### Application of Conflict of Interest Rules to the Conduct of

Government Litigation by Private Attorneys

W h eth er the A m erican Bar A ssociation's C o d e o f Professional R esponsibility w ould bar private attorneys, retained as co n tracto rs to represent the interests o f the U nited States in railroad litigation, from sim ultaneously representing o th e r parties w hose interests are ad verse to those o f the U nited States, depends on the facts o f each situation.

E thical constraints on private atto rn ey s retained to co n d u ct railroad litigation on behalf o f the U nited States d o not end w ith the term ination o f the railroad litigation itself.

T h e m aking o f litigation ju d g m en ts is a function at the co re o f the P resident’s A rticle IIdu ty to take care that the law s be faithfully executed, and m ust, therefore, be p erform ed by those w h o serve under, and are responsible ultim ately to, the President.

T h e scope o f ethical restraints on private atto rn ey s retained by the U nited States depends upon extent of

necessary interaction w ith and supervision by governm ent officials; if close interaction and supervision can be anticipated, likelihood o f ethical problem s developing increases.

A ppendix identifies and discusses issues und er the conflict o f interest law s applicable to the tem p o rary appointm ent o f an atto rn ey in private p ractice as a g overnm ent attorney.

February 22, 1980

M EM ORAND UM O PIN IO N FOR T H E SPEC IA L A SSISTA N T

TO T H E A TTO RN EY G E N E R A L

This responds to your request for our discussion of the possible application of the American Bar Association’s Code of Professional Responsibility (ABA Code) to a transfer of litigation from the United States Railway Association (USRA) to a department or agency, such as the Department of Justice. This issue has arisen in the course of this D epartm ent’s preparation of a feasibility study for Congress on the transfer of U SRA ’s litigation to an agency of the government. This Office has written tw o earlier memoranda that bear on that subject.1 At this time, you have requested our discussion of the following question. Assuming that USRA is abolished and its litigation were transferred

1 One memorandum deall directly with the issue of possibly transferring U SR A ’s litigation to the Deparim ent of Justice. See memorandum of April 11, 1979, for the Deputy Associate A ttorneyGeneral, “ Possibility of Transferring the Litigating Functions of the United Stales Railway Association to the D epartm ent o f Justice." A second memorandum discussed at a general level the application o f conflict of interest statutes and principles to the conduct o f governm ent litigation by private
counsel. See memorandum of M arch 23, 1979, for the Deputy Associate A ttorney General, “Questions Raised by Proposed Appointment of Law yer in Private Practice as a G overnm ent Attorney for Purposes o f Trying Selected Civil Cases." [Note: The M arch 23, 1979, memorandum is published as an appendix to this opinion at p. 441, infra. Ed.)



### 434pursuant to statute to the Department of Justice, and assuming that the Department received authority to hire private attorneys as contractors to represent the interests of the United States in litigation,2 would the Code bar such private attorneys from simultaneously representing in other litigation corporations or other parties whose interests are adverse

to those of the United States? We should stress at the outset that the application of the ABA Code in this situation, as in others, depends on the particular facts of eachcase. O f crucial importance, of course, is the nature of the representation which the private attorneys may seek to undertake or have already undertaken. These facts are, in the first instance, peculiarly within the knowledge of the private attorneys. Therefore, in this discussion we can only identify the general principles that would apply in a particular

case. Three of the ABA Code’s canons of ethics may bear on a situation in which a private attorney is to be engaged as an independent contractor of the Department to conduct railroad litigation. Canon 4 provides that a lawyer should preserve the confidences and secrets of a client learned while representing the client. Canon 5 establishes that a lawyer should exercise independent professional judgm ent on behalf of a client. In particular, such judgment should be exercised “solely for the benefit of [the] client and free of compromising influences and loyalties.” Ethical Consideration 5-1. Canon 9 directs that a lawyer should avoid even the appearance of professional impropriety. We will focus here on Canon 5. It states explicitly the principle that is most directly relevant to yourquestion, namely, that an attorney should not compromise his independent professional judgm ent by “serving two masters” and is obligated to represent each client with undivided loyalty. The applicable disciplinary rule, DR 5-105, reads as follows:

(A) A lawyer shall decline proffered employment ifthe exercise of his independent professional judgment in behalf of a client will be or is likely to beadversely affected by the acceptance of the proffered employment, or if it would be likely to involve him in representing differing interests, except to the extent permitted under D R 5- 105(C).

