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Application of 18 U.S.C. § 203 to Former Employee’s

Receipt of Attorney’s Fees in Qui Tam Action

Title 18, section 203, U.S. Code, would not bar a former federal employee from sharing in attorney’s

fees in a qui tam action, provided that those fees, calculated under the lodestar formula, are prorated 

such that the former employee does not receive any fees attributable to his time in the government.

February 28, 2002

MEMORANDUM OPINION FOR THE

DEPUTY GENERAL COUNSEL AND DESIGNATED AGENCY ETHICS OFFICIAL

EXECUTIVE BRANCH DEPARTMENT*

You have asked for our opinion whether, under 18 U.S.C. § 203 (1994), a 

former federal employee may share, on a prorated basis, in fees awarded to his 

firm for representational services in a qui tam action that was pending both during 

periods in which he was working for the federal government and during a period 

in which he was working for his firm. See Letter for Daniel Koffsky, Acting 

Assistant Attorney General, Office of Legal Counsel, from Deputy General 

Counsel, Executive Branch Department, Re: Request for Written Opinion on 

Former Employee’s Receipt of Attorney’s Fees (June 6, 2001) (“Department 

Letter”). We conclude that, subject to the conditions set out below, the statute 

would not bar his receiving a prorated share of attorney’s fees that are calculated 

under the lodestar method.1

I. Background

A former employee of your agency is now a member of a law firm that represents relators in a qui tam action. The United States intervened in the action and 

settled it in April 2000, Department Letter at 1; see 31 U.S.C. § 3730(b)(2) (1994); 

and the relators have petitioned the court for an award of attorney’s fees to be paid 

by the defendant to the law firm. Id. § 3730(d); see United States ex rel. Virani v. 

Jerry M. Lewis Truck Parts & Equip., Inc., 89 F.3d 574, 578 (9th Cir. 1996). The 

petition seeks “lodestar” fees calculated as “the product of reasonable hours times 

* Editor’s Note: We are not identifying in the published version of this opinion the Executive 

Branch department that employed the individual who is the subject of the opinion.

1 As you suggest, see Department Letter at 3, 18 U.S.C. § 205 (1994 & Supp. II 1996) would not be 

implicated by the former employee’s receipt of fees now, because that provision applies only to current 

federal employees. See Application of 18 U.S.C. § 205 to Communications Between the National 

Association of Assistant United States Attorneys and the Department of Justice, 18 Op. O.L.C. 212 

(1994).

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a reasonable rate.”2

The former employee worked for the federal government during two separate 

periods when his current firm was working on the qui tam case. It was during the 

first of these periods, in November 1995, that the firm entered the case. The 

former employee left federal employment in June 1997 and worked for the firm 

from July 1997 until December 1999, during which time he took part in the firm’s 

efforts in the case. After a second period of federal employment from December 

1999 until January 2001, he returned to the firm. Department Letter at 1. The fee 

petition covers the firm’s work from November 1995 through April 2000. The 

former employee seeks to share in the fees awarded, under a formula designed to 

identify the proportion of the fees attributable to the time he was not employed by 

the federal government:

See Pennsylvania v. Delaware Valley Citizens’ Council for 

Clean Air, 478 U.S. 546, 565 (1986) (defining “lodestar”); see also City of 

Burlington v. Dague, 505 U.S. 557, 560-61, 562, 565 (1992) (distinguishing fees 

calculated under the lodestar method from “certain” fees, which are “payable 

without regard to the outcome of the suit,” and from fees under “the contingent-fee 

model,” which “would make the fee . . . a percentage of the value of the relief 

awarded in the primary action”).

He is seeking only his partnership share of the fees attributable to the 

actual hours worked by the law firm during the 21⁄2-year period in 

which he was not in Federal service. For example, if the law firm

worked 100 hours in total on the case, 25 hours of which occurred 

during that 21⁄2-year period, the Employee would receive only his 

partnership share of the attorneys’ fees attributable to the 25 hours.

Department Letter at 4.

This formula is designed to comply with 18 U.S.C. § 203(a), which, among 

other things, subjects to criminal penalties anyone who,

otherwise than as provided by law for the proper discharge of official 

duties, directly or indirectly—

(1) demands, seeks, receives, accepts, or agrees to receive or accept 

any compensation for any representational services, as agent or 

attorney or otherwise, rendered or to be rendered either personally or 

by another—

***

2 Here, the firm has sought an upward adjustment through a multiplier of the lodestar. Our opinion 

should not be read as addressing the former employee’s receipt of a share in any such adjustment, 

should the court grant it.

