In Re Advisory Committee on Professional Ethics

745 A.2d 497, 162 N.J. 497

• Court: Supreme Court of New Jersey
• Decided: February 15, 2000
• Docket: DOCKET NO. 18-98
• Status: Published

Opinions

The opinion of the Court was delivered by

O’HERN, J.

The question in this case is whether an attorney may simultaneously serve as municipal attorney and as clerk-administrator for the same municipality. The Advisory Committee on Professional Ethics (Committee or ACPE) determined that an attorney may not hold both positions. The Committee concluded that such dual office-holding creates an actual conflict of interest and otherwise gives rise to an appearance of impropriety. The Committee reasoned that the municipal attorney might fail to bring independent judgment to evaluation of the conduct in office of the clerk-administrator. We granted petitioner’s request, 157 N.J. 643, 725 A. 2d 1124 (1999), to review the opinion under R. 1:19-8. We agree with the ACPE that an attorney may not simultaneously hold the positions of municipal attorney and clerk-administrator under the circumstances outlined in this petition, although we confine our reasoning to the finding of an impermissible potential conflict of interest.

I

Petitioner had served the Borough of Old Tappan as its borough attorney for ten years when the Mayor and Council expressed an intention to appoint him to the position of clerk-administrator. Petitioner sought an advisory opinion from the Committee to determine whether he could hold both positions. In response to petitioner’s inquiry, the Committee ruled

that an attorney called upon to serve as both municipal solicitor and municipal administrator would be unable to provide the full panoply of legal services expected of him without such service being affected by the lawyer’s own interests, a conflict of interest to which the municipality cannot consent, or otherwise causing an ordinary knowledgeable citizen acquainted with the facts to conclude that multiple service poses a substantial risk of disservice to the public interest.

The Committee cited R.P.C. 1.7, which states in pertinent part:

(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer’s responsibilities to another client or to a third person, or by the lawyer’s own interests, unless:

(1) the lawyer reasonably believes the representation will not be adversely affected; and

(2) the client consents after a full disclosure of the circumstances and consultation with the client, except that a public entity cannot consent to any such representation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved.

(c) This rule shall not alter the effect of case law or ethics opinions to the effect that:

(1) in certain cases or categories of eases involving conflicts or apparent conflicts, consent to continued representation is immaterial, and

(2) in certain cases or situations creating an appearance of impropriety rather than an actual conflict, multiple representation is not permissible, that is, in those situations in which an ordinary knowledgeable citizen acquainted with the facts would conclude that the multiple representation poses substantial risk of disservice to either the public interest or the interest of one of the clients.

Petitioner has furnished us with copies of the relevant Borough ordinances. The duties of the borough clerk are described as follows:

[t]he borough clerk shall serve as clerk of the council, ... attend all meetings of the council and keep the minutes of the proceedings of the council. The minutes of each meeting of the council shall be signed by the officer presiding at the meeting and by the clerk____ The clerk shall record all ordinances in books to be provided for that purpose____ The clerk shall have custody of and safely keep all records, books and documents of the borough____ The clerk shall maintain a record of all real property which the borough may acquire, sell, or lease____ The clerk shall cause the corporate seal of the borough to be affixed to instruments and writings when authorized by ordinance or resolution of the council or when necessary to exemplify any document on record in his office____ The clerk shall be the repository for and custodian of all official surety bonds furnished by or on account of any officer or employee, ... perform all the functions required of municipal clerks by the General Election Law, [and] ... [a]dminister the provisions of borough ordinances with reference to the licensing of occupations and activities____

[Old Tappan, N.J., Rev. Ordinances § 2-6.1 to -6.8 (1975).]

The ordinance describes the responsibilities of the borough administrator as follows:

[the] borough administrator ... shall ... provide a liaison between the governing body and the various departments, bodies and other officials of the Borough of Old Tappan under the supervision and control of the mayor and council and to fulfill such other duties as shall be specifically assigned by the said mayor and council from time to time____ The duties of the borough administrator ... shall not infringe upon the duties, rights and powers of other borough officers designated by statute or by borough ordinance____ The office of the borough administrator shall be held by the same person who holds the title of the borough clerk.

[Id. at §§ 2-29.1., 2-29.4 (May 1997).]