2 We believe lhat under existing statutes the Attorney General would not have such authority. The issues surrounding the authority o f the Attorney General to hire counsel outside the Departm ent, and the A ttorney G eneral's duty to supervise litigation involving the interests of the United States, are discussed in our April II, 1979, memorandum for the Deputy Associate A ttorney General.



### 435(B) A lawyer shall not continue multiple employment if the exercise of his independent professional judgm ent in behalf of a client will be or islikely to be adversely affected by his representation of another client, or if it would be likely to involve him in representing differing interests, except to the extent permitted under DR 5- 105(C).
(C) In the situations covered by DR 5 -105(A) and (B), a lawyer may represent multiple clients if it is obvious that he can adequately represent theinterest of each and if each consents to the representation after full disclosure of the possible effect of such representation on the exercise of his independent professional judgm ent on behalf
of each.
(D) If a lawyer is required to decline employment orto w ithdraw from employment under a Disciplinary Rule, no partner, or associate, or any other lawyer affiliated with him or his firm, may accept or continue such employment.

The foregoing rule establishes a two-part analysis for determiningwhether, in a particular case, an exception may be made to the principle that a lawyer should not represent multiple clients with “differing interests” :3 (1) it must be “obvious” that the lawyer can “adequately” represent each client’s interest, and (2) each client must consent to the representation after full disclosure of the facts. This two-part analysis is also reflected in the proposed rules of professional conduct, not yet adopted by the ABA, which were circulated at the ABA mid-wintermeeting in a discussion draft dated January 30, 1980. That draft enunciates the basic principle that “a lawyer may not act as advocate against a person the lawyer represents in some other matter, even if the litigation is wholly unrelated.” {Id. at p. 29.) The draft goes on to say, however, that “. . . there are circumstances in which a lawyer may act as advocate against a client. For example, a lawyer engaged in a suitagainst a large corporation with diverse operations may accept employment by the corporation in an unrelated m atter if doing so will not affect the lawyer’s conduct of the suit and if both the litigant and the corporation consent upon adequate disclosure.” {Id.) Accordingly, theproposed ethical rules maintain both the requirement that dual representation would “not affect the lawyer’s conduct of the suit” and, thus,

3 T he phrase, “differing interests,” is defined rather broadly in the ABA Code. It includes “every interest that will adversely affect either the judgm ent or the loyally o f a lawyer to a client, w hether it be a conflicting, inconsistent, diverse, or other interest."



### 436that the lawyer can adequately represent the client’s interests and the requirement that each client must consent to such representation.The principles of Canon 5 would apply to the government’s independent contractor that sought simultaneously to represent both theUnited States, and in other litigation another party with interests adverse to those of the United States. In such a situation, a court will consider not just whether the two matters as to which simultaneous representation is to be undertaken are substantially related, but also whether “the duty of undivided loyalty which an attorney owes to each of his clients” may be discharged. Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d 1384, 1385-87 (2d Cir. 1976). At a minimum, a court would normally expect that participation in a lawsuit against a client, orsimilar adverse representation, had been fully disclosed to and consented to by all concerned clients. See id. at 1386; see also IB M v. Levin, 579 F.2d 271, 280 (3d Cir. 1978) (an attorney “must resolve all doubts in favor of full disclosure to a client of the facts o f the attorney’s concurrent representation of another client in a lawsuit against him.”). Moreover, a court may well take an independent look at the underlying facts of the dual representation. As the Court of Appeals for the
Second Circuit has written:

Where the relationship is a continuing one, adverse representation is prima facie improper . . . and the attorney must be prepared to show, at the very least, that there
will be no actual or apparent conflict in loyalties or diminution in the vigor of his representation.4 In view of these principles, as a practical matter tw o different steps would have to be taken in the present situation. First, before any private firm were retained to represent the United States in the railroad litigation, it would be necessary for the United States to know aboutcases—involving litigation, counseling or other aspects of representation—that the firm presently has in which the interests of the United States in the railroad litigation would be implicated. Then, each of thecases should be studied in order to determine w hether the representation called for by them would make it unlikely that the private attorneys could also represent with undivided loyalty the interests of the United States in the railroad litigation. If agencies or instrumentalitiesof the United States other than the Department of Justice were involved in the firm’s other cases, those agencies should be consulted in determining w hether a conflict of interest would arise from engaging the firm in the railroad litigation. Second, both the United States and the law firm’s other present clients would have to agree to its representation of the United States in the railroad litigation. And, whenever the firm sought to engage a new

4 Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d 1384, 1387 (2d Cir. 1976) (emphasis in original).



