HWG Ethics & Malpractice Group Client Alert
By: Hilary P. Gerzhoy, Thomas B. Mason, and Amy E. Richardson
There are more lawyers entering private practice from the government than at any other time in recent memory. Incorporating a former government lawyer into a firm implicates a number of ethics and compliance issues. This advisory highlights key considerations all firms should bear in mind as they incorporate former government lawyers into their practice.
There are four1 main categories of ethics and compliance issues in onboarding a former government lawyer, each of which we discuss below.
- conflicts of interest, as governed by Rule 1.11
- confidentiality obligations, as governed by Rules 1.6 and 1.11 and ABA Formal Opinion 509;
- post-employment restrictions, as governed by 18 U.S.C. § 207 and 5 C.F.R. § 2641; and
- fee sharing restrictions, as governed by 18 U.S.C. § 203
1. Conflicts of Interest
Rule 1.11 prohibits a former government lawyer from working on a matter that is the same or substantially related to a matter in which the lawyer “participated personally and substantially” while in the government. If a conflict arises because of a former government lawyer’s personal and substantial participation in a matter, several things must happen: (1) the former government lawyer must be timely screened from the matter; (2) the former government lawyer cannot share in the fees generated from the matter; (3) the former government lawyer must send his/her former agency a signed letter stating that he/she will not participate in the matter, will not discuss it, and will not share in any fees generated from it; (4) the former government lawyer must send that letter to any other parties to the relevant proceeding; and (5) at least one lawyer from the firm must submit a letter to the agency and to any other parties to the relevant proceeding attesting to the screen and describing the procedures taken to ensure its efficacy. Where there are confidentiality concerns, the letters in (3) and (5) can be submitted to the Office of Disciplinary Counsel under seal. See D.C. Rule 1.11(e).
2. Confidentiality
Rule 1.6 prohibits a former government lawyer from revealing confidences or secrets about any cases on which he/she worked while in the government. D.C. Rule 1.6(k) clarifies that the “client of [a] government lawyer” is “the agency that employs the lawyer unless expressly provided to the contrary.”
A former government lawyer is equally prohibited from using any such confidences or secrets to the disadvantage of the agency. ABA Formal Opinion 509 emphasizes that former government lawyers must ensure they do not improperly use confidential information learned during their government service in private practice.
3. Post-employment Restrictions
18 U.S.C. § 207 (a section of the Ethics in Government Act) imposes a permanent ban on communications to and appearances with the intent to influence a former agency in regards to matters that a former government lawyer “personally and substantially” participated. It also imposes a two-year ban on those activities for matters that were under the former government lawyer’s “official responsibility” during the last year of their government service. Senior employees—those who made more annually than a certain financial threshold, reset yearly and currently standing at $195,230.50—are also prohibited from appearing before or communicating with their former agency for one year on any matter.
Because D.C. Rule 1.11(a) prohibits any role by a former government official in a matter in which they participated “personally and substantially” while in government, there are therefore some behaviors prohibited by the ethics rules that are not prohibited by 18 U.S.C. § 207. Note that the Rules and the Ethics in Government Act restrictions only apply to specific matters— a former government lawyer may do work relating to and appear before their former agency on general issues like rulemakings, policy statements, and industrywide concerns.
To ensure compliance, the new firm must know (1) all matters involving a specific party or parties on which the former government lawyer worked personally and substantially while in the government; and (2) all matters that involved specific parties at the time they were pending and that were under the former government lawyer’s official responsibility within 1 year of the termination of government employment.
4. Fee Sharing Restrictions
For former government lawyers entering firms as equity partners, 18 U.S.C. § 203 prohibits them from sharing in fees that their new law firm generated at the time the former government lawyer was working in the government concerning a matter in which the government had an interest. This prohibition applies to all government matters—not just those before the lawyer’s department or agency—and the lawyer need not have even been aware of the matter. The restriction lasts for as long as the firm generates profits from work the firm did before a government agency, or from a court case in which the government had an interest, while the new law firm partner was still employed by the government.
Some federal agencies have regulations that go further than the Ethics and Government Act, for example the Securities and Exchange Commission under 17 C.F.R. § 200.735-8 and the Internal Revenue Service under 31 C.F.R § 10.25. Additionally, Members of Congress and their staff are separately regulated by 18.U.S.C. § 207(e).
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For more information on the HWG Ethics & Malpractice Group please visit: https://hwglaw.com/practices/legal-ethics-and-malpractice/