City of San Antonio, Texas
Ethics Advisory Opinion No. 9
March 19, 2002
Issued By: The Ethics Review Board
Whether a lawyer who is a former City official may be retained by the City to perform work on behalf of the City prior to the two year limitation described in Part C of the Ethics Code of the City of San Antonio.
FACTS AND APPLICABLE LAW
A lawyer was employed as the City Attorney until December 31, 2001, at which time he was employed by the City of San Antonio as General Counsel. The attorney has represented to the board that he intends to accept employment in the private sector after April 30, 2002. While serving as City Attorney and as General Counsel, the attorney had primary responsibility in assisting the City Council with the City Council redistricting process. The attorney requested an opinion regarding the following question: May a former City Attorney be retained by the City to perform work on behalf of the City prior to the expiration of the two year limitation period set out in Part C of the Code of Ethics of the City of San Antonio (herein, "the Code").
Due to the lawyer’s former employment as City Attorney, the City Attorney’s Office forwarded the matter to the Ethics Review Board for its consideration pursuant to Part H of the Code. The Board, at its meeting on February 6, 2002, voted to appoint a panel to draft for the Board an opinion determining whether the actions of the lawyer in continuing to represent the City is a violation of the Code. In this regard, the Board should consider which provisions of the Code are applicable to the lawyer’s actions and whether the issue is affected by the Texas Disciplinary Rules of Professional Conduct, particularly Rules 1.10 and 5.06.
The Code’s definition of a "former city employee" is found in Part A, Section 2. The lawyer is a person who is listed on the City of San Antonio payroll as an employee and whose City duties will terminate after the effective date of the Code, January 1, 1999.
Part C of the Code lists the standards of conduct to which a former city official or employee must abide. Those standards of conduct concern, inter alia: (1) continuing confidentiality; and (2) subsequent representation.
The Code provides:
Section 1 Continuing Confidentiality
A former city official or employee shall not use or disclose confidential government information acquired during service as a city official or employee. This rule does not prohibit:
(a) any disclosure that is no longer confidential by law; or
(b) the confidential reporting of illegal or unethical conduct to authorities designated by law.
Section 2 Subsequent Representation
(a) Representation by a Former Board Member. A person who was a member of a board or other city body shall not represent any person, group, or entity for a period of two (2) years after the termination of his or her official duties:
(1) before that board or body;
(2) before city staff having responsibility for making recommendations to, or taking any action on behalf of, that board or body, unless the board or body is only advisory in nature; or
(3) before a board or other city body which has appellate jurisdiction over the board or body of which the former city official or employee was a member, if any issue relates to his or her former duties.
(b) Representation Before the City.
(1) A former city official or employee shall not represent for compensation any person, group, or entity, other than himself or herself, or his or her spouse or minor children, before the city for a period of two (2) years after termination of his or her official duties. This subsection does not apply to a person who was classified as a city official only because he or she was an appointed member of a board or other city body. For purposes of this subsection, the term compensation means money or any other thing of value that is received, or is to be received, in return for or in connection with such representation.
(2) In connection with the representation of private interests before the city, a former city official or employee shall not state or imply that he or she is able to influence city action on any basis other than the merits.
(c) Representation in Litigation Adverse to the City. A former city official or employee shall not, absent consent from the city, represent any person, group, or entity, other than himself or herself, or his or her spouse or minor children, in any litigation to which the city is a party, if the interests of that person, group, or entity are adverse to the interests of the city and the matter is one in which the former city official or employee personally and substantially participated prior to termination of his or her official duties.
Section 3 Prior Participation in Negotiating or Awarding of Contracts
A former city official or employee may not, within two (2) years of the termination of official duties, perform work on a compensated basis relating to a discretionary contract, if he or she personally and substantially participated in the negotiation or awarding of the contract. A former city official or employee, within two (2) years of termination of official duties, must disclose to the City Clerk immediately upon knowing that he or she will perform work on a compensated basis relating to a discretionary contract for which he or she did not personally and substantially participate in its negotiation or award.
