Advisory Opinion No. 96-76

Re: Melvin L. Zurier, Esq.

A. QUESTION PRESENTED

The Petitioner, a state appointed member of the Health Services Council, requests an advisory opinion as to (1) whether he must recuse himself in matters where an institution is represented by a law firm given that the Petitioner is "of counsel" to that law firm and that he receives retirement benefits and fees only on those matters that he is handling; (2) whether the law firm where the Petitioner works "of counsel" is disqualified from appearing before the Health Services Council.

B. SUMMARY

We conclude that the Petitioner is prohibited from participating, as a state appointed Health Services Council Member, in matters where his law firm's clients appear before him. In these matters, the Petitioner must file a Section 6 recusal and file it with the Health Services Council and with the Ethics Commission. Similarly, although Tillinghast, Licht & Semonoff may appear before the Health Services Council, the Petitioner must recuse himself if the law firm appears before the Health Services Council. These conclusions are based on the Petitioner's relationship with Tillinghast, Licht & Semonoff and its common financial interest in matters where he serves as an independent contractor, thus creating a business associate relationship. Given this relationship between the Petitioner and the law firm, a substantial conflict of interest, impairment of independence of judgment, and other sections of the Code may be violated. R.I. Gen. Laws §§ 36-14-5(a), (b), (d), (f) and 36-14-7(a).

C. DISCUSSION

1. Facts

The Petitioner has been asked by Governor Almond to accept an appointment as a member of the Health Services Council. Pursuant to R.I. Gen. Laws § 23-17-13, the Health Services Council is an advisory body to the Rhode Island state department of health and considers matters regarding the development, establishment and enforcement of standards for the authorization and allocation of new institutional health services and new health care equipment.

The Petitioner was a partner with Licht & Semonoff until March 1 of this year. It merged with another firm to form Tillinghast Licht & Semonoff and the Petitioner retired as a partner. The Petitioner receives retirement benefits and is "Of Counsel" to the new firm. The Petitioner continues to act as fiduciary in estates where he is named executor or trustee. Any other legal work is performed by the Petitioner as an independent contractor and is paid by the firm for those matters.

Tillinghast Licht & Semonoff represent Miriam Hospital, Lifespan and other health service organizations which may from time to time appear before the Health Services Council. The Petitioner represents that he has never personally done work for any of the health service organizations represented by the firm.

The Petitioner requests an advisory opinion as to whether he must recuse himself from matters relating to institutions represented by Tillinghast Licht & Semonoff and whether the law firm is disqualified from appearing before him given the above facts.

2. Analysis

At issue in this advisory opinion request is whether the Code of Ethics prohibits a member of the Health Services Council from participating in decisions relating to his law firm or its clients. R.I. Gen. Laws § 36-14-5(a) and R.I. Gen. Laws § 36-14-7(a) of the Code of Ethics provide that the Petitioner, as a member of the Health Services Council, may not participate in any matter in which he has an interest, financial or otherwise, which is in substantial conflict with the proper discharge of his duties in the public interest. A substantial conflict occurs when the public official has reason to believe or expect that he or any business associate will derive a direct monetary gain or suffer a direct monetary loss by reason of his official activity. Additionally, the Petitioner cannot accept other employment which would impair his independence of judgment as to his official duties or induce him to disclose confidential information acquired by him in the course of and by reason of his official duties. R.I. Gen. Laws § 36-14-5(b). Pursuant to R.I. Gen. Laws § 36-14-5(d), the Petitioner shall not use his public office or confidential information received through his holding public office to obtain financial gain, for himself, a member of his family or business associate or any business which the person represents. Additionally, the Code of Ethics provides that a business associate may not appear before the Petitioner unless the associate first advises the Commission of the nature of his business relationship with the Petitioner and the Petitioner recuses himself from voting on or otherwise participating in the Commission's consideration or disposition of the matter at issue. R.I. Gen. Laws § 36-14-5(f). Finally, a business associate is defined as persons joined together to achieve a common financial objective. R.I. Gen. Laws § 36-14-2(8).

