Local elected officials come from all walks of life. Farmers, teachers, architects, car dealers, insurance agents, realtors . . . you name the occupation and it’s a sure bet someone with that experience is serving on a city council or a board of county commissioners somewhere in North Carolina.
Board members from different professions create opportunities and challenges for local governments and the attorneys who represent them. This is especially true when an attorney is elected to a local governing board. In addition to traditional conflict of interest laws applicable to all elected officials, attorneys serving on local boards need to worry how the North Carolina Rules of Professional Conduct might limit their actions.
My colleague Frayda Bluestein expertly summarizes North Carolina’s conflict of interest provisions for local officials here. At the risk of over simplifying things, for purposes of this blog post I’ll boil down Frayda’s detailed analysis to one sentence: state law limits a local government board member’s obligation and authority to vote on any matter in which the member’s personal interest—usually but not always financial—potentially conflicts with the interest of that local government.
As for the ethical rules governing attorney board members, remember that when an attorney serves on a local government’s governing board that local government is not the attorney’s client. This means we’re not primarily concerned with the typical conflict between two different clients that is the subject of many of the North Carolina Rules of Professional Conduct . Instead, an attorney board member needs to worry about conflicts between the attorney’s obligations as an elected official and the interests of that attorney’s clients, legal colleagues, and competitors.
Here’s how I think these ethics rules and North Carolina’s conflict of interest laws govern some common scenarios involving attorney board members. To simplify the hypothetical descriptions, assume for all of them that Attorney Ann is both a partner in the Dean & Roy law firm and serves on the Tar Heel Town Council. (The analysis would be identical if Ann served on the board of county commissioners, albeit with different citations as noted below).
1. Tar Heel Town considers retaining Ann’s law firm to represent the town.
This relationship is permitted only under limited circumstances.
G.S. 14-234 prohibits contracts between a local government and a board member of that local government. However, the statute applies only if the board member derives any income directly from the contract or if she owns more than 10% of the firm that is contracting with the local government.
Even if G.S. 14-234 applies to a given contract there are a number of exceptions to its prohibitions. One major exception is for contracts worth less than $40,000 annually with “small jurisdictions,” defined as cities with no more than 15,000 residents and counties that have no cities with no more than 15,000 residents.
If G.S. 14-234 applies to a particular contract that does not meet any of the statute’s exceptions, then that contract would be illegal and void and the board member who benefited from such a contract could be prosecuted for a misdemeanor violation.
When analyzing a potential contract between Tar Heel Town and Ann’s law firm, we’d need to know both Ann’s ownership interest in the Dean & Roy law firm and the town’s population. Assuming that the contract did not violate G.S. 14-234, the town could retain Ann’s law firm but Ann would be prohibited from publicly commenting or voting on the proposed contract. See G.S. 153A-44 (counties), G.S. 160A-75 (cities), and N.C. State Bar RPC 130 (1992), which overruled a portion of CPR 290 (1981). (It’s not possible to link to individual ethics opinions on the State Bar website, but you can easily search by opinion number here.)
2. Ann’s law firm represents clients appearing before the Tar Heel Town Council.
This is permitted, but Ann must disclose her relationship to the Dean & Roy law firm and should not comment on the matter, attend meetings at which the matter is discussed, or vote on the matter. See G.S. 153A-44 (counties), G.S. 160-75 (cities), and N.C. State Bar CPR 290 (1981).
3. Ann’s law firm represents a client suing Tar Heel Town.
This is permitted if screening occurs on both sides. A local government board member’s law firm may be adverse to that local government so long as the board member is excluded from participation in the matter by both the town and the law firm. See N.C. State Bar 2002 Formal Ethics Opinion 2, which overruled RPC 160 (1994). One caveat: if a lawsuit names the board member as an individual in addition to naming the member in her official capacity, the conflicting representation may not be permitted.
In our hypothetical, Ann could not participate in town council discussions or votes on the matter nor could she be involved with Dean & Roy’s representation or the fees generated by that representation.
4. Ann represents another local government while serving on the Tar Heel Town Council.
Ann can continue to represent clients while serving on the board, including other local governments, but she needs to be wary of the potential conflicts that could arise. Is Ann representing the county in which Tar Heel Town resides? Is Ann’s client a town 200 miles away from Tar Heel Town? The closer in proximity, the more likely a conflict will arise between Ann’s personal interest in serving Tar Heel Town and her professional obligation to the other local government she represents. If such a conflict arose, Ann would need to choose between continuing to serve on the Tar Heel Town Council and continuing to represent the other local government. See N.C. Rule of Professional Conduct 1.7.
What’s more, Ann may not use her influence as an elected official to give any of her clients special advantage when “it is obvious that such action is not in the public interest.” See N.C. Rule of Professional Conduct 6.6. Nor may Ann or her partners boast of an ability to influence Tar Heel Town officials to benefit Dean & Roy’s clients. See N.C. Rule of Professional Conduct 8.4. This means Ann’s partners should not use Ann’s role as an elected official to attract new clients (although law firms implicitly do this all of the time when they brag about having former elected officials on staff).
5. After Ann leaves office, she represents a client adverse to Tar Heel Town.
This is permissible so long as Ann does not use confidential information she obtained solely because of her role on the Tar Heel Town council and the matter is not one in which she participated personally and substantially while serving on the council. G.S. 14-234.1 and N.C. Rule of Professional Conduct 1.11.