttorney G eneral. — 435 — (B) A law yer shall not continue multiple em ploy­ ment if the exercise o f his independent profes­ sional judgm ent in behalf o f a client will be or is likely to be adversely affected by his representa­ tion o f another client, or if it would be likely to involve him in representing differing interests, except to the extent perm itted under D R 5105(C). (C) In the situations covered by D R 5 - 105(A) and (B), a lawyer may represent multiple clients if it is obvious that he can adequately represent the interest o f each and if each consents to the repre­ sentation after full disclosure o f the possible effect o f such representation on the exercise of his independent professional judgm ent on behalf o f each. (D ) If a law yer is required to decline em ploym ent or to w ithdraw from employm ent under a Discipli­ nary Rule, no partner, or associate, or any other law yer affiliated with him or his firm, may accept o r continue such employment. T he foregoing rule establishes a tw o-part analysis for determining w hether, in a particular case, an exception may be made to the princi­ ple that a law yer should not represent multiple clients with “differing interests” :3 (1) it must be “obvious” that the law yer can “adequately” represent each client’s interest, and (2) each client must consent to the representation after full disclosure of the facts. This tw o-part analysis is also reflected in the proposed rules o f professional conduct, not yet adopted by the ABA, w hich w ere circulated at the ABA m id-winter m eeting in a discussion draft dated January 30, 1980. T hat draft enunci­ ates the basic principle that “a law yer may not act as advocate against a person the law yer represents in some other matter, even if the litigation is w holly unrelated.” {Id. at p. 29.) The draft goes on to say, however, that “ . . . there are circum stances in which a law yer may act as advocate against a client. F o r example, a law yer engaged in a suit against a large corporation with diverse operations may accept em ploy­ ment by the corporation in an unrelated m atter if doing so will not affect the law yer’s conduct o f the suit and if both the litigant and the corporation consent upon adequate disclosure.” {Id.) Accordingly, the proposed ethical rules maintain both the requirem ent that dual represen­ tation would “not affect the law yer’s conduct of the suit” and, thus, 3 T h e phrase, “differing interests,” is defined rath er broadly in the A B A C ode. It includes “every interest that will adversely affect eith er the ju dgm ent o r the loyally o f a law yer to a client, w hether it be a conflicting, inconsistent, diverse, o r o th er interest." — 436 — that the lawyer can adequately represent the client’s interests and the requirement that each client must consent to such representation. T he principles o f Canon 5 w ould apply to the governm ent’s inde­ pendent contractor that sought simultaneously to represent both the United States, and in other litigation another party with interests ad­ verse to those o f the United States. In such a situation, a court will consider not just w hether the tw o matters as to which simultaneous representation is to be undertaken are substantially related, but also w hether “the duty o f undivided loyalty w hich an attorney owes to each of his clients” may be discharged. Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d 1384, 1385-87 (2d Cir. 1976). At a minimum, a court would normally expect that participation in a lawsuit against a client, or similar adverse representation, had been fully disclosed to and con­ sented to by all concerned clients. See id. at 1386 ; see also IB M v. Levin, 579 F.2d 271 , 280 (3d Cir. 1978) (an attorney “must resolve all doubts in favor o f full disclosure to a client o f the facts o f the attorney’s concurrent representation o f another client in a lawsuit against him.”). M oreover, a court may well take an independent look at the underlying facts o f the dual representation. As the C ourt of Appeals for the Second Circuit has written: W here the relationship is a continuing one, adverse repre­ sentation is prim a facie im proper . . . and the attorney must be prepared to show, at the very least, that there will be no actual or apparent conflict in loyalties o r dimi­ nution in the vigor o f his representation.4 In view o f these principles, as a practical m atter tw o different steps would have to be taken in the present situation. First, before any private firm w ere retained to represent the United States in the railroad litigation, it would be necessary for the United States to know about cases—involving litigation, counseling or other aspects o f representa­ tion—that the firm presently has in which the interests o f the United States in the railroad litigation would be implicated. Then, each o f the cases should be studied in order