### 437client in a m atter involving the United States, the firm would have an

obligation to inform the United States of that fact. In that way, the
United States would be able to determine w hether it should continue to consent to representation by the private attorneys of its interests in the railroad litigation. Also, the ethical constraints would not end with the termination of the railroad litigation itself. Even after the attorney-client relationship between private attorneys and the United States ended, the private attorneys would be bound not to reveal confidences of the United States gained as its lawyer. The “clearly settled test” in disqualificationmatters where the adverse party is the attorney’s former client is the socalled “substantial relationship” test: “ . . . the attorney will bedisqualified if the subject m atter of the tw o representations are ‘substantially related.’ ” Westinghouse Elec. Corp. v. G u lf O il Corp., 588 F.2d 221, 223 (7th Cir. 1978); see also T.C. & Theatre Corp. v. Warner Bros. Pictures, Inc., 113 F. Supp. 265, 268 (S.D.N.Y. 1953). This test “embodies the substance of Canons 4 and 9 of the ABA Code of Professional Responsibility,” 588 F.2d at 224. It turns on “the possibility, or appearance thereof, that confidential information might have been givento the attorney in relation to the subsequent m atter in which disqualification is sought.” Id.; see also Westinghouse Elec. Corp. v. Kerr-McGee Corp., 580 F.2d 1311, 1322 (7th Cir. 1978).5 In addition to the foregoing, we think a word is in order on a related, but somewhat distinct, set of issues. There has always been in this Office a basic question w hether it is appropriate for the Attorney General (or the President) to contract out the litigation responsibility of the United States. The question has both a constitutional and a policy aspect. First, on the constitutional level, we have long asserted that the making of litigation judgm ents (variously described as prosecutorial discretion or litigation management) is a function at the core of the President’s Article II duty to take care that the laws be faithfully executed, and must, therefore, be performed by those who serve under, and are responsible ultimately to, the President. Second, on the policylevel, we have enunciated the view that the performance of this function is best assured by centralizing all litigation in one agency underone Cabinet official. W e have long defended the essentiality of A ttorney General “supervision” and “control” of litigation involving the
United States. O f course, at the same time, this Departm ent has often acknowledged the merit—or at least the tolerability—of allowing the independent regulatory commissions and government chartered corporations to

* A num ber o f steps should also be taken by a law firm during the course o f representing the United States to protect any confidences gained during that representation from other attorneys in the firm w ho may be involved in cases involving the United States, such as assuring that the files o f the railroad case will only be accessible to certain attorneys and those attorneys will have no contacts w ith others in the firm with respect to other cases involving the United States.



### 438retain independent litigating authtirity. (Indeed, USRA was one of these independent entities.) O ur acceptance of that independence has grown out of an appreciation of the rather distinct nature of these entities; they were created by Congress to function to some extent beyond the control of the President. As long as their functions are not controllable in the normal manner by the Executive Branch, it makes at least reasonably good sense to allow their litigation judgments to go forward outside the President’s and the Attorney General’s control. However, the abolition of the independent entity and its incorporation into the structure of the Executive Branch would remove the only legitimate traditional reason for independent litigation responsibility. If the USRA is to be no longer a party to the litigation, and if the United States is to be the only party having an interest in the outcome of the pending valuation cases, our knee jerk response ordinarily would be that there is no cause for having lawyers other than those supervised by the Attorney General making the litigation judgments and arguing the United States’ cause in court. The question you have posed as an ethical issue has, candidly, given us considerable concern because it involves a proposal that is alien to our experience and contrary to this Departm ent’s usual stance on questions of litigation supervision. How can a lawyer represent the United States in court if he or she is not accountable to the United States? How can that lawyer divine w hether the position he or she intends to take in court—both on questions of procedure and substance—is the view of the United States? At the least, unless there is central supervisory authority, the positions taken in these cases could only reflect the position of the United States in these cases and not in other cases litigated by this Department. Our study of the ethical question you posed has led us to the viewthat the ethical inquiry inevitably merges with these overarching questions of policy. They merge for this reason: The extent to which a private lawyer or firm can both represent the United States and litigate against it may depend upon the extent to which the work done on behalf of the United States can take place in a sterile environmentremoved from the usual exchange of information and personal interchange that characterizes our litigation practice. That is, if the representational activity could be performed without consultation and exchange within this Department, it might be fairly easy to conclude that
there is less reason to believe that client confidences will be misused or that loyalty will be undercut. The fully independent contractor probably
fits well within that structure. Such a contractor would receive an assignment and carry it out without further input or second-guessing by the Department. Thus, if we were to retain a law firm to perform a study on behalf of the Department, the performance of that segregable activity would probably not jeopardize the firm’s ability to litigate against this Departm ent in cases unrelated to that subject matter.