Finally, the Old Tappan ordinance entitled “Borough Attorney” includes the following:

The borough attorney shall be appointed by the mayor with the advice and consent of the council for a term of one year____ The attorney shall not receive a fixed salary ¹, but shall be paid such retainer as may be agreed upon and authorized by the council, plus such fees and charges as shall be deemed reasonable____ The attorney shall have such powers and perform such duties as are provided for the office of borough attorney by general law or ordinances of the borough. [The attorney] shall represent the borough in all judicial and administrative proceedings in which the municipality or any of its officers or agencies may be a party or have an interest. [The attorney] shall give all legal counsel and advice where required by the mayor and council or any member thereof, and shall in general serve as the legal advisor to the mayor and council on all matters of borough business----

Ud. at §§ 2-13.1, -13.2 (July 1978).]

The ordinance also describes the specific duties of the borough attorney that include drafting all legal documents, conducting appeals, entering into agreements, compromises or settlements on behalf of the borough, and rendering any opinions submitted by the mayor or council.

The Legislature has provided that a municipal council may appoint “a municipal manager, an assessor, an auditor, a treasurer, a clerk, and an attorney. One person may be appointed to two or more such offices, except that the offices of municipal manager and auditor or assessor shall not be held by the same person.” N.J.S.A. 40:81-11 (emphasis added). Because the Legislature has expressly held the two offices to be compatible, we do not rely on the “appearance of impropriety” doctrine to disqualify petitioner on those grounds. After all, the test is whether “an ordinary knowledgeable citizen acquainted with the facts would conclude that the multiple representation poses substantial risk of disservice to either the public interest or the interest of one of the clients.” R.P.C. 1.7(c). Surely, the members of the Legislature are better informed than “an ordinary knowledgeable citizen,” yet they did not perceive a potential for conflict.

We agree also that the offices are not incompatible. In Reilly v. Ozzard, Chief Justice Weintraub stated the test: “Incompatibility is usually understood to mean a conflict or inconsistency in the functions of the office. It is found where in the established governmental scheme one office is subordinate to another, or subject to its supervision or control, or the duties clash, inviting the incumbent to prefer one obligation over another.” 33 N.J. 529, 543, 166 A.2d 360 (1960)(holding that the common law did not prohibit a state senator from holding the position of municipal attorney); see also, Schear v. Elizabeth, 41 N.J. 321, 196 A.2d 774 (1964) (holding that municipal attorney could be a member of the planning board). Although the duties of borough attorney and clerk-administrator do not intrinsically clash, we must analyze this dual office-holding under “[t]he,New Jersey disciplinary system [that] is [ ] designed to protect the public and ‘the integrity of the profession.’ ” Baxt v. Liloia, 155 N.J. 190, 202, 714 A.2d 271 (1998).

II

Although N.J.S.A. 40:81-11 expressly allows the appointment of one person to the positions of attorney and clerk or manager, that is not the end of the inquiry. Resolution of the ethical propriety of an attorney’s conduct “is within the exclusive province of the Supreme Court.” Pickett v. Harris, 219 N.J.Super. 253, 260, 530 A.2d 319 (App.Div.1987). “[I]t is safe to say that generally, almost without exception, no branch of government has the power to authorize, either explicitly or implicitly, conduct by attorneys that violates the ethical standards imposed by the judiciary.” In re Opinion No. 621 of the Advis. Comm. on Prof l Ethics, 128 N.J. 577, 590, 608 A.2d 880 (1992). Although such judicial power may interfere with governing a municipality, “[n]either the Legislature nor the Executive has any power to overrule attorney ethical standards promulgated by this Court.” Id. at 591, 608 A.2d 880 (citing In re Genser, 15 N.J. 600, 607, 105 A.2d 829 (1954)). For example, this Court has held that “[a]n attorney, his partner or associate may not be counsel to a municipality and to the county in which it is located” because of the regular interaction between the two governmental entities. In re Opinion No. 415 of the Advis. Comm. on Prof'l Ethics, 81 N.J. 318, 327, 407 A.2d 1197 (1979).

We must therefore consider whether the holding of the two offices would pose an impermissible conflict of interest under R.P.C. 1.7(b). We find such an impermissible conflict because we believe that the position of municipal administrator, as contemplated by the inquiry, is akin to that of a chief daily operating officer of the municipality.² At one time there was no need for such an office of local government. Municipalities could gather once or twice a month to conduct public business. Part-time public officials, a clerk, a tax collector, a treasurer could attend to the daily operations of the municipality.