to determ ine w hether the representa­ tion called for by them would make it unlikely that the private atto r­ neys could also represent with undivided loyalty the interests o f the United States in the railroad litigation. If agencies or instrumentalities o f the United States other than the D epartm ent o f Justice w ere in­ volved in the firm’s other cases, those agencies should be consulted in determining w hether a conflict of interest would arise from engaging the firm in the railroad litigation. Second, both the United States and the law firm’s other present clients would have to agree to its representation o f the United States in the railroad litigation. And, w henever the firm sought to engage a new 4 Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d 1384, 1387 (2d Cir. 1976) (emphasis in original). — 437 — client in a m atter involving the United States, the firm would have an obligation to inform the United States o f that fact. In that way, the United States would be able to determ ine w hether it should continue to consent to representation by the private attorneys o f its interests in the railroad litigation. Also, the ethical constraints would not end w ith the termination o f the railroad litigation itself. Even after the attorney-client relationship betw een private attorneys and the United States ended, the private attorneys w ould be bound not to reveal confidences o f the United States gained as its lawyer. T he “clearly settled test” in disqualification m atters w here the adverse party is the attorney’s form er client is the socalled “substantial relationship” test: “ . . . the attorney will be disqualified if the subject m atter o f the tw o representations are ‘substan­ tially related.’ ” Westinghouse Elec. Corp. v. G u lf O il Corp., 588 F.2d 221, 223 (7th Cir. 1978); see also T.C. & Theatre Corp. v. Warner Bros. Pictures, Inc., 113 F. Supp. 265, 268 (S.D .N.Y. 1953). This test “ em­ bodies the substance o f Canons 4 and 9 o f the A B A Code o f Profes­ sional Responsibility,” 588 F.2d at 224 . It turns on “the possibility, or appearance thereof, that confidential inform ation m ight have been given to the attorney in relation to the subsequent m atter in w hich disqualifi­ cation is sought.” Id.; see also Westinghouse Elec. Corp. v. Kerr-M cGee Corp., 580 F.2d 1311 , 1322 (7th Cir. 1978).5 In addition to the foregoing, we think a w ord is in order on a related, but som ewhat distinct, set o f issues. T here has always been in this Office a basic question w hether it is appropriate for the A ttorney G eneral (or the President) to contract out the litigation responsibility of the United States. T he question has both a constitutional and a policy aspect. First, on the constitutional level, we have long asserted that the making o f litigation judgm ents (variously described as prosecutorial discretion or litigation m anagem ent) is a function at the core o f the President’s A rticle II duty to take care that the laws be faithfully executed, and must, therefore, be perform ed by those w ho serve under, and are responsible ultim ately to, the President. Second, on the policy level, w e have enunciated the view that the perform ance o f this func­ tion is best assured by centralizing all litigation in one agency under one Cabinet official. W e have long defended the essentiality o f A tto r­ ney G eneral “supervision” and “control” o f litigation involving the United States. O f course, at the same time, this D epartm ent has often acknowledged the m erit—o r at least the tolerability—o f allowing the independent regulatory commissions and governm ent chartered corporations to * A num ber o f steps should also be taken by a law firm d uring the course o f representing the United States to p ro tect any confidences gained during that representation from o th e r attorneys in the firm w h o may be involved in cases involving the U nited States, such as assuring that the files o f the railroad case will only be accessible to certain attorneys and those attorneys will have no contacts w ith o th ers in the firm w ith respect to o th e r cases involving the U nited States. — 438 — retain independent litigating authtirity. (Indeed, USRA was one o f these independent entities.) O ur acceptance o f that independence has grow n out o f an appreciation o f the rather distinct nature o f these entities; they were created by Congress to function to some extent beyond the control of the President. As long as their functions are not controllable in the normal m anner by the Executive Branch, it makes at least reasonably good sense to allow their litigation judgm ents to go forw ard outside the President’s and the A ttorney G eneral’s control. H ow ever, the abolition of the independent entity and its incorporation into the structure o f the Executive Branch w ould remove the only legitimate traditional reason