### 439The question that we find especially troubling here is whether that

same firm can, realistically and consistently with our traditional understanding of the role of this Department, undertake a contract to litigate on behalf of the United States that will not force it to interact closely with this Department. If the answer is that interaction and supervision are to be anticipated, then to that extent the likelihood of ethical problems correspondingly increases. In this same vein, one additional point should be reemphasized. It will not suffice for this Department alone to make the judgm ents w hether ethical problems appear in other cases in which the lawyer or firm may be involved. In those cases the views of our client agencies will have to be seriously evaluated, and we see no way in advance of consultation with those agencies that this Departm ent can pass on w hether disqualification would be required in

some other cases. The question you raise is obviously a difficult one, and we would not want our discussion here to suggest that the ethical dilemma presents an insurmountable obstacle. We would be pleased to address this question

further as more concrete facts become available.

L a r r y A . H a m m o n d 

### Acting Assistant Attorney General Office of Legal Counsel

440A PPEN D IX

M arch 23, 1979

M EM ORANDUM O PIN IO N FO R T H E D EPU TY A SSO CIA TE

A TTO RN EY G E N E R A L

This responds to your request for advice regarding problems that
would be raised under the conflict of interest laws in connection with a proposed temporary appointment of a lawyer (L) in private practice as a government attorney for the purpose of trying selected civil cases. You stated that a number of alternatives are being considered: service with or without compensation, on a part- or full-time basis, with or without continuing affiliation with a private firm, for a period of time of a few months to about two years. In this memorandum we discuss the principal questions raised by these alternative proposals: (1) whether the lawyer may be hired as an independent contractor rather than as a government employee; (2) the compensation he can be paid; (3) the extent to which his disqualification would be necessary pursuant to 18 U.S.C. § 208; (4) other limitations applicable to the lawyer and hispartners during the lawyer’s tenure with the government; (5) restrictions on post-employment activities applicable to the lawyer and his partners; and (6) issues raised under the ABA Code of Professional Responsibility in connection with the proposed appointment. As you know, and as our comments in this memorandum demonstrate, the relevant federal personnel, conflict of interest, and ethical requirements constitute a formidable body of regulation. In our work in these areas we have frequently found that there is no reasonable substitute for careful case-by-case assessments. At the level of generality called for byyour request we can do little more than identify the major considerations and suggest how they have been resolved in the past. We would, of course, be pleased to elaborate on any of these matters, or to provide specific advice on any particular arrangements as you may deem helpful.



### 1. Independent Contractor or Government Employee

Officers and employees in the Executive Branch are covered by the conflict of interest laws; independent contractors are not. One w ho in fact will serve as a government employee may not, however, be hired as an independent contractor to avoid the application of the conflict of



### 441interest laws. The terms “officer” and “employee” are not defined in

the conflict of interest laws themselves. The definitions of these terms provided by §§2104 and 2105 of Title 5 are ordinarily referred to for guidance. Three elements are regarded as having critical significance: (1) appointment in the civil service by one of the federal officers oremployees specified; (2) performance of a federal function under authority of law or an “executive act”;‘ and (3) supervision by a federal official of the performance of the duties of the position.2 In this case, Lwould seem plainly to be an employee: he would be formally appointed, would perform services ordinarily performed by Departmentemployees pursuant to 28 U.S.C. § 516,3 and would be under the supervision o f Departm ent officials who would remain responsible for the conduct of the litigation in question.4 In addition, § 516 of Title 28 reserves to “officers” of the Departm ent of Justice the authority to conduct litigation in which the United States is a party. For both these reasons, we believe L must be appointed as an employee, rather than as an independent contractor.