Section 4 Discretionary Contracts
(a) Impermissible Interest in Discretionary Contract or Sale. This Subsection applies only to contracts or sales made on a discretionary basis, and does not apply to contracts or sales made on a competitive bid basis. Within one (1) year of the termination of official duties, a former city officer or employee shall neither have a financial interest, direct or indirect, in any discretionary contract with the City, nor have a financial interest, direct or indirect, in the sale to the City of any land, materials, supplies, or service. Any violation of this Section, with the knowledge, expressed or implied, of the individual or business entity contracting with the Council shall render the contract involved voidable by the City Manager or the Council. A former city officer or employee has a prohibited "financial interest" in a discretionary contract with the city, or in the sale to the city of land, materials, supplies, or service, if any of the following individuals or entities is a party to the contract or sale:
(1) the former officer or employee;
(2) his or her parent, child, or spouse;
(3) a business entity in which the former officer or employee, or his or her parent, child or spouse, directly or indirectly owns:
(A) ten (10) percent or more of the voting stock or shares of the business entity, or
(B) ten (10) percent or more of the fair market value of the business entity; or
(4) a business entity of which any individual or entity listed in Subsection (1), (2) or (3) is:
(A) a subcontractor on a city contract;
(B) a partner; or
(C) a parent or subsidiary business entity.
The Board is of the opinion that the lawyer is currently a City Official or Employee as defined by the Code. Furthermore, when he is no longer employed as an employee of the City, he will become a Former City Official or Employee as defined by the Code. The lawyer was an employee of the City as of January 1, 1999, when the Code became effective. As a result, the lawyer will be required to comply with the Standards of Conduct for Former City Officials and Employees found in Part C of the Code after April 30, 2002.
It should be noted at the outset that this Board has considered previously the applicability of the Code to former City Attorneys. In Ethics Advisory Opinion No. 8, issued October 23, 2001, the Ethics Review Board was requested to consider whether Rules 1.10 and/or 5.06 of the Texas Disciplinary Rules of Professional Conduct bar the application of the Code to a licensed attorney. In that opinion, the Board concluded that the City of San Antonio Ethics Code does not attempt to regulate the practice of law in Texas. It does not delineate the standards of conduct for lawyers, apart from any other occupation, but instead the Board held that the provisions of the Code remain applicable to lawyers and non-lawyers alike. The Board issued its opinion that the Code is not displaced by the Texas Disciplinary Rules of Professional Conduct or by other law of the state of Texas. The Board reiterates its prior opinion that the Code applies to lawyers.
The issue under consideration is whether the former City Attorney is precluded from representing the City of San Antonio within the two year non-employment period imposed by Part C, Section 2 of the Code. The former City Attorney is a City official and employee within the meaning of the Code. Part C, Sections 1, 2, 3 and 4 apply to Former City Officials and Employees. Section 1 imposes a duty of Continuing Confidentiality. Section 2 (a) applies only to former Board Members, but Sections 2 (b) and 2 (c) apply to former city employees and officials. Section 2 (b) proscribes the former City Attorney from representing for compensation any person, group, or entity other than himself, or his family before the City for two years from the date of his termination of employment. Section 2 (c) proscribes the former attorney from representing third parties in litigation if the attorney substantially participated in said litigation prior to his termination from the City and if that litigation is either against the City or is against the interests of the City. Section 3 prohibits a former City official or employee from performing work on a compensated basis relating to a discretionary contract if he personally and substantially participated in the negotiating or awarding of said contract for two (2) years. Section 4 prohibits a former City officer or employee from having a financial interest in a City contract for one (1) year.