for independent litigation responsibility. If the USRA is to be no longer a party to the litigation, and if the United States is to be the only party having an interest in the outcom e o f the pending valuation cases, our knee jerk response ordinarily would be that there is no cause for having lawyers other than those supervised by the A ttorney G eneral making the litigation judgm ents and arguing the United States’ cause in court. T he question you have posed as an ethical issue has, candidly, given us considerable concern because it involves a proposal that is alien to our experience and contrary to this D epartm ent’s usual stance on questions o f litigation supervision. H ow can a lawyer represent the United States in court if he or she is not accountable to the United States? H ow can that law yer divine w hether the position he or she intends to take in court—both on questions o f procedure and substance—is the view o f the United States? A t the least, unless there is central supervisory authority, the positions taken in these cases could only reflect the position of the United States in these cases and not in other cases litigated by this Departm ent. O ur study o f the ethical question you posed has led us to the view that the ethical inquiry inevitably merges with these overarching ques­ tions o f policy. They m erge for this reason: T he extent to w hich a private law yer or firm can both represent the United States and litigate against it may depend upon the extent to which the w ork done on behalf of the United States can take place in a sterile environm ent removed from the usual exchange of information and personal inter­ change that characterizes our litigation practice. T hat is, if the repre­ sentational activity could be perform ed w ithout consultation and ex­ change within this Departm ent, it might be fairly easy to conclude that there is less reason to believe that client confidences will be misused or that loyalty will be undercut. The fully independent contractor probably fits well within that structure. Such a contractor would receive an assignment and carry it out w ithout further input or second-guessing by the Departm ent. Thus, if we w ere to retain a law firm to perform a study on behalf o f the Departm ent, the perform ance o f that segregable activity would probably not jeopardize the firm’s ability to litigate against this D epartm ent in cases unrelated to that subject matter. — 439 — T he question that we find especially troubling here is w hether that same firm can, realistically and consistently with our traditional under­ standing o f the role o f this D epartm ent, undertake a contract to litigate on behalf of the United States that will not force it to interact closely with this D epartm ent. If the answ er is that interaction and supervision are to be anticipated, then to that extent the likelihood o f ethical problems correspondingly increases. In this same vein, one additional point should be reemphasized. It will not suffice for this D epartm ent alone to make the judgm ents w hether ethical problems appear in other cases in w hich the law yer o r firm may be involved. In those cases the views o f our client agencies will have to be seriously evaluated, and we see no way in advance o f consultation with those agencies that this D epartm ent can pass on w hether disqualification would be required in some other cases. T he question you raise is obviously a difficult one, and we w ould not w ant our discussion here to suggest that the ethical dilemma presents an insurm ountable obstacle. W e w ould be pleased to address this question further as m ore concrete facts becom e available. L arry A. H am m ond Acting Assistant Attorney General Office o f Legal Counsel — 440 — A P P E N D IX M arch 23, 1979 M EM O R A N D U M O P IN IO N F O R T H E D E P U T Y A S S O C IA T E ATTORNEY G EN ERA L This responds to your request for advice regarding problem s that would be raised under the conflict o f interest laws in connection w ith a proposed tem porary appointm ent o f a law yer (L) in private practice as a governm ent attorney for the purpose o f trying selected civil cases. You stated that a num ber o f alternatives are being considered: service with or w ithout compensation, on a part- or full-time basis, with or without continuing affiliation with a private firm, for a period o f time of a few months to about tw o years. In this m em orandum we discuss the principal questions raised by these alternative proposals: (1) w hether the lawyer may be hired as an independent contractor rather than as a governm ent employee; (2) the compensation he can be paid; (3) the extent to w hich his disqualification would be necessary pursuant to 18 U.S.C. § 208 ; (4) other limitations applicable to the law yer and his partners during the law yer’s tenure with the governm ent; (5) restric­ tions on