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(B) at a time when such person is an officer or employee . . . of 

the United States in the executive . . . branch of the Government, 

or in any agency of the United States,

in relation to any proceeding, application, request for a ruling or other determination, contract, claim, controversy, charge, accusation, 

arrest, or other particular matter in which the United States is a party 

or has a direct and substantial interest, before any department, agency, court, court-martial, officer, or any civil, military, or naval commission.

II. Discussion

As your letter notes, section 203, at the least, forbids the former employee from 

sharing in fees covering the firm’s work performed while the former employee 

was in the federal government. Department Letter at 2. The United States was a 

party to the qui tam case, and section 203 reaches payments for representational 

services, whether performed personally or by another, in such a matter. Further, 

section 203 extends to compensation received after an employee leaves federal 

service, if the payment is for representational services performed during the period 

of federal employment: “18 U.S.C. § 203 prohibits a former government employee 

from receiving any share of a fee earned by others for work they performed 

[before an agency or court] at the time he was a federal employee. This section 

requires a law firm which a former government lawyer joins to ensure that the 

lawyer does not receive any share of the firm’s fee attributable to work it performed [before such a forum] at the time the lawyer was with the Federal Government.” Memorandum for Lovida H. Coleman, Jr., Special Assistant to the 

Deputy Attorney General, from Leon Ulman, Deputy Assistant Attorney General, 

Office of Legal Counsel, Re: Application of Ethics Act Restrictions to United 

States Trustees and Supervisors of Trustees at 5 (July 5, 1979). See also Memorandum, Re: Statutory and Ethical Restrictions on Former Non-Legal Government 

Officers and Employees of the White House Staff at 5 (Feb. 10, 1971) (“The 

section makes it unlawful for a former official to share in any fees received by the 

firm for services in a matter covered by the statute and performed by the firm at 

any time during the period of his government employment.”); H.R. Rep. No. 87-

748, at 20 (1961) (section 203 corrects the omission of the predecessor statute,

which did not cover post-employment receipt of compensation for services 

rendered during the period of government employment).

The question here is whether, under the proposed formula for prorating an 

award of attorney’s fees calculated under the lodestar method, the former employee would be receiving compensation for services that were rendered at a time 

when he was a federal employee. We have not previously addressed the applica227-329 VOL_26_PROOF.pdf 22 10/22/12 
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tion of section 203 in circumstances where a fee would be calculated under the

lodestar method and would cover some periods during which a former employee 

worked in the federal government and some periods during which he did not. We 

must decide whether to follow, in this context, the usual interpretation of section 

203’s application to awards under the contingent fee model. Under that interpretation, for example, it has been “the longstanding view of the Office of Legal Counsel 

that § 203 prohibits an individual entering government employment from maintaining a contingent interest in fees recoverable in a proceeding involving the United 

States.” Application of 18 U.S.C. § 203 to Maintenance of Contingent Interest in 

Expenses Recoverable in Litigation Against the United States, 22 Op. O.L.C. 1, 2 

(1998) (“1998 Opinion); see also Office of Government Ethics, Compensation 

Arrangements for Former Federal Government Employees and 18 U.S.C. § 203,

Informal Advisory Op. 93x31 (Oct. 26, 1993), available at http://www.oge.gov/

OGE-Advisories/Legal-Advisories/Legal-Advisories/ (last visited Aug. 4, 2012)

(applying interpretation to receipt of contingency fee by former employee). We 

observed in the 1998 Opinion that “the rationale underlying this longstanding 

interpretation has never been articulated with clarity” but that “[a] rule against 

retaining a contingent interest in fees reflects that a contingent fee covers the entire 

representation up to the payment, the amount remains uncertain until then, and the 

fee thus compensates, in part, for representational services performed after the

employee began working for the United States.” 22 Op. O.L.C. at 2 n.2. If fees under 

the lodestar method are like fees under the contingent fee model, each dollar of 

lodestar fees might be seen as compensating for the entire representation, including 

(in a case like the present one) that part of the representation when the former 

employee was with the federal government. In that event, section 203 would bar a 

former employee from receiving any part of the lodestar award.