The Commission has considered matters where clients of a law firm appear before a public body. In these matters, the Commission has found that the public official must recuse himself when the clients appear before him. In A.O. 84-18, the Commission concluded that a Newport City Council member must recuse on matters involving his law firm's client even through the client was represented by other outside counsel. See also A.O. 79-08 (City Council member who is also in partnership with other attorneys could not participate in or vote on matter before City Council which affects the business of a clients of the firm); A.O. 82-54 (Newport Zoning Board of Review member must recuse where clients of spouse's firm appear before her). See also A.O. 85-98 (Charlestown Property Tax Review Board member who was also employed in real estate business cannot participate in any matter in which one of her clients or one of her agency's clients appears before the Board).

The Commission has also considered matters where other members of the public official's law firm were to appear the public official's body. In that context, the Commission has generally found that if members of the same law firm appear before the public official, the law firm must disclose their relationship with the public official and the public official must recuse himself in conformity with Code. In A.O. 96-03, the Commission found that a Municipal Court Judge whose private law firm associates with the City Solicitor must recuse where the office of the city solicitor entered an appearance or rendered advice to City officials and/or entities. See also A.O. 84-18, (Commission concluded that a Newport City Council member will violate Code if a member or employee of his law firm practices before the Council); A.O. 89-68 (Pawtucket City Council member's law firm cannot represent clients before the City Council); A.O. 92-64 (Westerly school department attorney associates cannot appear before other Westerly Boards).

However, the Commission has also made a distinction where the attorneys were independent of the firm. In A.O. 93-45, the Commission concluded that a Cranston City Council member can participate in a matter where an independent attorney affiliated with him appears on behalf of his or her own private clients before the Probate Court. The Commission based this conclusion on the fact that the attorneys did not have a fee sharing arrangement. Similarly, in A.O. 93-18, the Commission found that no inherent conflicts for a Cranston City Council President given that two independent attorneys affiliated with him would appear before the Probate Court. This decision was again based on the independent attorneys not receiving a salary from the firm, but receiving fees directly from the clients.

This matter involves an attorney serving as "of counsel" who does not share in the firm's fees. The Petitioner does receive retirement benefits, has an office and may do work on a contract basis. It is the ongoing nature of these independent contractor matters what give rise to the issue of whether the Petitioner is a "business associate" of Tillinghast Licht & Semonoff. The Petitioner is joined together with the law firm in seeking a common financial objective in those matters where the law firm has requested the Petitioner to perform work, the Petitioner is paid for his work by the firm, and the firm will receive a financial gain by reason of the Petitioner's work. The facts of this matter are distinguishable from the two advisory opinions cited above, in that those opinions simply dealt with an office sharing arrangement whereby the fees for work performed by the independent attorneys never passed through the law firm and which the law firm never received a benefit. Additionally, those opinions do not involve the law firm appearing before the independent attorney, but before the Probate Court. Also, the Commission has found that independent contractors are "business associates" of the person receiving the services. See A.O. 93-2 (Coventry Planning Board member and independent contractor/salesperson for a real estate agency could not participate in matter concerning real estate in which real estate agency had an interest based on Board member's "business associate" relationship with the agency) See also A.O. 87-17 (Cranston City Councilor and independent contractor (title searcher and collector) for Cranston Redevelopment Agency could not participate if a Cranston Redevelopment Agency matters appear before the Council based on the Councilor's employment relationship with the Agency).

Based on the Petitioner representations, the Code of Ethics and previous advisory opinions, we conclude that the Petitioner is prohibited from participating, as a Health Services Council Member, in matters where his law firm or his law firm's clients appear before him. In these matters, the Petitioner must file a Section 6 recusal and file it with the Health Services Council and with the Ethics Commission. This does not prohibit the law firm from appearing before the Health Services Council so long as the Petitioner recuses himself in such matters. These conclusions are based on the Petitioner's relationship with Tillinghast, Licht & Semonoff and its common financial interest in matters where he serves as an independent contractor, thus creating a business associate relationship. Given this relationship between the Petitioner and the law firm, a substantial conflict of interest, impairment of independence of judgment, and other sections of the Code may be violated. R.I. Gen. Laws §§ 36-14-5(a), (b), (d), (f) and 36-14-7(a).

Code Citations:

36-14-2(8)

36-14-5(a)

36-14-5(b)

36-14-5(d)

36-14-5(f)

36-15-6

36-14-7(a)

Related Advisory Opinions:

96-03

93-45

93-18

93-02

92-64

89-68

87-17

85-98

84-18

82-54

79-08

Keywords:

business associate

private employment

recusal