post-em ploym ent activities applicable to the law yer and his partners; and (6) issues raised under the A B A C ode o f Professional Responsibility in connection with the proposed appointm ent. As you know, and as our com m ents in this m em orandum dem onstrate, the relevant federal personnel, conflict o f interest, and ethical requirem ents constitute a formidable body o f regulation. In our w ork in these areas we have frequently found that there is no reasonable substitute for careful case-by-case assessments. A t the level o f generality called for by your request we can do little m ore than identify the m ajor consider­ ations and suggest how they have been resolved in the past. W e would, o f course, be pleased to elaborate on any o f these m atters, o r to provide specific advice on any particular arrangem ents as you may deem helpful. 1. Independent Contractor or Government Employee Officers and em ployees in the Executive Branch are covered by the conflict o f interest laws; independent contractors are not. O ne w ho in fact will serve as a governm ent em ployee may not, how ever, be hired as an independent contractor to avoid the application o f the conflict o f — 441 — interest laws. T he term s “officer” and “em ployee” are not defined in the conflict o f interest laws themselves. T he definitions o f these terms provided by §§2104 and 2105 o f Title 5 are ordinarily referred to for guidance. T hree elements are regarded as having critical significance: (1) appointm ent in the civil service by one o f the federal officers or em ployees specified; (2) perform ance o f a federal function under au­ thority o f law or an “executive act” ; ‘ and (3) supervision by a federal official o f the perform ance o f the duties o f the position.2 In this case, L would seem plainly to be an employee: he would be formally ap­ pointed, w ould perform services ordinarily perform ed by D epartm ent employees pursuant to 28 U.S.C. § 516 ,3 and w ould be under the super­ vision o f D epartm ent officials w ho would remain responsible for the conduct o f the litigation in question.4 In addition, § 516 o f Title 28 reserves to “officers” o f the D epartm ent o f Justice the authority to conduct litigation in w hich the United States is a party. F or both these reasons, we believe L must be appointed as an employee, rather than as an independent contractor. 2. Compensation W e assume that L w ould be em ployed on a tem porary basis either as a Special Assistant United States A ttorney pursuant to 28 U.S.C. §543 , or as a special attorney or special assistant to the A ttorney General pursuant to 28 U.S.C. § 515 (b).5 If appointed as a Special Assistant 'T h e meaning o f the phrase “executive a ct,’* used in 5 U.S.C. § 2105 (a)(2), is unclear. Perform ance o f executive functions w ould, how ever, clearly com e w ithin the term s o f the statute. 2 T h e Civil Service Commission has developed a m ore lengthy list o f indicia o f em ployee status: service under the supervision o f a federal em ployee; w ork in governm ent space w ith governm ent equipm ent; access to governm ent files; handling o f specific agency problems; service on m ore than one occasion on the same project; w ork on dates and hours requjred to be reported to the agency. See Federal Personnel Manual, ch. 304. See also Lodge 1858. Am . Fed. o f Gov't Emp. v. Administrator, N A SA , 424 F. Supp. 186 (D .D .C . 1976); B. M anning, Federal Conflict o f Interest Law 27-34 (1964). 3 H e w ould not, therefore, qualify as an expert o r a consultant w hose services may be procured by c on tract pursuant to 5 U.S.C. §3109 as authorized by § 4 (c), D epartm ent o f Justice A ppropriation A uthorization A ct, Fiscal Year 1979, Pub. L. No. 95-624, 92 Stat. 3459, 3462. 4 T h e C o m p tro ller G enera) has recognized that notw ithstanding the general rule that purely per­ sona) services must be perform ed by regular governm ent em ployees, there may be unusual circum ­ stances w h ere—because o f the nature o f the w ork o r the existence o f conditions not perm itting its perform ance in the usual m anner (such as w here regular em ployees are not qualified o r are not available)—co n tractin g for personal services may be perm itted. Such circum stances exist w here, in o rd e r to avoid the appearance o f conflict o f interest, it becom es necessary to retain private counsel to defend a federal em ployee sued in his individual,* rath er than official, capacity in a civil proceeding w hich arises out o f his perform ance o f official duties at the same tim e that the em ployee is the target o f a crim inal investigation concerning the act o r acts for w hich he seeks representation. See 28 C .F.R . §§ 50.15, 50.16 (1978). N o such unusual circum stances appear to exist in the instant case. 5 N otw ithstanding the existence o f this authority, governm ent*w ide lim itations on hiring