Thursday, March 29, 2001
‘Councilman, Remember Those Free Legal Services I Gave You? Well...’
By ROGER M. GRACE
At the outset of the Political Reform Act of 1974, the aims of the act are set forth.
Government Code §81001(c) recites: "Costs of conducting election campaigns have increased greatly in recent years, and candidates have been forced to finance their campaigns by seeking large contributions from lobbyists and organizations who thereby gain disproportionate influence over governmental decisions[.]"
Sec. 81002(b) spells out: "The activities of lobbyists should be regulated and their finances disclosed in order that improper influences will not be directed at public officials."
Yet, lobbyists who are lawyers are unrestricted in heaping donations on candidates and officeholders (in their capacities as candidates and officeholders) in the form of free legal services. As I pointed out in my last column, donations in that form do not have to be reported.* The loophole is contained in §82015(g) which says that a "contribution," as the term is used in the act, "does not include volunteer personal services."
Lawyer/lobbyists are not rarities. Ones that are registered in the City of Los Angeles, as of its latest report, appear in the box below.
How often do lawyer/lobbyists provide free services to those they lobby?
Howard Sunkin, a City Hall lobbyist and vice president of Cerrell Associates, Inc., says he doesn’t know of this being a common practice, but adds: "Maybe it’s a common practice but they do it discreetly and quietly and nobody knows about it."
"I wouldn’t do it," former County Bar President Sheldon H. Sloan, who is registered as a lobbyist, declares. The former Los Angeles Municipal Court judge adds: "I don’t know of anybody that does."
I do know of someone who does: Neil Papiano. Papiano is known to have provided free legal services to his chum Hal Bernson, a Los Angeles City Council member. Papiano provided such services in connection with an administrative enforcement action against Bernson for misuse of officeholder funds, an action resulting in a $1,500 fine in 1997.
Papiano’s law firm, Iverson, Yoakum, Papiano and Hatch, was itself fined $4,000 last October in connection with free services to Bernson—but the services were not those provided by Papiano, considered a "volunteer" lawyer. The services were those of two lawyers and one paralegal whom the firm paid for their efforts, and who devoted more than 10 percent of their time during certain months of the 1996-97 fiscal year to the Bernson matter.
(The commission alleged that the firm’s contributions to Bernson’s officeholder account in the forms of cash, unreimbursed costs, and services it paid its employees to perform exceeded the $1,000 contribution limit by $4,700.79. Under the stipulated resolution, Bernson paid a $3,000 fine.)
For the present, Papiano does not have influence over Bernson’s votes with respect to matters Papiano is lobbying on. On Oct. 16, 1999, Bernson announced from the City Council floor that, to avoid any "appearance of impropriety," he would not vote on a proposed five-year extension of a contract with Nederlander-Greek Inc. to operate the city-owned Greek Theater. Papiano is lobbyist for Nederlander-Greek and one of its principals. Bernson’s action came on the heels of a revelation by the Los Angeles Times that Bernson had paid Papiano $140,000 for a half-interest in an Encinitas condominium, an interest which the San Diego assessor had valued at $387,000. What is noteworthy is that Bernson did not recuse himself based on the fact that Papiano has been his non-charging attorney.
Papiano has, by the way, represented Bernson before. On Jan. 17, 1992, Papiano filed a libel suit on Bernson’s behalf based on the contents of a dossier on the councilman leaked to newspapers in the late 1980s. Papiano continued to represent Bernson in the case when it went to the appellate courts. You’ll find his name as counsel for Bernson in the California Supreme Court’s opinion in Bernson v. Browning-Ferris Industries (1994) 7 Cal. 4th 926.
While §82015(g) does not obviate the need of City Council members to report gifts of services provided to them personally, the legal services Papiano conferred in connection with the libels suit by Bernson did relate to allegations of a political nature and would not appear to have been subject to reporting requirements. ("Political purposes" are broadly defined under campaign laws and officeholders are deemed to remain "candidates" throughout their terms.) It must be assumed, in light of no cause to suspect to the contrary, that legal services Papiano has provided to other City Council members in clearly private matters has been either been charged for or reported as a gift.
For all I know, Bernson paid Papiano exorbitant fees in connection with enforcement proceedings over the Hollywod Bowl tickets. But that’s just it—I don’t know, you don’t know, and we can’t find out.
One general purpose behind the Political Reform Act is to bring sunshine to the political process. But the loophole created by a provision in that act, §82015(g), permits attorneys (and others) to bestow services on politicians, with no light cast on the extent of the services or their value, or even that they have been rendered. A revamping of that section strikes me as a good idea.
Reforms can be effected at the local level, even with the Government Code section remaining as is. That’s not only because Los Angeles is a chartered city, but because Government Code §81013 says that nothing in the Political Reform Act prevents a "local agency from imposing additional requirements on any person if the requirements do not prevent the person from complying with this title."
The Los Angeles City Ethics Commission on March 20 voted to look into ways to cut down on lobbyists’ influence on city officials, with an emphasis on barring them from using lobbyists as campaign consultants. That action followed publication of articles in the Times reporting heavy reliance by City Council members on consultants who are also lobbyists.