### 2. Compensation

We assume that L would be employed on a temporary basis either as a Special Assistant United States A ttorney pursuant to 28 U.S.C. §543, or as a special attorney or special assistant to the A ttorney General pursuant to 28 U.S.C. § 515(b).5 If appointed as a Special Assistant

'T h e meaning of the phrase “executive act,’* used in 5 U.S.C. § 2105(a)(2), is unclear. Performance of executive functions would, however, clearly come within the terms o f the statute. 2 T he Civil Service Commission has developed a more lengthy list o f indicia of employee status: service under the supervision o f a federal employee; w ork in governm ent space with government equipment; access to governm ent files; handling of specific agency problems; service on more than one occasion on the same project; work on dates and hours requjred to be reported to the agency. See Federal Personnel Manual, ch. 304. See also Lodge 1858. Am. Fed. o f Gov't Emp. v. Administrator, NASA, 424 F. Supp. 186 (D .D .C . 1976); B. M anning, Federal Conflict o f Interest Law 27-34 (1964). 3 He would not, therefore, qualify as an expert or a consultant whose services may be procured by contract pursuant to 5 U.S.C. §3109 as authorized by §4(c), D epartm ent o f Justice A ppropriation Authorization A ct, Fiscal Year 1979, Pub. L. No. 95-624, 92 Stat. 3459, 3462.4 T he C om ptroller Genera) has recognized that notw ithstanding the general rule that purely persona) services must be performed by regular governm ent employees, there may be unusual circum ­ stances w here—because of the nature of the w ork or the existence of conditions not permitting its perform ance in the usual manner (such as w here regular employees are not qualified or are not available)—contracting for personal services may be perm itted. Such circum stances exist where, in order to avoid the appearance o f conflict o f interest, it becomes necessary to retain private counsel to defend a federal employee sued in his individual,* rather than official, capacity in a civil proceeding w hich arises out of his perform ance of official duties at the same time that the employee is the target o f a criminal investigation concerning the act or acts for which he seeks representation. See 28 C.F.R. §§ 50.15, 50.16 (1978). No such unusual circum stances appear to exist in the instant case. 5 Notw ithstanding the existence of this authority, government*wide limitations on hiring may be in effect at the time o f the proposed appointment. A general freeze on permanent hiring could continue in effect in order to implement the requirements o f § 3 1 1(a) of the Civil Service Reform A ct of 1978, Public Law No. 95-454, 92 Stat. 1111, 1153, w hich provides that the total number of federal civilian employees on Septem ber 30, 1979, may not exceed the number on Septem ber 30, 1977. Tem porary hiring may not be used to circum vent such a freeze. See OM B Bulletin 79-2, H 3, (O ctober 27, 1978). In addition, it is notew orthy that the em ployment ceiling on total employees, imposed by OM B on each agency, encompasses tem porary employees.



### 442United States Attorney, L ’s salary would be administratively determined pursuant to 28 U.S.C. § 548. Because of the ceiling now imposed by 5 U.S.C. §5308, the maximum per diem rate paid Special Assistant United States Attorneys is $182. Since no minimum salary is establishedby law for such positions, L might also be appointed without com pensation should he so desire.6 If appointed as a special assistant or special attorney, L could be paid an annual salary fixed by the A ttorneyGeneral at not more than $12,000. 28 U.S.C. § 515(b). We have previously opined that this provision permits compensation at a per diem
rate of V

