Acceptance of Legal Fees by United States Attorney

U nited S tates A ttorney would be prohibited by 18 U .S .C . § 205(1) from accepting an attorney’s fee
   generated in a case that he handled while in private practice, if the lawsuit were determ ined to
   co nstitute a claim against the U nited States, and if his interest in the fee was o f a contingent nature
   at th e tim e he began government service.

W h eth er a m atter in litigation constitutes a claim against the United States for purposes of 18 U .S .C .
   § 205 dep en d s not upon whether th e U nited States is a plaintiff o r defendant, but upon w hether the
   U nited States has a significant m onetary interest at stake in the lawsuit.


                                                                                    November 4, 1982

              MEMORANDUM OPINION FOR THE DIRECTOR,
           EXECUTIVE OFFICE FOR UNITED STATES ATTORNEYS

   You have asked for our views on the propriety of a United States Attorney
accepting an attorney’s fee generated in a case that he handled while in private
practice. While we do not have sufficient information to reach a conclusive
determination on this question, the following discussion should assist you in
making your decision in the matter.
   You have advised us that prior to his appointment as United States Attorney,
Mr. A negotiated a proposed settlement for his clients in a suit you characterized
as “ a title dispute between relatives” where the United States was named as a
“ nominal party” because the farm er’s Home Administration (FmHA) held a
mortgage on the property. Mr. A states that although he negotiated the settlement
prior to assuming his position as the United States Attorney, a final consent
decree was not entered in the case until the defendants were able to obtain a loan
from the FmHA to pay the settlement. The settlement was entered approximately
a year and a half after Mr. A assumed his position as the United States Attorney.
During this year and a half, Mr. A’s former clients were represented by another
lawyer, who has tendered to Mr. A $1,265.50, which constitutes one-half of the
contingent fee collected from the clients.1


  1 We presume that the 50-50 split of any attorney’s fee collected was agreed upon between the lawyers before Mr.
A assumed his position as United States Attorney. We also understand that the total attorney’s fee collected was
based upon M r A ’s original agreement w ith his clients that they would pay as an attorney's fee one-third of any
amount recovered in the suit.

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   As you know, the applicable conflict of interest statute is 18 U.S.C. § 205. In
pertinent part this statute prohibits officers or employees of the United States
from receiving any share of or interest in any claim against the United States. 18
U.S.C. § 205(1). As a preliminary matter, you will want to determine whether
this suit can reasonably be said to constitute a “ claim against the United States.”
In our view, this is primarily a question of fact that you must determine by
reviewing the nature of the interests of the FmHA in this lawsuit.2
   As you know, there is some judicial authority to support the proposition that
not every case involving the monetary interests of the government necessarily
constitutes a claim against the United States. In United States v. 679.19 Acres cf
Land, 113 F. Supp. 590, 593 (D.N.D. 1953) the court held that the predecessor
statute to § 205( 1) did not bar an employee of the Soil Conservation Service from
testifying under subpoena as an expert witness in a land condemnation suit. In
reaching this conclusion, the court stated that the suit did not constitute a claim
against the United States because the United States was the plaintiff rather than
the defendant in the suit. While we agree with the court that giving expert
testimony was not within the intended purview of § 205 as it then read,3 we do not
agree that the position of the United States as plaintiff or defendent is controlling
in determining the application of § 205(1). Rather, we suggest that the inquiry
into whether a matter is a claim against the United States should be focused on
whether the United States has a significant monetary interest at stake in the
lawsuit. See also Office of Legal Counsel Memorandum of November 9,1966, to
the Assistant Attorney General, Land and Natural Resources Division.
   If you determine that this lawsuit does constitute a claim against the United
States, the transaction described in your memorandum would seem to fall within
the prohibition of § 205( 1). If, however, the problem of this contingent fee had
been raised at the time Mr. A was appointed United States Attorney, it may have
been possible to arrange for him to receive quantum meruit compensation for his
past service without contravening § 205(1). More specifically, Mr. A might have
eliminated his interest in the claim by (1) reducing his fee to a sum certain
calculated on the basis of work actually performed (rather than percentage of the
amount recovered) and (2) collecting this amount (or a lesser amount discounted
to account for the speculative nature of the fee entitlement) from his succeeding
counsel. As you know, the Department routinely recommends this method to
incoming attorneys who must eliminate contingent fee interests in litigation
involving the United States. See e.g .. Office of Legal Counsel Memorandum of
November 9, 1966, supra.
   We recognize that it is not factually possible to turn back the clock in this case
to remove the contingent nature of the tendered fee. On the other hand, a
thorough review of the facts may reveal that the contingent aspect of this fee was
effectively eliminated by the settlement agreement arranged prior to Mr. A ’s

   2 We are not in a position to make this determination based on the scant facts provided by Mr. A, and we will defer
lo your judgment on this point.
   3 This view was incorporated into the statute when it was amended in 1962 See 18 U.S C § 205 (last clause)
[exempting the giving of testimony under oath from the application of the statute].

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assumption of federal office.4 If your review of the facts convinces you that this
was the case, we would not object to after-the-fact arrangement of the sort
described above. That would simply mean that Mr. A ’s fee would have to be
scrutinized and, if necessary, reduced to ensure that it represents no more than a
fair hourly fee for services actually rendered.
   In the future you may wish to take steps to encourage employees to make
arrangements to eliminate contingent fees at the time that they begin government
service. In the case of persons required to file financial disclosure forms, you will
have an opportunity to raise and resolve such problems at the time that you review
their financial disclosure reports. In some cases this issue will be raised by the
report itself in the section disclosing relationships with former employers, in our
view it would be a good practice to question prospective employees specifically
about any interests in contingent fees, whether or not the issue is raised in their
reports.

                                                                 T h eo d o re B. O       lso n

                                                             Assistant Attorney General
                                                              Office c f Legal Counsel




  4 In reviewing the facts, you should inquire into the reasons why (1) the settlement was not made final for a year
and a half, (2) Mr. A was willing to give a full 5 0 percent o f the fee to the succeeding counsel, and (3) the FmHA was
willing to fund the settlement In addition, you should satisfy yourselves that Mr A played no role, as the United
States Attorney, in convincing the FmHA to provide the loan that funded the settlement.

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