2014-04 (April 22, 2014)
Transition to the Bench
Rules 1.2, 1.3, 3.10 and
3.11, and Application Section of the Code of
Judicial Conduct
Issue: May a Judicial
Nominee’s law firm remain in existence and retain
its name on a bank account after the Nominee is
confirmed solely for purposes of receiving payments
for previously provided services?
Additional Facts:
A Judicial Nominee is a
named partner in a small firm that is organized as a
closely held professional corporation wherein the
Nominee is the sole shareholder. Once the
Nominee is confirmed, the firm will cease to
practice law (the other attorneys will be joining
other firms). The firm is owed money which is
automatically paid by institutional clients on a
monthly basis for work previously performed.
Payments will continue for approximately one year
and a lawyer other than the Nominee will receive and
distribute the payments.
Response:
The Application section of the
Code states, with respect to the time for
compliance, as follows:
A person to whom this Code
becomes applicable shall comply immediately with its
provisions, except that those judges to whom Rules
3.8 (Appointments to Fiduciary Positions) and 3.11
(Financial, Business, or Remunerative Activities)
apply shall comply with those Rules as soon as
reasonably possible, but in no event later than one
year after the Code becomes applicable to the judge.
The Comment to the foregoing provision states as
follows:
If serving as a fiduciary when
selected as judge, a new judge may, notwithstanding
the prohibitions in Rule 3.8, continue to serve as
fiduciary, but only for that period of time
necessary to avoid serious adverse consequences to
the beneficiaries of the fiduciary relationship and
in no event longer than one year. Similarly, if
engaged at the time of judicial selection in a
business activity, a new judge may, notwithstanding
the prohibitions in Rule 3.11, continue in that
activity for a reasonable period but in no event
longer than one year.
Rule 1.2 states that a judge
"should act at all times in a manner that promotes
public confidence in the … impartiality of the
judiciary, and shall avoid impropriety and the
appearance of impropriety. The test for
appearance of impropriety is whether the conduct
would create in reasonable minds a perception that
the judge violated this Code or engaged in other
conduct that reflects adversely on the judge’s
honesty, impartiality, temperament, or fitness to
serve as a judge."Rule 1.3 states
"A judge shall not use or attempt to use the
prestige of judicial office to advance the personal
or economic interests of the judge or others or
allow others to do so."
Rule 3.10 states “Except as
provided herein, a judge shall not practice law….”
Rule 3.11 states that a judge
may hold and manage investments of the judge and
family members but limits the circumstances under
which a judge may serve as an officer, director,
manager, general partner or advisor to a business
entity, to a business closely held by the judge or
members of the judge’s family or a business entity
primarily engaged in investments of the financial
resources of the judge of members of the judge’s
family. A judge is further prohibited from
engaging in the foregoing otherwise permissible
activities if it will interfere with the proper
performance of judicial duties, lead to frequent
disqualifications, involve the judge in frequent
transactions with lawyers or others likely to come
before the court on which the judge serves, or
result in a violation of other provisions of the
Code.
Based upon the facts
presented, including that the firm would cease to
practice law and the only payments are automatic
payments from institutional clients, and having
considered opinions from New York, South Carolina
and Florida,[1] the Committee
unanimously determined that the firm name and bank
account may remain in existence for a period of time
not to exceed one year subject to the following
conditions:
- The Nominee’s firm is not held out to the public as being in existence;
- There is a written agreement as to how the funds that are
received are to be distributed;
- Clients are notified that the firm is dissolved but
that payments are to continue to be made in the firm name; and
- Payments are received only for work done prior to the Nominee’s confirmation.
[1] In rendering its
opinion, the Committee considered the following
advisory opinions: New York Opinion 05-130(A) (a new
judge is not required to immediately dissolve the
professional corporation constituting the judge’s
law practice and the judge may remain a shareholder
"solely for the purpose of winding up its affairs,
including collecting fees"); South Carolina Opinion
No. 13-1996 (a newly elected judge who was a sole
shareholder of a professional association that
formerly served as his law practice could manage the
association until the end of the year to collect
accounts receivable and facilitate the closing of
the association); Florida JEAC Opinion 2006-31 (a
judge and the judge’s former law partner may
continue to maintain a partnership account after the
judge assumes office for purposes of receiving fees
due the partnership for work performed prior to the
judge’s election provided the firm is formally
dissolved, maintenance of the account is solely for
purposes of winding up partnership business, the
account is closed within a reasonable time, and no
professional services are provided after the judge
assumes office); but see Florida JEAC Opinion
2006-01 (a professional association should change
its status or be dissolved prior to the date a newly
appointed judge takes the bench; however, the
professional association’s operating account may
remain open but should reflect the status of the new
entity established before the judge takes the
bench).
Committee on Judicial Ethics