360 of $12,000, rather than payment at a greater rate so long as his total compensation for the year does not exceed the $12,000 ceiling.Like §543, § 5 15(b) does not establish a minimum salary; service w ithout compensation would thus for similar reasons be permissible. W hether additional payments may be made by his firm to supplement L’s government salary, and the extent to which compensation reflecting his or his partners’ earnings unrelated to his government service may be received by him to supplement his government salary, depends on whether L will qualify as a special government employee within the terms of § 202(a) of Title 18. The term “special Governm ent employee” is there defined to include “an officer or employee of the executive orlegislative branch of the United States Government, . . . who is retained, designated, appointed, or employed to perform, with or without compensation, for not to exceed one hundred and thirty days in any period of three hundred and sixty-five days, temporary duties either on a full-time or intermittent basis.” For an individual to be appointed as aspecial government employee, the Department must in good faith estimate in advance of the appointment that he will serve for no more than130 days in the 365-day period beginning on the day of his appointment. In estimating the number of days to be served, a part of a day must be counted as a full day, and a Saturday, Sunday, or holiday on which duties are to be performed must be counted equally with a regular work day. Federal Personnel Manual, ch. 735, Appendix C. If an employee does, however, serve for more than 130 days in a 365-dayperiod, he will nevertheless continue to be regarded as a special government employee so long as the original estimate was made in good
faith. Id. Once an individual is appointed as a special government employee, the restrictions imposed by the conflict of interest laws apply even on days he does not serve the government. Id. Sections 203 and 209 of Title 18 limit the compensation employees may receive in addition to their government salary. Section 209, which prohibits receipt or payment of any salary, contribution to or

6 Section 663(b) o f title 31 prohibits the acceptance o f ’'voluntary serv ice/’ This prohibition was not intended to preclude acceptance of “gratuitous” services rendered in an official capacity under regular appointment otherwise perm itted by law to be nonsalaried w here an agreem ent is reached prior to appointment that the employee is to serve without compensation. 30 Op. A tt’y Gen. SI (1913).



### 443supplementation of salary as compensation for an employee’s services as

an employee of the Executive Branch, is expressly not applicable to special government employees. 18 U.S.C. § 209(c). Section 203 prohibits receipt or payment of any compensation for services rendered or to be rendered either by a special government employee currently employed in the Executive Branch or by “another” (such as his law partner) only in relation to a particular m atter involving a specific party or parties in which he has at any time participated personally and substantially as a government employee or which is pending in the department in which he is serving. M oreover, the Department-wide ban applies only where he has served in the Departm ent for at least 61 days during the immediately proceeding 365 days. A special government employee would therefore be free to receive and to share in fees generated by his partners except as to a limited class of matters such as, for example, representation in connection with a criminal investigation that has not yet resulted in an indictment and is therefore still pending in the Department. Section 203 does not, however, bar receipt of fees in relation to representation before the federal courts even though the m atter may incidentally be pending in the Departm ent because of the D epartm ent’s role in the court proceeding. Broader restrictions on receipt of outside compensation would apply if L does not qualify as a special government employee, i.e., if hewould be a regular employee. If L were to serve without compensation, §209 would still be inapplicable. 18 U.S.C. § 209(c). However,§ 203 would prohibit receipt or payment of compensation for any services rendered or to be rendered by another before any department, agency, court-martial, officer, civil, military or naval commission in relation to any particular m atter in which the United States is a party or has a direct and substantial interest. L could not, therefore, share in fees for representational services rendered under such circumstances. While he could share in fees received by his partners for services rendered in court,7 he could not himself act as agent or attorney for anyone in court in connection with any particular m atter in which the United States is a party or has a substantial interest.8 Thus his income would be limited accordingly.9 Finally, if L is a regular employee, but does receive compensation from the government for his efforts, he would be subject both to the

7 He could not, how ever, receive any gratuity, or any share o f or interest in any claim against the United States in consideration o f assistance in the prosecution for such claim. 18 U.S.C. §205(1). * 18 U .S .C §205(2).9 D epartm ent regulations also prohibit private professional practice by other than special government employees. 28 C .F.R . 45.735-9(a) (1978). This requirement has been interpreted to require regular governm ent employees to resign from private practice during their period o f governm ent service. T he Associate A ttorney G eneral may make exceptions to this requirement in unusual circum ­ stances. 28 C .F.R . 45.735(c) (1978). Outside employm ent that would interfere with the proper perform ­ ance o f an em ployee’s duties, create or appear to create a conflict o f interest, o r reflect adversely on the D epartm ent o f Justice, is in any event barred. 28 C .F.R . 45.735-9(d) (1978).



