Who Should Pay for Attorney's Fees in Ethics Proceedings?

Anonymous

Thu, 04/28/2011 - 10:34

City Related

Update: September 17, 2011 (see below) 
 
<a href="http://www.stamfordadvocate.com/default/article/An-ethical-dilemma-Who-…; target="”_blank”">An
article
in yesterday's Stamford Advocate</a> keeps asking the question,
Who should pay? The article is referring to attorney's fees
related to an ethics proceeding. Most ethics codes do not deal with
this issue, and therefore it often turns into a big political
controversy after the fact,
leaving a bad taste in citizens' mouths, especially if they are
forced to foot the bill. 
 
For this reason, it should be clear from the start who pays, under what circumstances, and how much.

An Attorney's Role in an Ethics Proceeding 
It's worth noting what an attorney's role is in an ethics proceeding.
In the beginning stages, before an investigation begins, there is
nothing to do. Many, if not most, ethics complaints are dismissed at
this stage. 
 
The first thing an attorney does is help the official write a response to the complaint. Then, during an investigation, there is little else an attorney needs to do other
than, possibly, be present when her client is interviewed and negotiate
a settlement. And that settlement can include payment of attorney's
fees, as did a recent settlement in an ethics proceeding against a
member of Stamford's board of finance. But negotiating a settlement
should not run up much of a bill. 
 
Anything else, such as defending the official's reputation and filing
ethics complaints and judicial actions (as the Stamford board of
finance member did), is superfluous and should not be reimbursed under
any circumstances. 
 
An attorney's role expands if the ethics proceeding moves to the public
hearing stage, and there is true disagreement regarding the facts (so
that few facts can be stipulated to) and regarding the application of
ethics code provisions to the particular situation (this is
usually straightforward, although it was not in the Stamford case). 
 
It's important to recognize that an ethics proceeding, if handled
properly by both the respondent and the EC, is not a life-and-death
matter. Fines are usually limited or unavailable, and in most jurisdictions there is
no chance of jail time, a criminal record, suspension, or removal from
office (a jurisdiction that criminalizes ethics should recognize that
this might greatly increase requests for attorney's fees). In other
words, in the great majority of cases, attorney's fees for a possible
$1,000 fine, or even, as in Stamford, just a reprimand, should not be
tens of thousands of dollars. Anyone who believes he might have to pay
for attorney's fees would settle the case or argue it himself,
especially considering that ethics proceedings are usually
administrative in nature, which means that the evidentiary aspects are
relatively easy to handle. They are not trials and require little legal
expertise. 
 
One can argue that one's reputation cannot be given a value, but if one
handles an ethics complaint responsibly, there should be no serious
harm to one's reputation. If one simply denies and fights back, that is
a personal decision that should not be funded by the public. 
 
And yet, another Stamford board of finance member was recompensed for
$30,000 in legal fees even though the complaint against him was
dismissed relatively early on. It is hard to believe that most of these fees were
necessary. The board of finance member who filed ethics complaints
and a judicial action says that he ran up over $100,000 in attorney's
fees. This is outrageous. And it is ironic that someone known as a
fiscal watchdog could be so extravagant when it came to, in his
opinion, his reputation. This shows how much his attacks on city
officials were more about him than about saving taxpayers money. 
 
Local Government Payment of Attorney's Fees 
The City Ethics Model Code deals with attorney's fees in two instances.
With respect to an ethics proceeding, <a href="http://www.cityethics.org/content/full-text-model-ethics-code#0.1_TOC81…; target="”_blank”">§213.14</a>
requires the local government to pay a respondent's reasonable
attorney's fees
only "if the Ethics Commission finds that a complaint was filed with
the knowledge that it is without foundation in fact," and only up to a
certain dollar amount. This protects officials from having to pay to
defend themselves against frivolous complaints (with "frivolous"
defined more clearly). 
 
Any provision for attorney's fees should, like the City Ethics Model
Code, contain two
elements: a dollar limit and the word "reasonable" before
"attorney's fees." If an official files countercomplaints and court
suits, as the Stamford board of finance member did, these should be
considered unreasonable and not be paid by the government. If the
official
spends an inordinate amount on legal representation, she should have to
prove that the expenditures were reasonable.
 
