BG Advisor Note | "New Austin Lobbyist Compensation Complaints" by Andy Cates
By: Andy Cates (Reposted with author's permission)
Have you ever seen a documentary where they film a fight between two apex predators? It's crazy to watch - it's bloody and it's exciting, usually with an intense musical score to build tension, but the final result is always the same: One wins and the other loses.
The Austin American Statesman ran an article Friday that displays much of the same tension-building and drama of a documentary predator fight, but this time it's between some big-time lawyer/lobbyists, and it very well may end up with the rest of us who lose in this fight.
Perennial watchdog Fred Lewis filed 17 ethics complaints against lobbyists this week, not because they failed to register or anything that we usually hear, but rather because they are also lawyers and are citing very specific rules which they say prohibit them from disclosing how much they are being compensated by their clients.
The requirement to disclose how much a client is paying a lobbyist is nothing new and has been upheld a number of times as an allowable restriction on lobbyists due to the prevailing state interest of transparency in the political process.
However, the lawyers cite Rule 1.05 of the Texas Disciplinary Rules of Professional Conduct for attorneys, and Chapter 81 of the Government Code which governs the State Bar of Texas.
To be honest, I haven't read all the way through Chapter 81 because it deals almost entirely with the set up and procedure of operating the State Bar. I have no idea what section in there they would be referring to, but I'm sure they found something that they feel justifies their actions.
However, the citation of Rule 1.05 is an interesting one. Rule 1.05 governs the confidentiality of information between an attorney and their client. This is generally the "attorney-client privilege" rule and it lays out a number of different scenarios in which a communication and information learned in that communication between an attorney and his/her client is or is not considered privileged client information.
A couple of things to note here:
- The fact that these attorneys specifically cite this rule and/or state "confidential attorney-client information" as a reason to not disclose the compensation amount means very likely that in their contracts with their clients, they specifically state that the compensation amount is considered confidential information.
Do I have any proof to back that up? No.
But to me, there's no other plausible reason that compensation amount would be considered attorney-client privileged unless it was specifically stated to be confidential in the employment agreement.
Again, this is just my opinion, but I don't believe this rule of confidentiality was ever intended to apply to the compensation provided to the attorney. In my view, the rule regarding attorney-client privilege is there to protect the communications between a client and his advocate so that the advocate can know private facts that will help with the client's representation. The rule specifically states:
"Privileged Information" refers to the information of a client protected by the lawyer-client privilege of Rule 503 of the Texas Rules of Evidence or of Rule 503 of the Texas Rules of Criminal Evidence or by the principles of attorney-client privilege governed by Rule 501 of the Federal Rules of Evidence for United States Courts and Magistrates."
Not once in Rule 1.05 does it mention the compensation agreement, nor is it mentioned in any of the above rules to my knowledge.
This signals to me that the compensation arrangement would be specifically made to be confidential information in the employment agreement in an effort to avoid disclosing it at any point in the future.
2. The rule also says:
(c) A lawyer may reveal confidential information: ...
(4) When the lawyer has reason to believe it is necessary to do so in order to comply with a court order, a Texas Disciplinary Rule[s] of Professional Conduct, or other law. [emphasis added]
So it even provides the attorney an out to disclose the information to comply with other laws out there. One that particularly piques my interest is Section 4-8-6 of the Austin City Code that specifically lays out the compensation blocks in which lobbyist compensation must be reported on the quarterly activity report.
However, the rule does not necessarily require the attorney to do so in order to comply with "other law" it just allows an attorney to do so. Here, they are not choosing to do so.
I know, "get to the point, nerd."
The bottom line is, who is right in this apex predator fight?
As I mentioned, the city ordinance clearly requires the lobbyist to report their compensation. The question really hinges on whether lawyer lobbyists are implicitly exempted by virtue of the fact that they are lawyers and can structure their fee arrangements to be confidential.
Personally, I think that lawyers should not be able to use the color of attorney-client privilege to structure fee arrangements specifically to keep from disclosing them. Is this assuming a lot on my part? Sure. But it certainly looks that way to me.
Since these were complaints filed with the Ethics Review Commission, they'll get the first crack at it. The AAS was correct in its assertion that:
"Even if the city’s Ethics Review Commission, a council-appointed board, finds the lobbyists violated ethics rules, it would still have to refer the cases to the city attorney for actual prosecution. The offense would be a Class C misdemeanor with a maximum fine of $500."
So basically a slap on the wrist. The problem is, I don't think the ERC really even has the jurisdiction to make a determination on withholding confidential privileged information. That's really a determination to be made by the State Bar disciplinary committee if a complaint is ever even filed there.
So I don't think the complaints were a bad idea, but I do think that we shouldn't expect much out of them. I think the most we can look forward to here is a long advertising and press campaign on the issue, lots of esoteric debate on something most people don't understand, and eventually even if the City Attorney does move forward with fines based on violation of city code, we should expect numerous appeals to district court and beyond.
My guess is that this issue won't be resolved for a minimum of 5 years. Only through a real court process will we get the answers we need here, unfortunately. And worse still, this could prompt statewide lawyer-lobbyists to try the same tactic at the state level in filing with the Texas Ethics Commission.
All of which really means - taxpayers pay for the city/state to defend itself in court and you guessed it, we all lose.