### 444

### restrictions imposed by § 209 and those imposed by § 203. He thuscould not receive supplemental compensation from his firm for performing his government job. And if he were to work for the government on a full-time basis, he would probably be treated by the firm as having gone on a leave of absence from the firm and hence would be barred altogether from sharing in firm profits unless under established firm policy persons having such a status would be entitled to certain compensation regardless of their efforts on behalf of the firm. If L as a regular employee were to work only part-time for the government, an even more knotty problem of accounting would be posed. To satisfy the requirements of § 209, his share in firm profits would have to be reduced to reflect his more limited participation in the firm’s business; to satisfy § 203, his share would have to be further reduced in light of his inability to share in fees for representational services performed by another as outlined above.10 Perhaps the most workable solution to this problem would be for L to receive a salary reflecting the value of services he would render to the firm while working on a part-time basis. Any definite conclusion as to the compensation that might be received in these circumstances must, in any event, be deferred until more specific facts are presented.

3. Disqualification Pursuant to Section 208

The feasibility of your proposal may well ultimately turn on the application of §208 of Title 18 to the facts of each particular case.Section 208 requires an officer or employee (including a special government employee) to disqualify himself from participating in decisions with regard to particular matters where he, his spouse, minor child, partner, organization in which he is serving as officer, director, trustee, partner or employee or any person or organization with whom he isnegotiating or has any arrangement concerning prospective employment has a financial interest. So long as L is affiliated with his firm,11 and the firm, through its representation of certain clients, has a financial interest in decisions he might make in the course of his government service, disqualification would be necessary unless a waiver could be obtained under § 208(b).12 A waiver is available on an ad hoc 

### basis where an employee receives in advance a written determination that the interest is not so substantial as to be deemed likely to affect the integrity of the services which the government may expect from that employee. Decisions in the situation you have described would not,

10 H e could, however, continue to participate in bona Tide pension, retirement, group life, health, or accident insurance, profit-sharing, stock bonus, or other employee welfare o r benefit plans. 18 U.S.C. § 209(b). 11 A leave o f absence is regarded as a continuation o f employment within the terms o f § 208. lz„Thus, w here his law partner performs a significant amount o f w ork on behalf o f client X, L would be required to refrain from participating in a decision that would significantly affect client X ’s
business.

445

### however, appear to fall within this de minimus 

### exception at least where

clients of a major law firm are involved. Careful consideration would therefore have to be given to the circumstances in which decisions by L in the course of his government employment would affect clients of his firm, and thus, the financial interests of himself or his partners. Although § 208 does not, in terms, prohibit an individual’s appointment, if disqualification will frequently be required, the appointment may at
the outset be futile.

4. Other Restrictions Under the Conflict of Interest Laws Applicable

During Government Tenure

a. Restrictions on L. 

### We have previously discussed the restrictions on receipt of compensation and on participation in decisions affecting a personal financial interest, and have briefly alluded to the prohibition on certain activities of government employees imposed by § 205. If L is a special government employee who serves for at least 61 days, he will be barred by § 205 from acting as attorney or agent in relation to any particular matter involving a specific party or parties in which he has at any time participated in the course of his government service, or which is pending in the department in which he is serving. He would not otherwise be barred from acting as an attorney in court proceedings or in proceedings before other agencies. If he does not qualify as a special government employee, he must refrain from acting as agent or attorney for anyone before any department, agency, court, court-martial, officer or any civil, military or naval commission in connection with any particular matter in which the United States is a party or has a direct
and substantial interest.

b. Restrictions on L ’s partners. 

### L’s partners are precluded from acting as agents or attorneys for anyone other than the United States in connection with any judicial proceeding or other particular matter in which the United States is a party or has a direct and substantial interest and in which L participates or has participated personally and substantially as a government employee, or which is under his official responsibility.13 This bar is only effective during the period in which L serves as a government employee. Thus, if L remains affiliated with hisfirm, the firm may not, during his tenure with the government, participate as attorney for parties to the litigation in which L is involved. L’s partners may not be charged on an imputation theory of wrongdoing in violation of §§ 203 and 205.14

13 18 U.S.C. § 207(c), redesignated as § 207(g), effective July 1, 1979. 14 T he obligations directly imposed on L ’s partners to observe the prohibitions against providing L with outside compensation are discussed above.