may be in effect at the tim e o f the proposed appointm ent. A general freeze on perm anent hiring could continue in effect in o rd e r to im plem ent the requirem ents o f § 3 1 1(a) o f the Civil Service R eform A ct o f 1978, Public Law No. 95-454, 92 Stat. 1111, 1153, w hich provides that the total num ber o f federal civilian em ployees on Septem ber 30, 1979, may not exceed the num ber on Septem ber 30, 1977. T em porary hiring m ay not be used to circum vent such a freeze. See O M B Bulletin 79-2, H 3, (O ctober 27, 1978). In addition, it is no tew o rth y that the em ploym ent ceiling on total em ployees, imposed by O M B on each agency, encom passes tem porary employees. — 442 — United States A ttorney, L ’s salary would be adm inistratively deter­ mined pursuant to 28 U.S.C. § 548 . Because o f the ceiling now imposed by 5 U.S.C. §5308 , the maximum per diem rate paid Special Assistant United States A ttorneys is $182. Since no minimum salary is established by law for such positions, L might also be appointed w ithout com pen­ sation should he so desire.6 If appointed as a special assistant or special attorney, L could be paid an annual salary fixed by the A ttorney G eneral at not more than $12,000. 28 U.S.C. § 515 (b). W e have previ­ ously opined that this provision permits com pensation at a per diem rate o f V360 of $12,000, rather than payment at a greater rate so long as his total compensation for the year does not exceed the $12,000 ceiling. Like §543, § 5 15(b) does not establish a minimum salary; service w ith­ out compensation would thus for similar reasons be permissible. W hether additional payments may be made by his firm to supplement L ’s governm ent salary, and the extent to w hich com pensation reflecting his or his partners’ earnings unrelated to his governm ent service may be received by him to supplement his governm ent salary, depends on w hether L will qualify as a special governm ent employee within the terms o f § 202(a) o f Title 18. T he term “special G overnm ent em ployee” is there defined to include “an officer o r em ployee o f the executive or legislative branch o f the United States G overnm ent, . . . w ho is re­ tained, designated, appointed, or em ployed to perform , with or w ithout compensation, for not to exceed one hundred and thirty days in any period o f three hundred and sixty-five days, tem porary duties either on a full-time or interm ittent basis.” F or an individual to be appointed as a special governm ent employee, the D epartm ent must in good faith esti­ mate in advance o f the appointm ent that he will serve for no m ore than 130 days in the 365-day period beginning on the day o f his appoint­ ment. In estimating the num ber o f days to be served, a part o f a day must be counted as a full day, and a Saturday, Sunday, or holiday on which duties are to be perform ed must be counted equally w ith a regular w ork day. Federal Personnel Manual, ch. 735, Appendix C. If an employee does, how ever, serve for m ore than 130 days in a 365-day period, he will nevertheless continue to be regarded as a special g o v ­ ernm ent employee so long as the original estimate was made in good faith. Id. Once an individual is appointed as a special governm ent employee, the restrictions imposed by the conflict o f interest laws apply even on days he does not serve the governm ent. Id. Sections 203 and 209 o f Title 18 limit the com pensation employees may receive in addition to their governm ent salary. Section 209, w hich prohibits receipt o r paym ent o f any salary, contribution to or 6 Section 663(b) o f title 31 prohibits the acceptance o f ’'v o lu n tary s e rv ic e /’ T his prohibition w as not intended to preclude acceptance o f “gratuitous” services rendered in an official capacity under regular appointm ent otherw ise perm itted by law to be nonsalaried w here an agreem ent is reached p rio r to appointm ent that the em ployee is to serve w ithout com pensation. 30 Op. A tt’y G en. SI (1913). — 443 — supplem entation o f salary as com pensation for an em ployee’s services as an em ployee o f the Executive Branch, is expressly not applicable to special governm ent employees. 