 
Some jurisdictions provide for the payment of attorney's fees in every
case, either in laws or regulations, or via historical
precedent. But it is more common to provide for the payment of
attorney's fees only when a violation is not found. This seems
fair to an official who is not found to have violated an ethics provision,
until one realizes that there are many other ways to end a
proceeding without finding there was a violation,
including a settlement, resignation, dismissal on a technicality, the
running of
time limits, an injunction based on constitutional or other issues, and
even threats of lawsuits (or actual lawsuits) against the commission,
its members, or the complainant (who then asks that the proceeding be
dismissed). In all of these situations, the official might have
violated the code, and yet he has an incentive to prevent such a
finding, knowing that the EC has limited resources and cannot afford to
hold out for a finding of a violation. Remember, the official's
attorney's fees wouldn't come out of the EC budget, so the EC's interests with respect to attorney's fees would differ from the local government's. 
 
If an ethics complaint is dismissed because it does not state a
possible violation, a good argument could be made that attorney's fees
should be paid to the respondent, but since this is the first step in a
proceeding, there should be hardly any
attorney's fees at all. Respondents should be alerted to the strong
possibility that a complaint will be dismissed without any action by
the respondent. The respondent need not be in a rush to file a lengthy response, as long as there aren't overly short time requirements. 
 
Government Protection or Indemnification of Its Officials 
There is another sort of law that sometimes comes into play in determining who
pays for attorney's fees in ethics and related proceedings: the
government protection of local
officials and employees statute. Here is <a href="http://www.cga.ct.gov/2011/pub/chap097.htm#Sec7-101a.htm" name="Sec7-101a.htm" target="”_blank”">the one in Connecticut</a> that a
Stamford official's attorney said required his client's reimbursement:<ul>

Sec. 7-101a. Protection of municipal
officers and municipal employees from damage suits. Reimbursement of
defense expenses. Liability insurance. Time limit for filing notice and
commencement of action. (a) Each municipality
shall protect and save harmless any municipal officer, whether elected
or appointed ... from financial loss and expense, including legal fees
and costs, if any, arising out of any claim, demand, suit or judgment
by reason of alleged negligence, or for alleged infringement of any
person's civil rights, on the part of such officer or such employee
while acting in the discharge of his duties. 
 
(b) In addition..., each municipality shall protect and save harmless
any such municipal officer or municipal employee from financial loss
and expense, including legal fees and costs, if any, arising out of any
claim, demand or suit instituted against such officer or employee by
reason of alleged malicious, wanton or wilful act or ultra vires act,
on the part of such officer or employee while acting in the discharge
of his duties. In the event such officer or employee has a judgment
entered against him for a malicious, wanton or wilful act in a court of
law, such municipality shall be reimbursed by such officer or employee
for expenses it incurred in providing such defense and shall not be
held liable to such officer and employee for any financial loss or
expense resulting from such act.</ul>

How do these provisions apply to an ethics proceeding? Is dealing
irresponsibly with a conflict an act of negligence, or is it a
malicious, wanton or wilful act (it would not be an ultra vires act,
since participation in a government matter is not beyond the official's
powers)? Some ethics provisions do require intent, but this language
("malicious, wanton or wilful") certainly does not seem to apply to
ethics violations. Nor are ethics violations negligent, except to the
extent an official ignored ethics requirements. 
 
Therefore, I don't think this statutory section applies, but it is
possible that a court would disagree, and certainly possible that a
local government would pay its official's attorney's fees pursuant to
such a statute. And, in any event, local governments usually insure
their officials against suits brought against them, and it is possible
that the insurance language may, at least arguably, include ethics
complaints. Like so many problems in today's world, this one could boil
down to insurance coverage. In a municipality where ethics proceedings
are insured, officials could run up huge bills fighting an ethics
commission, thereby making the ethics program appear too expensive and
open for attack. 
 
Complainant Payment of Attorney's Fees 
Another approach is to force the complainant to pay attorney's fees if
a complaint is dismissed. This is popular with officials, because it is
the easiest way to prevent complaints from being filed. No matter how
certain a complainant is about the facts, he has no control over how
the code is interpreted or how the proceeding ends. Too many things are
outside a complainant's control for anyone to file a complaint knowing
that it might cost him many thousands or even tens of thousands of
dollars. 
 