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### 5. Post-employment Restrictions

We assume that L, if appointed, will leave government service some time after the July 1 effective date of the recent amendments to § 207 of Title 18. Unless he is designated for coverage under § 207(d),15 he would not be subject to the aiding and assisting bar of § 207(b)(ii) and the 1-year bar on contacts with the Department under § 207(c). He would, however, be permanently barred from acting as attorney or agent or otherwise representing any person other than the United States in making any communication, with intent to influence, to or in making any formal or informal appearance before any department or court in relation to any particular matter in which the United States or the District of Columbia is a party or has a direct and substantial interest and in which he participated personally and substantially. He would also be prohibited for 2 years from acting as agent or attorney insimilar circumstances with regard to matters under his official responsibility during the last year of his government service. In all likelihood, L’s realm of official responsibility will be no broader than the matter inwhich he participates personally and substantially, and he will essentially be barred simply from switching sides in the case in which he served as government counsel and in closely related cases. Ethical obligations, rather than statutory requirements, are the sourceof the principal restrictions applicable to L’s partners during the postemployment period.

6. Ethical Constraints

While we will touch here briefly upon ethical constraints that may be of significance, you should be aware that a general discussion of this sort is of limited value and adequate guidance can only be given where reference can be made to particular facts and circumstances.

a. Restraints on L ’s service with the government. 

### If L or his firm has previously represented any of the defendants in the case he will be trying for the government, he may be subject to a motion to disqualify based on the American Bar Association’s Canon 4 directive to preserve
the secrets and confidences of a client unless he could demonstrate thathe never received confidential information in a case substantially related to the case he handles for the government. Even were the former client to waive such disqualification, a question would be presented whether the United States should accept such a waiver, particularly ina case in which the United States is suing the client, since the govern15 Persons paid al Che executive level are automatically covered. Those paid at a rate o f G S-17 or above who have significant decisionmaking or supervisory responsibility and others in positions with comparable decisionmaking authority are to be designated for coverage by the D irector o f the Office
o f G overnm ent Ethics.

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### ment should be above reproach and should avoid even the appearance

of impropriety.

b. Restraints on L's firm following his service with the government. 

### Following his government service, L would be obliged, pursuant toDR 9 -101(B) of the ABA Code of Professional Responsibility, to decline private employment in a matter in which he had substantial responsibility while he was a public employee. His disqualification would also be imputed to his firm pursuant to DR 5 -105(D) of the ABA Code of Professional Responsibility. This Department has takenthe position, approved in ABA Formal Opinion 342, that the disqualification of a firm may be waived by the government whenever effective screening measures by the firm will effectively isolate the lawyer who is personally barred from participating in the particular matter and sharing in the fees attributable to it, so long as there is no appearance of significant impropriety affecting the interests of the government.16

7. Conclusions

The above discussion has necessarily been rather general in nature. Should you determine that as a policy matter appointment of L wouldbe appropriate, a more detailed review of the conflict of interest problems likely to be presented would certainly be advisable. For present purposes, however, the following conclusions are perhaps the most significant. a. L could be appointed as a Special Assistant United States Attorney to be paid at a per diem rate of up to $182. If he is appointed as a special government employee or serves without compensation, his firm may supplement his salary.b. For L to qualify as a special government employee the Department would be required to estimate in good faith that he would serve the government on no more than 130 out of the 365 consecutive days beginning with the day of his appointment. Days on which only part of his time was devoted to government service would count as days worked for purposes of this estimate. c. Unless L qualifies as a special government employee, he may as a regular employee be required significantly to limit his activities in private practice pursuant to 18 U.S.C. §§ 203 and 205. d. Depending on the facts of the case on which L will be working and the clients of the firm with which he is affiliated, L may be seriously handicapped in his performance of his governmental duties because of his obligation under § 208 to refrain from participating in decisions with regard to a matter in which he or his partners have a
financial interest or in which his law firm has a financial interest

16 T he currently pending proposal for revision o f the D istrict of Columbia Bar’s Code o f Professional Responsibility also addresses this question.

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### because of it representation of a party in the matter. If so, he should probably not be appointed. e. L may not subsequently serve as agent or attorney in a particular matter in which he personally and substantially participated while in the government. f. During L’s tenure with the government, L’s partners are barred from serving as attorneys in a particular matter in which L participates personally and substantially. Following his return to private practice, their obligations would be ethical in nature.

L a r r y A. H a m m o n d Deputy Assistant Attorney General Office o f Legal Counsel

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