While the commission is pondering what to do itself or recommend to the City Council in connection with lobbyists, it might consider the appropriateness of free legal services secretly rendered by lobbyists to those who are elected city officials or are vying to acquire that status. Even if Papiano is the only lawyer/lobbyist in town who donates legal services to those he lobbies (which I suspect is not so), what matters is that there are loopholes in the law relating to lobbyists that shouldn’t exist, and there is at the least a potential for abuse.
Thus far, however, the Ethics Commission has not voiced a concern over this situation but, rather, has seemingly acted to conceal it. In its Oct. 30 press release in which it trumpeted its triumph over Papiano and Bernson, commission president Miriam Krinsky was quoted as saying:
"Those who provide free or discounted legal services to candidates and elected officials should be treated no differently than those who contribute any other services or monetary sums to elected officials. This enforcement action puts any provider of services, including those who provide legal services, on notice that they, too, are be [sic] subject to contribution limits under City law."
The implication, of course, is that if a lawyer provides legal services to a candidate for city office or an elected city official, those services constitute a "contribution" which is subject to contribution limits. In fact, Papiano had provided free legal services but was not put on the same footing with those contributing "monetary sums" because, in light of §82015(g), the services were not deemed by the commission to be a "contribution."
Krinsky apparently did not appreciate that her public statement contradicted the legal conclusions reached by the commission’s lawyers. This cannot be dismissed as confusion on the part of a layperson. She’s an assistant U.S. attorney and is a senior vice president of the Los Angeles County Bar Assn.
I learned of the contribution-limit exemption for lawyer/lobbyists who volunteer their services in reviewing documents the commission provided—but only after receiving a Public Records Act request for them. I assumed that the documents would reflect Papiano’s hourly rate.
(The rate was of relevance to litigation in which the Metropolitan News Company was seeking to overturn a county contract awarded to the Daily Journal Corporation in part based on the contention that DJC was represented in connection with that contract by an unregistered lobbyist, Papiano. Though Papiano registered with the city—after it threatened to institute an administrative enforcement action against him for refusing to do so—he is not registered with the county.)
Rather than finding information in the documents as to the value of Papiano’s unbilled services to Bernson, I found that the commission had been entirely unconcerned about the extent of the benefit conferred by Papiano, personally, on Bernson—it was "not at issue," a brief filed by the director of enforcement said.
The commission would have better served the public had it spotlighted in its Oct. 30 press release that services provided by the lobbyist, himself, were not implicated, and that it is powerless to control free legal services of a lawyer who is not compensated for them by his or her firm. Instead, it implied to the contrary.
It’s time to confront,
and not conceal, the loophole.
Mark S. Armbruster and Clare Bronowski of Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP
Wayne Avrashow of the Law Office of Wayne Avrashow
Donald P. Baker, William F. Delvac, Jeffrey S. Haber, Marian A. Harvey, Sharon J. Keyser, Lindsey C. Kozberg, Patrick J. Michell, George J. Mihlsten, Loren M. Montgomery, Dale K. Neal, E. Michael Nytzen, Joseph A. Palombi, Francis Y. Park, Lucinda Starrett, David H. Vena and Rick Zbur of Latham and Watkins
Ellen M. Berkowitz, Donna R. Black, George D. Kieffer, Kenneth D. Rozell, Lisa Specht, David F. Thompson and Candace A. Younger of Manatt, Phelps and Phillips
John M. Bowman, Kevin K. McDonnell, Benjamin M. Reznik and Monica D. Witt of Jeffer Mangels Butler & Marmoro
Linda J. Bozung of Brobeck Phleger & Harrison LLP
Gregory C. Brown of Bright & Brown
Philip M. Brown, Lee A. Egerman and Mark Egerman of Egerman & Brown LLP
Nicki Carlsen, John C. Funk, Amanda F. Susskind and Steven W. Weston of Weston, Benshoof, Rochefort, Rubalcava & MacCuish
Douglas P. Carstens and Jan Chatten-Brown of Chatten-Brown & Associates
Robert J. Comer, Heidi K. Eick, Kacy C. Keys and Michael J. Kiely, Jerold B. Neuman, Patrick A. Perry, Sonia R. Ransom and Gerald A. Wells of Allen Matkins Leck Gamble & Mallory LLP
Fred N. Gaines of Gaines & Stacey
Dale J. Goldsmith, Veena D. Persaud and Elizabeth Watson of Greenberg Glusker Fields Claman & Machtinger LLP
Lorna Gail Gordon of Hughes Hubbard & Reed LLP
Shawna L. Ballard, J. Michael Hennigan and Sean M. Kneafsey of Hennigan Bennett and Dorman
Corin L. Kahn
Peter D. Kelly of Kelly Lytton Mintz & Vann LLP
Edwin K. Marzec of Arter & Hadden
Cynthia McClain-Hill of McClain-Hill Associates
Neil Papiano of Iverson Yoakum Papiano & Hatch
Dominick W. Rubalcava
Jack H. Rubens of Sheppard Mullin Richter & Hampton LLP
Sheldon H. Sloan of Sheldon H. Sloan—a Professional Corporation
Michael F. Woodward of Paul Hastings Janofsky & Walker LLP
*For a contrary view, see a letter to the editor from the president and the executive director of the city Ethics Commission. [Return to text.]
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