Lawyer-Client Confidentiality and Money Laundering
The arrest of New York state senate majority leader Sheldon Silver
points to an ongoing institutional problem that is not limited to
New York state: the law firm as the perfect place to launder money.
The reason for this is that lawyer-client
confidentiality, at least as it is often practiced, allows a law firm, and the public office holders who are part of or do work for it, to keep its
clients, its services, its receipts, and its payments secret. <br>
<br>
According to <a href="http://graphics8.nytimes.com/packages/pdf/nyregion/2015/20150123_silver…; target="”_blank”">
the complaint</a>, dated January 21, Silver has been accused of using
his position to give himself millions of dollars in kickbacks and
bribes, most of which went through two law firms with which he is
affiliated. What were called "attorney referral fees" came from
clients with substantial business before the state and, according to
the complaint, "not as a result of legitimate outside income Silver
earned as a private lawyer." Even legitimate and semi-legitimate
outside income earned from those seeking special benefits from the
government can be problematic.<br>
<br>
Some law firms, as well as New York state representatives, led by
Silver, fought to prevent the state's Moreland Commission from
getting access to the names of their clients (not to mention the
work done for them), insisting wrongly that they were protected by
lawyer-client confidentiality (see my <a href="http://www.cityethics.org/content/law-firm-turns-logical-fallacies-defe…; target="”_blank”">November
2013 blog post</a> on this).<br>
<br>
This problem needs to be dealt with. The legal profession is not so
special that (1) it can have the same level of secrecy as doctors
and clergy and (2) be the principal profession in public service.
These extremes of private and public undermine transparency and
allow for the appearance and reality of impropriety.<br>
<br>
If a practicing lawyer wants to serve in a high public office, she
should, before she runs or accepts an appointed position, get
permission — from all her clients that seek special benefits from
the government, agency, or body which the lawyer will serve — to
make public their names and payments to the lawyer or firm, and what
work, in general, the payments are for. If a client chooses not to
waive this level of confidentiality, then the lawyer should be required to choose
between the position and the client. That is, after all, how a lawyer deals with a conflict of interest. It does not matter whether or
not the lawyer represents the client before the particular
government, agency, or body, only whether the client has an interest
which the lawyer could aid due to her public office.<br>
<br>
At the local level, this would apply only to mayors and county
executives, local legislators, and members of important boards and
commissions. It would certainly mean fewer lawyers would serve in
such offices, but there are more than enough lawyers working for the
government to provide legal advice to those non-lawyers who serve.<br>
<br>
There is little doubt that the Silver case is an extreme example,
since he appears to have done no legal work at all and used his
position to hide this fact. But I do not think that this is a case
of an isolated individual. I think this is an institutional problem
that the legal profession and governments at all levels need to acknowledge
and deal with.<br>
<br>
Is the approach I suggest above at least worth a few experiments, to see what
happens?<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
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