CEO 81-49 -- July 16, 1981
CONFLICT OF INTEREST
SCHOOL BOARD ATTORNEY ALSO OFFICER AND SHAREHOLDER OF PROFESSIONAL ASSOCIATION PROVIDING LEGAL SERVICES TO SCHOOL BOARD
To: (Name withheld at the person's request.)
A prohibited conflict of interest exists where an employee of a school board serving as school board attorney is an officer and shareholder in a law firm which is providing legal services to the school board. Section 112.313(3), Florida Statutes, prohibits a public employee from acting in a private capacity to sell any services to his agency. Here, the school board attorney is an employee, with his compensation being provided in the form of a salary and an hourly fee and his responsibilities being defined by a written job description requiring him to perform routine specified services to the board and to represent the board in litigation. However, at times other members or associates of the law firm have assisted in portions of litigation, and the school board has been billed for their time. Therefore, to this extent, the attorney has been acting in a private capacity as an officer and shareholder in the law firm to sell the services of the firm to the school board. In addition, under Section 112.313(7)(a), Florida Statutes, the attorney, as an officer and shareholder of the law firm, would have a contractual relationship with a business entity which is doing business with the school board.
Does a prohibited conflict of interest exist where you, an employee of a School Board serving as School Board Attorney, are an officer and shareholder in a law firm which is providing legal services to the School Board?
Your question is answered in the affirmative.
In your letter of inquiry you advise that since 1972 the .... County School Board has employed you as attorney and legal advisor to the Board. Although there was no written contract of employment, the School Board provided that its attorney would be paid a monthly salary for routine specified services to the Board and its employees, and that fees for litigation would be billed at a rate customarily charged for similar services by attorneys in the area. This salary arrangement has continued, you advise, and on several occasions you have represented the Board and its employees in litigation, billing the Board for these services at an hourly rate and for reimbursement of out-of-pocket expenses. On rare occasions, because of your case load or a scheduling conflict on your part, an associate or partner in your law firm has assisted in portions of litigation, and the Board has been billed for their time. In addition, at times members of the firm have attended Board meetings and have given advice to members of the school administration; however, the Board has not been billed for these services.
You also advise that deductions from your salary are made for income tax withholding, social security, and hospital insurance payments and that your salary was increased by the Board in 1974 and again in 1980. In addition, you advise that you have a written job description which provides, among other duties, that you are to attend meetings of the School Board except in the event of an unavoidable conflict in scheduling, in which case you are to have a member of your law firm in attendance at meetings, and that you are to represent the Board and its employees in litigation.
It is your position that you are eligible for the same benefits, such as workers compensation, retirement and insurance, as other persons who are employees of the School Board, and that your relationship with the School Board was intended by both parties to be an employment relationship as opposed to an independent contractor relationship. You further advise that the manner of your compensation, involving both salary and hourly fees for litigation, was adopted because of uncertainty as to the amount and duration of litigation involving the School Board from time to time.
You advise that you own fifty percent of the shares of your law firm and that you are president of the firm. Your salary paycheck from the Board is payable directly to you personally and is deposited without being co-mingled with firm funds. Litigation expenses are billed by and paid to the firm, with the principal amount of litigation being handled by you and assistance being provided by an associate of the firm on occasion. In a telephone conversation with our staff, you advised that the law firm does not have a contract with the School Board separate from your employment agreement. Other members of the firm share in the revenue derived by the firm from your litigation work for the School Board, just as you share in the income received by the firm for the services of other attorneys in the firm provided to the School Board. You also advised that the firm associate only becomes involved in litigation when it is possible for him to undertake an activity which would result in a lower hourly billing to the School Board.
The Code of Ethics for Public Officers and Employees provides in relevant part:
DOING BUSINESS WITH ONE'S AGENCY. -- No employee of an agency acting in his official capacity as a purchasing agent, or public officer acting in his official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his own agency from any business entity of which he or his spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or his spouse or child, or any combination of them, has a material interest. Nor shall a public officer or employee, acting in a private capacity, rent, lease, or sell any realty, goods, or services to his own agency, if he is a state officer or employee, or to any political subdivision or any agency thereof, if he is serving as an officer or employee of that political subdivision. The foregoing shall not apply to district offices maintained by legislators when such offices are located in the legislator's place of business. This subsection shall not affect or be construed to prohibit contracts entered into prior to:
(a) October 1, 1975.
(b) Qualification for elective office.
(c) Appointment to public office.
(d) Beginning public employment.
[Section 112.313(3), Florida Statutes (1979).]
In our opinion, you are a public employee of the School Board rather than an independent contractor, with your responsibilities being defined by your written job description and your compensation being provided in the form of a salary and hourly fee. See CEO 77-76, CEO 78-65, and CEO 79-24, copies of which are enclosed. Therefore, Section 112.313(3) prohibits you from acting in a private capacity to sell any services to your "agency," which is the School Board as the term "agency" is defined by Section 112.312(2), Florida Statutes.
In previous opinions, we have advised that one acts "in a private capacity" to sell any realty, goods, or services when he is an officer or director of, or owns more than five percent of, the business entity which is selling such realty, goods, or services. See, for example, CEO 78-39, a copy of which is enclosed. We also have advised that a partner is "acting in a private capacity" when his partnership acts. See CEO 79-83, Question 2, a copy of which is enclosed. Thus, we have interpreted Section 112.313(3), Florida Statutes, to apply not just where a public officer or employee is selling his personal services in a private capacity to his agency, but also where the officer or employee is acting in a private capacity to sell the services of another. In this regard, we note that the language of the statute is not couched in terms of prohibiting a public officer or employee from acting in a private capacity to sell his services to his agency, but rather in terms of prohibiting him from acting in a private capacity to sell any services to his agency.
Under the circumstances you have described, in addition to the services you are providing as an employee of the School Board, the law firm of which you are an officer and shareholder is selling services to the School Board. Unlike attendance by a member of the firm at School Board meetings in your stead, representation of the Board and its employees in litigation by an attorney with your firm is not contemplated by your job description. We also note that you share in the income received by the firm for the services of other attorneys in the firm provided to the School Board. Thus, we find that you are acting in a private capacity to sell the services of your law firm to the School Board.
Section 112.313(3) does contain a "grandfather" clause, which would exempt contracts entered into prior to October 1, 1975. However, we find that this provision would not apply to exempt the services occasionally provided to the School Board by your law firm. Although your oral contract of employment with the School Board was entered into in 1972 and modified in 1974 and 1980, the minutes of the School Board reflecting its initial action do not indicate that the School Board also intended to enter into a contract with the law firm for services to be provided by other attorneys with the firm. Therefore, it does not appear that the provision of these services could be "grandfathered in," since no contract existed before October 1, 1975 which would apply to the occasional services provided to the School Board by the firm subsequent to that date.
The Code of Ethics also provides:
CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP. -- No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he is an officer or employee . . . ; nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties. [Section 112.313(7)(a), Florida Statutes (1979).]
This provision prohibits a public employee from being employed by, or having a contractual relationship with, a business entity which is doing business with his agency. As an officer and shareholder of the law firm, you have a contractual relationship with a business entity which is doing business with the School Board.
Accordingly, we find that a prohibited conflict of interest exists where you are an employee of a School Board serving as School Board attorney while also being an officer and shareholder in a law firm which is providing legal services to the School Board.