Local government has grown more complex, with increasing demands for cost efficiency on the one hand and for more sophisticated governmental services such as environmental or emergency management on the other. Many municipalities have entrusted the day to day conduct of their affairs to full-time municipal administrators. By a 1989 amendment to N.J.S.A. 40A:9-136, the Legislature authorized the delegation of partial or total executive responsibility to an administrator. See also, 34 New Jersey Practice, Local Government Law § 109 (Michael A. Pane) (2d ed.1993). Depending on the terms of the enabling ordinance, we would expect an administrator to arrange for the purchase of materials, supplies and equipment, to administer contracts necessary for the operation and maintenance of city services, to ensure the efficient use of all property owned by the city, to take care that all franchises are faithfully observed, to recommend such measures as are necessary for the health, safety or welfare of the community, to investigate, examine or inquire into the affairs or operation of any department, bureau, or office of the municipality, to interpret collective negotiation agreements and to give advice to boards, committees, agencies, departments or officials of the municipality.

Such a person will from time to time have the need for legal counsel concerning the propriety of actions taken in these many diverse areas of responsibility. More importantly, the administrator may need legal advice on actions that he or she may have already taken. When the municipal attorney counsels the municipal administrator, he or she is really giving legal advice to the municipality itself.

The attorney’s client is the municipal body as represented through its mayor, council and other officials. In re Opinion No. 662 of the Advisory Comm. on Prof'l Ethics, 133 N.J. 22, 25, 626 A.2d 1084 (1993). An attorney cannot reasonably be expected to give that body candid, objective advice concerning his own conduct as administrator.

We realize that in the private sector, the general counsel for a corporation may hold diverse executive responsibilities. A municipality, unlike a private corporation, cannot consent to a conflict of interest. In re Opinion 415, supra, 81 N.J. at 326, 407 A.2d 1197. The question thus is whether representation of the borough would be materially limited by the lawyer’s own interests, specifically, the lawyer’s own interests in vindicating his conduct as municipal administrator. We envision many circumstances in which the conduct of the administrator might be called into question and require legal counsel and advice, such as in employment decisions that might give rise to employment discrimination claims, in contract administration that might give rise to claims of preferential bidding, in licensing decisions that might give rise to claims of selective enforcement of ordinances. In all such circumstances, the borough administrator as chief operating officer of the municipality should have access to independent counsel and advice. The municipality is poorly served by an attorney whose personal interests are potentially in conflict with those of his client. In re Opinion 662, supra, 133 N.J. at 29-30, 626 A.2d 1084.

Petitioner suggests that such conflicts will rarely, if ever, arise and that if conflicts arise, outside counsel can be brought in to advise the municipality and the administrator. We do not consider that to be a sound solution when there is a recurring potential for disqualification. Id. at 30, 626 A.2d 1084. It is only when “the possibility of litigation is so remote that should actual conflict arise, the appointment of special counsel would be an appropriate remedy.” In re Opinion No. 653 of the Advisory Comm. on Prof'l Ethics, 132 N.J. 124, 135, 623 A.2d 241 (permitting two partners from the same firm'to serve as county counsel and school board counsel). Here, however, actual conflict is far from remote. There is substantial likelihood that outside counsel would or should be frequently required. The use of special counsel “not only increases the cost of legal services to the public, but also deprives the public client of representation by the attorney first selected by it.” In re Opinion 415, supra, 81 N.J. at 322, 407 A.2d 1197.

We respect the wishes of the Borough to engage for its day to day management an attorney in whom it has reposed great trust and confidence. Likewise, we respect the attorney who is certain that his integrity would assure an unfettered exercise of judgment in either capacity. Yet we must fashion a rule that will apply equally as well in more demanding circumstances, as in a fast-growing suburban community. It asks too much for an individual to be able to give objective advice to the municipality without being materially limited by the “lawyer’s own interest” as the subject of the inquiry.

For these reasons, we hold that one attorney may not hold both the position of municipal attorney and clerk-administrator for the same municipality. As modified, the advisory opinion of the ACPE is affirmed.

1 The attorney acknowledged that if the arrangement contemplated would be a fee for services arrangement, there would be a conflict; however, he assured the Court that the ordinance would be amended to clarify that the attorney's fee would be a flat fee.

2 Although holding the positions of clerk and borough attorney might not impose an impermissible conflict of interest, the Old Tappan ordinance requires that the administrator be the same person as the clerk.