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 5-

105(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 5-

105(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 so-

called “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