In the matter before us, however, the attorney is not representing a third party before the City itself or before any of its agencies, boards, or bodies. The attorney seeks to represent the City as a party. The attorney’s client will not change as a result of the termination of employment: the attorney will continue to represent the City. He is not called upon to take sides against, or to influence the action of, or to compromise the confidences of his former client. It is clear that there is no conflict of continuing confidentiality where the Former Attorney represents the City both before and after the termination of his employment. Section 2(a) of the Code does not apply to such a circumstance. While it may be possible to imagine a circumstance where a former city attorney may be retained to represent the City before one of the City’s own organs, such as perhaps as a special prosecutor to appear in a Municipal Court, that is not the matter before us. Section 2 (b) does not apply for the same reason: he is not representing third parties, he is representing the City. We hold, as our opinion, that, in the matter before us, neither Part C, Section 2 (a) nor Part C, Section 2 (b) prevents continued representation by the attorney.
Part C, Section 2(c) proscribes representation in Litigation adverse to the City. If the attorney substantially participated in the litigation while employed by the City, he may not represent others in any litigation to which the City is a party if the interests of his clients are adverse to the City. In this case, the attorney will be called upon to work on the same matter upon which he was working before terminating his City service, but the matter mentioned in his application for an opinion, redistricting, does not at this time include litigation. Furthermore, in this matter the attorney’s post termination client will still be the City, so it is clear that a post employment representation does not contemplate actions adverse to the interests of the City. It is the Opinion of the Board that the former City Attorney’s continued representation of the City after termination of his City employment is not barred by Part C, Section 2(c) of the Code.
Part C, Section 3, Prior Participation in Negotiating or Awarding of Contracts, prohibits the individual for two (2) years (from the date of termination of his city employment) from performing work on a compensated basis that relates to a discretionary contract, if, prior to the termination of his City employment, he or she personally and substantially participated in the negotiation or awarding of that contract. There are two circumstances in which this might arise. The employee may have negotiated a discretionary contract on behalf of the City, in which case Part C, Section 3 prohibits the employee from terminating his employment and becoming re-employed by the party that was awarded the contract. Alternatively, the employee may have negotiated a discretionary contract for himself. In either case, there is an actual or apparent conflict of interest, and regardless of the terms of the discretionary contract, the transaction has the appearance of being substantially less than arms-length. To avoid the actual or apparent conflict, Part C, Section 3 prohibits the employee from working on a compensated basis under any discretionary contract he negotiated or awarded for two years. If the attorney negotiates a legal services contract between the City and an outside law firm, the attorney may not thereafter work for that law firm on a compensated basis performing legal work under that contract for two years. He may, however, work for the law firm and be compensated if he works for other clients. If the attorney negotiates a legal services contract between the City and himself while he is employed by the City, he may not thereafter work on a compensated basis under that contract for two years. On the other hand, if he terminates his city employment without negotiating a post termination retainer contract, but subsequently negotiates that retainer with the City, then Section 3 would not apply.
Part C, Section 4 does not concern the negotiation of, but rather defines impermissible interest in, discretionary contracts of almost all types. It prohibits a Former City Official or Employee from having a financial interest, direct or indirect, in any discretionary contract with the City for a period of one year from the date of termination. For the purposes of this section, a former City employee is defined as "any person who, prior to termination of employee status, was required to file a financial disclosure statement pursuant to Section 1(a) of Part G (Financial Disclosure Report)."
In this case, the former attorney’s retainer contract is a discretionary City contract, and one cannot imagine a contract in which the attorney would have a greater financial interest. However, Section 4 has a unique definition section. It specifically defines "contract" in that section as being any discretionary contract other than a contract for the personal services of the City Official or Employee. A retainer agreement for an attorney is a contract for the personal services of the attorney, so it falls within the specific exception. Accordingly, Section 4 does not prohibit the former City Attorney from negotiating with and being compensated by the City under a post termination retainer contract.
Conclusion. It is the Opinion of this board that the two year limitation of Part C does not prevent the former City Attorney from continuing to represent the City as he will not be called upon to compromise confidences of the City, will not be representing others in matters before the City or its various agencies, and will not represent third parties in court contrary to the interests of the City. Because he will continue to provide services directly to the City, Part C, Section 2 does not apply.
On behalf of the Ethics Review Board:
Elizabeth Benavides Melson Benjamin F. Youngblood
District 7 Appointee District 8 Appointee
District 10 Appointee