18 U.S.C. § 209 (c). Section 203 prohibits receipt or paym ent o f any com pensation for services rendered or to be rendered either by a special governm ent em ployee currently employed in the Executive Branch or by “another” (such as his law partner) only in relation to a particular m atter involving a specific party or parties in w hich he has at any time participated personally and substantially as a governm ent em ployee o r w hich is pending in the departm ent in which he is serving. M oreover, the D epartm ent-w ide ban applies only where he has served in the D epartm ent for at least 61 days during the immediately proceeding 365 days. A special governm ent employee w ould therefore be free to receive and to share in fees generated by his partners except as to a limited class o f m atters such as, for example, representation in connection with a criminal investigation that has not yet resulted in an indictm ent and is therefore still pending in the D epartm ent. Section 203 does not, how ever, bar receipt o f fees in relation to representation before the federal courts even though the m atter may incidentally be pending in the D epartm ent because o f the D epartm ent’s role in the court proceeding. B roader restrictions on receipt o f outside com pensation w ould apply if L does not qualify as a special governm ent employee, i.e., if he w ould be a regular employee. If L w ere to serve w ithout com pensa­ tion, §209 would still be inapplicable. 18 U.S.C. § 209 (c). H owever, § 203 w ould prohibit receipt o r paym ent o f com pensation for any serv­ ices rendered or to be rendered by another before any departm ent, agency, court-m artial, officer, civil, military or naval commission in relation to any particular m atter in w hich the United States is a party o r has a direct and substantial interest. L could not, therefore, share in fees for representational services rendered under such circumstances. W hile he could share in fees received by his partners for services rendered in co u rt,7 he could not him self act as agent or attorney for anyone in court in connection w ith any particular m atter in w hich the U nited States is a party o r has a substantial interest.8 Thus his income w ould be limited accordingly.9 Finally, if L is a regular employee, but does receive compensation from the governm ent for his efforts, he w ould be subject both to the 7 H e could not, how ever, receive any gratuity, o r any share o f o r interest in any claim against the U nited States in consideration o f assistance in the prosecution for such claim. 18 U.S.C. §205 (1). * 18 U .S .C §205(2). 9 D ep artm en t regulations also prohibit private professional practice by other than special go v ern ­ m ent em ployees. 28 C .F .R . 45.735-9(a) (1978). T his requirem ent has been interpreted to require regular governm ent em ployees to resign from private practice during their period o f governm ent service. T h e A ssociate A tto rn ey G eneral may make exceptions to this requirem ent in unusual circum ­ stances. 28 C .F .R . 45.735(c) (1978). O utside em ploym ent that w ould interfere w ith the proper perform ­ ance o f an em ployee’s duties, create o r ap p ear to create a conflict o f interest, o r reflect adversely on the D epartm ent o f Justice, is in any event barred. 28 C .F .R . 45.735-9(d) (1978). — 444 — restrictions imposed by § 209 and those imposed by § 203. He thus could not receive supplemental compensation from his firm for per­ forming his government job. And if he were to work for the govern­ ment on a full-time basis, he would probably be treated by the firm as having gone on a leave of absence from the firm and hence would be barred altogether from sharing in firm profits unless under established firm policy persons having such a status would be entitled to certain compensation regardless of their efforts on behalf of the firm. If L as a regular employee were to work only part-time for the government, an even more knotty problem of accounting would be posed. To satisfy the requirements of § 209, his share in firm profits would have to be reduced to reflect his more limited participation in the firm’s business; to satisfy § 203, his share would have to be further reduced in light of his inability to share in fees for representational services performed by another as outlined above.10 Perhaps the most workable solution to this problem would be for L to receive a salary reflecting the value of services he would render to the firm while working on a part-time basis. Any definite conclusion as to the compensation that might be received in these circumstances must, in any event, be deferred until more specific facts are presented. 3. Disqualification Pursuant to Section 208 The feasibility of your proposal may well ultimately turn on the application of §208 of Title 18 to the facts of each particular case. Section 208 requires an officer or employee (including a special govern­ ment employee) to disqualify himself from participating in decisions with regard to particular matters where he, his spouse, minor child, partner, organization in which he is serving as officer, director, trustee, partner or employee or any person or organization with whom he is negotiating or has any arrangement concerning prospective employ­ ment has a financial interest. So long as L is affiliated with his firm,11 and the firm, through its representation of certain clients, has a financial interest in decisions he might make in the course of his government service, disqualification would be necessary unless a waiver could be obtained under § 208(b).12 A waiver is available on an ad hoc basis where an employee receives in advance a written determination that the interest is not so substantial as to be deemed likely to affect the integrity of the services which the government may expect from that employee. Decisions in the situation you have described would not, 10 H e could, how ever, continue to participate in bona Tide pension, retirem ent, group life, health, or accident insurance, profit-sharing, stock bonus, o r o th er em ployee w elfare o r benefit plans. 