We do not believe that this treatment of contingent fees should be extended to 

lodestar awards. Under the contingent fee model, because the fee is for the whole 

representation, no part of the fee is assigned to any particular time. By contrast, 

under the lodestar model, the fees are segregated by time. The value of work 

during any particular period is fixed, according to the hours worked, multiplied by 

the reasonable rate. A lawyer who receives only fees generated during the time he 

was not with the government thus does not receive “any compensation for any 

representational services, as agent or attorney or otherwise, rendered or to be 

rendered either personally or by another . . . at a time when such person is an 

officer or employee” of the United States. 18 U.S.C. § 203(a).

To be sure, without the work that took place here during the time of the 

employee’s service in the federal government, the qui tam action would not have 

succeeded, and it might therefore be argued that, in receiving a portion of the 

firm’s fees, the employee necessarily would be compensated for representational 

services performed during that time. But our 1998 Opinion, which examined 

reimbursement for expenses in contingent cases, concluded that the statutory 

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language “compensation for representational services” would not support such an 

argument:

[T]he use of the word “for” makes clear that § 203 embodies an element of exchange . . . . [T]he fact that a government officer or 

employee receives a monetary payment or something else of value 

will not alone trigger a violation of § 203. Nor is it sufficient that an 

officer or employee receives something of value because a representational service occurred during his or her government tenure. The 

provision requires that the officer or employee receive something of 

value in exchange for the representational services performed on the 

client’s behalf during the officer’s or employee’s government tenure.

22 Op. O.L.C. at 3 (emphasis added).3

In the 1998 Opinion, we noted that the interpretation of section 203 as applicable to contingent fees was “consistent with a view of § 203 as primarily seeking to 

prevent the actual or apparent influence of an officer or employee over a proceeding involving the government by virtue of the individual’s pecuniary interest in the 

proceeding’s outcome.” 22 Op. O.L.C. at 2 n.2 (citation omitted). In that opinion, 

we concluded that the statute did not reach a contingent arrangement for the 

recovery of expenses, as opposed to fees, but we conceded that, to the extent the 

statute’s purpose was to guard against the influence that might be exercised by a 

government employee with an interest in a proceeding, the statute arguably should 

receive a broader interpretation than we were giving it. There, as here, it could 

have been said that “the official’s incentive to influence the outcome of a proceeding, the danger that an adjudicator would be affected by the knowledge that the 

official possesses an interest in the proceeding’s outcome, or the possibility that 

the interest would cause the official to be biased in other government matters,” id.

at 6, would be just as strong as in the paradigm case of a contingent fee for

services. Nevertheless, we did not find ourselves “free to interpret § 203 without 

regard for its textual boundaries.” Id.

Here, under the same reasoning, the hours 

worked by others while the employee was with the government were necessary to 

the successful outcome resulting in the firm’s entitlement to receive any fees, but 

that fact means only that the former employee would receive fees because of work 

done while he was a federal employee, not that he would receive a share of fees 

paid in exchange for that work.

Our analysis here rests on the critical assumptions that the fees in question will 

be awarded under the lodestar method, see United States ex rel. John Doe I v. 

Pennsylvania Blue Shield, 54 F. Supp.2d 410, 414 (M.D. Pa. 1999) (applying 

3 We made the additional argument that the repayment of expenses was not “compensation” for 

“representational services” under the statute. 1998 Opinion at 3.

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method to fee calculation in qui tam action), and that the lodestar amount will not 

be enhanced or otherwise adjusted (e.g., based on the special value of services 

provided by the firm when the former employee was working for the federal 

government) in ways that render our analysis inapplicable. Moreover, the details 

of the formula in the present case for computing the former employee’s share, 

which we do not know, could raise issues under section 203. The formula, as 

described in general terms by your letter, is based on the firm’s hours devoted to 

the case while the former employee worked there, divided by the firm’s total hours 

in the whole case. However, unless the formula takes account of the other factor in 

the lodestar calculation—the billing rates on which the fee award is based—this 

calculation may not completely separate the fees attributable to the time that the 

former employee was in the government from the other fees in the case. Particular 

periods may be tied to higher or lower payments for the same hours, to the extent 

reasonable billing rates for those hours differ. A similar attribution problem might 

arise if the court disallows inclusion in the lodestar amount of a number of billed 

hours but fails to make clear for which periods those hours were billed.

M. EDWARD WHELAN III

Principal Deputy Assistant Attorney General

Office of Legal Counsel

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