More often, a complainant is required to pay attorney's fees only if a
complaint is found to be without any foundation in fact. Or in such a case, the
respondent is expressly permitted to sue the complainant for attorney's
fees or even damages, the approach taken in <a href="http://www.cityethics.org/content/full-text-model-ethics-code#0.1_TOC81…; target="”_blank”">City
Ethics
Model Code §213.13</a>. 
 
It is important to severely
limit requirements on a complainant to pay a respondent's costs,
because the last thing an ethics program
should do is make it hard for even questionable complaints to be filed.
Often complainants do not have access to much information, but have a
reasonable belief that something is wrong. Such a complainant may
have few facts and little understanding of government ethics. After
all, most government officials have a poor understanding of government ethics,
so why should complainants be penalized for having the same level of
understanding? 
 
In such situations, an
investigation is needed to find out what is going on, and often an
investigation leads to amending a complaint or even adding allegations.
In a jurisdiction that allows anonymous tips and the filing of
complaints by the ethics commission, there is far less need for
complainants to file complaints with limited knowledge. This is a good
argument for allowing anonymous tips and EC-initiated complaints, two
things that most government officials do not like. It might be worth
trading attorney's fees for these two provisions, since complainants
with little information would be less likely to file poor complaints,
and the EC could recommend that a poor complaint be withdrawn in favor
of a tip to be investigated at the EC's discretion. 
 
Government Attorney Representation of Respondents 
Another approach is to allow respondents in ethics proceedings to be
represented by the city or county attorney's office. This is less
expensive for the local government, but it raises other problems,
including conflicts. First of all, in many cases it would require the
government to represent an official's personal interest against the
public interest that the government attorney is pledged to protect.
This puts the government attorney in a seriously conflicted position. I
don't think it is right to ask this of anyone. 
 
Second, if the government attorney advised the official on the matter,
and the official did not follow the advice, how can the government
attorney represent that official? 
 
Third, in many cases the city or county attorney's office represents
the ethics commission. Would it be fair to have the only person in the
office with ethics expertise represent the official, while the ethics
commission has to try to find someone with equivalent expertise, which
is not easy to do? This would also raise a legal conflict situation,
where an attorney is faced with representing a client in a matter
before, or even argued by, his longstanding client. 
 
This exacerbates what is already a difficult situation. In the Stamford
situation, for example, even without representing the official in the
proceeding, the corporation counsel withdrew from the matter, so that
the ethics commission was forced to hire outside counsel. 
 
And in some jurisdictions, the city or county attorney is charged with
bringing criminal charges for ethics violations, which certainly
prevents them from representing the official being charged. 
 
Some Final Thoughts 
One thing I find fascinating about arguments regarding attorney's fees
is that people rarely argue for a local government to pay for the
complainant's fees, or for a city or county attorney to represent the
complainant, even if the complainant is a government official or
employee, as is the case in Stamford. Complainants can spend money
investigating and writing a complaint, and they are often named in
suits, and interviewed and questioned in hearings just as respondents
are. 
 
Assuming there was a violation, they are providing a better
service to the community than an official who has arguably violated the
ethics code. This is why <a href="http://www.cityethics.org/content/full-text-model-ethics-code#0.1_TOC67…; target="”_blank”">City
Ethics
Model Code §110.2</a> provides for attorney's fees in a
suit by a whistleblower who has been threatened, dismissed, etc. 
 
Maricopa County, AZ, a spider's-nest of a local government,
has <a href="http://www.maricopa.gov/pr_detail.aspx?releaseID=1238" target="”_blank”">a
recent "Talk First, Sue Later" rule</a> that requires elected
officials, when engaged in disputes with other county officials, to try
alternative dispute resolution methods before filing a suit. And if
they file a suit, their department or agency must cover their
own legal fees; no money may come from the county's general fund. This
rule, which is a response to myriad intra-government disputes, would
mean that no attorney's fees would have been awarded
in Stamford. 
 
Update: September 17, 2011 
According to <a href="http://www.stamfordadvocate.com/news/article/Stamford-legal-fee-questio…; target="”_blank”">an article in the Stamford Advocate this week</a>, the city is seeking a court determination of its obligation to pay the attorney's fees of the board of finance member who filed a suit against and then reached a settlement with the city's ethics board, and of a respondent council member whose ethics complaint was dismissed. 
 
Robert Wechsler 
Director of Research-Retired, City Ethics 
 
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Who Should Pay for Attorney's Fees in Ethics Proceedings?

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