18 U.S.C. § 209 (b). 11 A leave o f absence is regarded as a continuation o f em ploym ent w ithin the term s o f § 208. lz„Thus, w here his law partn er perform s a significant am ount o f w ork on behalf o f client X, L w ould be required to refrain from participating in a decision that w ould significantly affect client X ’s business. — 445 — however, appear to fall within this de m inimus exception at least where clients of a major law firm are involved. Careful consideration would therefore have to be given to the circumstances in which decisions by L in the course of his government employment would affect clients of his firm, and thus, the financial interests of himself or his partners. Although § 208 does not, in terms, prohibit an individual’s appointment, if disqualification will frequently be required, the appointment may at the outset be futile. 4. Other Restrictions Under the Conflict of Interest Laws Applicable During Government Tenure a. Restrictions on L. We have previously discussed the restrictions on receipt of compensation and on participation in decisions affecting a personal financial interest, and have briefly alluded to the prohibition on certain activities of government employees imposed by § 205. If L is a special government employee who serves for at least 61 days, he will be barred by § 205 from acting as attorney or agent in relation to any particular matter involving a specific party or parties in which he has at any time participated in the course of his government service, or which is pending in the department in which he is serving. He would not otherwise be barred from acting as an attorney in court proceedings or in proceedings before other agencies. If he does not qualify as a special government employee, he must refrain from acting as agent or attorney for anyone before any department, agency, court, court-martial, officer or any civil, military or naval commission in connection with any particular matter in which the United States is a party or has a direct and substantial interest. b. Restrictions on L ’s partners. L’s partners are precluded from acting as agents or attorneys for anyone other than the United States in connection with any judicial proceeding or other particular matter in which the United States is a party or has a direct and substantial interest and in which L participates or has participated personally and substantially as a government employee, or which is under his official responsibility.13 This bar is only effective during the period in which L serves as a government employee. Thus, if L remains affiliated with his firm, the firm may not, during his tenure with the government, partici­ pate as attorney for parties to the litigation in which L is involved. L ’s partners may not be charged on an imputation theory of wrongdoing in violation of §§ 203 and 205.14 13 18 U .S.C. § 207(c), redesignated as § 207(g), effective July 1, 1979. 14 T h e obligations d irectly imposed on L ’s p artners to observe the prohibitions against providing L w ith outside com pensation are discussed above. — 446 — 5. Post-employment Restrictions We assume that L, if appointed, will leave government service some time after the July 1 effective date of the recent amendments to § 207 of Title 18. Unless he is designated for coverage under § 207(d),15 he would not be subject to the aiding and assisting bar of § 207(b)(ii) and the 1-year bar on contacts with the Department under § 207(c). He would, however, be permanently barred from acting as attorney or agent or otherwise representing any person other than the United States in making any communication, with intent to influence, to or in making any formal or informal appearance before any department or court in relation to any particular matter in which the United States or the District of Columbia is a party or has a direct and substantial interest and in which he participated personally and substantially. He would also be prohibited for 2 years from acting as agent or attorney in similar circumstances with regard to matters under his official responsi­ bility during the last year of his government service. In all likelihood, L’s realm of official responsibility will be no broader than the matter in which he participates personally and substantially, and he will essen­ tially be barred simply from switching sides in the case in which he served as government counsel and in closely related cases. Ethical obligations, rather than statutory requirements, are the source of the principal restrictions applicable to L’s partners during the post­ employment period. 6. Ethical Constraints While we will touch here briefly upon ethical constraints that may be of significance, you should be aware that a general discussion of this sort is of limited value and adequate guidance can only be given where reference can be made to particular facts and circumstances. a. Restraints on L ’s service with the government. If L or his firm has previously represented any of the defendants in the case he will be trying for the government, he may be subject to a motion to disqualify based on the American Bar Association’s Canon 4 directive to preserve the secrets and confidences of a client unless he could demonstrate that he never received confidential information in a case substantially relat­ ed to the case he handles for the government. Even were the former client to waive such disqualification, a question would be presented whether the United States should accept such a waiver, particularly in a case in which the United States is suing the client, since the govern­ 15 Persons paid al Che executive level are autom atically covered. T hose paid at a rate o f G S -1 7 or above w ho have significant decisionm aking o r supervisory responsibility and others in positions w ith com parable decisionm aking authority are to be designated for coverage by the D irecto r o f the Office o f G overnm ent Ethics. — 447 — ment should be above reproach and should avoid even the appearance of impropriety. b. Restraints on L 's firm following his service with the government. Following his government service, L would be obliged, pursuant to D R 9 - 101(B) of the ABA Code of Professional Responsibility, to de­ cline private employment in a matter in which he had substantial responsibility while he was a public employee. His disqualification would also be imputed to his firm pursuant to DR 5 - 105(D) of the ABA Code of Professional Responsibility. This Department has taken the position, approved in ABA Formal Opinion 342, that the disqualifi­ cation of a firm may be waived by the government whenever effective screening measures by the firm will effectively isolate the lawyer who is personally barred from participating in the particular matter and sharing in the fees attributable to it, so long as there is no appearance of significant impropriety affecting the interests of the government.16 7. Conclusions The above discussion has necessarily been rather general in nature. Should you determine that as a policy matter appointment of L would be appropriate, a more detailed review of the conflict of interest prob­ lems likely to be presented would certainly be advisable. For present purposes, however, the following conclusions are perhaps the most significant. a. L could be appointed as a Special Assistant United States Attorney to be paid at a per diem rate of up to $182. If he is appointed as a special government employee or serves without compensation, his firm may supplement his salary. b. For L to qualify as a special government employee the Depart­ ment would be required to estimate in good faith that he would serve the government on no more than 130 out of the 365 consecutive days beginning with the day of his appointment. Days on which only part of his time was devoted to government service would count as days worked for purposes of this estimate. c. Unless L qualifies as a special government employee, he may as a regular employee be required significantly to limit his activities in private practice pursuant to 18 U.S.C. §§ 203 and 205. d. Depending on the facts of the case on which L will be working and the clients of the firm with which he is affiliated, L may be seriously handicapped in his performance of his governmental duties because of his obligation under § 208 to refrain from participating in decisions with regard to a matter in which he or his partners have a financial interest or in which his law firm has a financial interest 16 T h e cu rren tly pending proposal for revision o f the D istrict o f C olum bia Bar’s C ode o f Profes­ sional Responsibility also addresses this question. — 448 — because of it representation of a party in the matter. If so, he should probably not be appointed. e. L may not subsequently serve as agent or attorney in a particular matter in which he personally and substantially participated while in the government. f. During L’s tenure with the government, L ’s partners are barred from serving as attorneys in a particular matter in which L participates personally and substantially. Following his return to private practice, their obligations would be ethical in nature. L arry A. H a m m o n d D eputy Assistant Attorney General Office o f Legal Counsel — 449 —