This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on January 5, 2001, basing its approval solely on the facts and circumstances stated herein.

May a bank be selected by the county board of supervisors as a county depository when the attorney for the board of supervisors has a law partner serving on the bank's board of directors?

State law restricts the Mississippi Ethics Commission to interpreting and issuing opinions on Sections 25-4-101 through 25-4-119, 1972 Mississippi Code Annotated and Article IV, Section 109, Mississippi Constitution of 1890. Therefore, this opinion does not address the Mississippi laws outside the Commission's jurisdiction nor the governmental entity's internal rules and regulations.

The pertinent conflict of interest laws to be considered here are:

Code Section 25-4-101 states:

"The legislature declares that elective and public office and employment is a public trust and any effort to realize personal gain through official conduct, other than as provided by law, or as a natural consequence of the employment or position, is a violation of that trust. Therefore, public servants shall endeavor to pursue a course of conduct which will not raise suspicion among the public that they are likely to be engaged in acts that are in violation of this trust and which will not reflect unfavorably upon the state and local governments."

Code Section 25-4-103(c), (e), (f)(i)(ii), (g)(i), (h), (i), (k)(i)(ii) and (p)(i)(ii)(iii) states:

"(c) 'Business' means any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, holding company, self-employed individual, joint stock company, receivership, trust or other legal entity or undertaking organized for economic gain, a nonprofit corporation or other such entity, association or organization receiving public funds.

(e) 'Compensation' mean money or thing of value received, or to be received, from any person for services rendered.

(f) 'Contract' means:

(i) Any agreement to which the government is a party; or

(ii) Any agreement on behalf of the government which involves the payment of public funds.

(g) 'Governmental' means the state and all political entities thereof, both collectively and separately, including but not limited to:

(i) Counties.

(h) 'Governmental entity' means the state, a county, a municipality or any other separate political subdivision authorized by law to exercise a part of the sovereign power of the state.

(i) 'Income' means money or thing of value received, or to be received, from any source derived, including but not limited to, any salary, wage, advance, payment, dividend, interest, rent, forgiveness of debt, fee, royalty, commission or any combination thereof.

(k) 'Material financial interest' means a personal and pecuniary interest, direct or indirect, accruing to a public servant or spouse, either individually or in combination with each other. Notwithstanding the foregoing, the following shall not be deemed to be a material financial interest with respect to a business with which a public servant may be associated:

(i) Ownership of any interest of less than ten percent (10%) in a business where the aggregate annual net income to the public servant therefrom is less than One Thousand Dollars ($1,000.00);

(ii) Ownership of any interest of less than two percent (2%) in a business where the aggregate annual net income to the public servant therefrom is less than Five Thousand Dollars ($5,000.00).

(p) 'Public servant' means:

(i) Any elected or appointed official of the government;

(ii) Any officer, director, commissioner, supervisor, chief, head, agent or employee of the government or any agency thereof, or of any public entity created by or under the laws of the State of Mississippi or created by an agency or governmental entity thereof, any of which is funded by public funds or which expends, authorizes or recommends the use of public funds; or

(iii) Any individual who receives a salary, per diem or expenses paid in whole or in part out of funds authorized to be expended by the government."

Code Section 25-4-105(3)(a) and (4)(a) states:

"(3) No public servant shall:

(a) Be a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent, other than in his contract of employment, or have a material financial interest in any business which is a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent.

(4) Notwithstanding the provisions of subsection (3) of this section, a public servant or his relative:

(a) May be an officer or stockholder of banks or savings and loan associations or other such financial institutions bidding for bonds, notes or other evidences of debt or for the privilege of keeping as depositories the public funds of a governmental entity thereof or the editor or employee of any newspaper in which legal notices are required to be published in respect to the publication of said legal notices."

Pertinent facts and circumstances provided by the requestor, absent identifying data, are set forth as follows and considered a part of this opinion.

As the attorney for the County Board of Supervisors and as a shareholder and employee of Law Firm, I would like to have the opinion of the Ethics Commission as to whether or not a violation of the above-referenced Section 25-4-105(3)(a) of the Mississippi Code of 1972, as amended, would occur under the following set of circumstances, to wit:

1. I am employed as an attorney for the County Board of Supervisors and am paid on a monthly basis. I participate in all the retirement plans and other benefits offered by the employment, and all payments are made directly to me, not to Law Firm.

2. I am an employee and shareholder of Law Firm, a law firm located in the County. I am paid a monthly wage, and I participate in all benefits offered employees of Law Firm.

3. One of the other shareholders and employees of Law Firm is a director of Bank, located in the County, and he receives a director's fee. The bank does not withhold any social security or other items from his fee, and he does not receive any retirement or other employee benefits.

4. The County Board of Supervisors advertises for bids from financial institutions for a county depository pursuant to Section 27-105-305 of the Mississippi Code of 1972, as amended.

Please advise whether or not there will be a violation of Section 25-4-105(3)(a) of the Mississippi Code of 1972, as amended, if Bank has the highest and best bid as depository and the same is, in fact, accepted by the County Board of Supervisors.

In addition to the above facts, the shareholder and employee of Law Firm who serves as a director of Bank advised the Commission's staff that the director's fee he receives is paid directly to him and not to Law Firm as his service is in an individual capacity.

The Commission formally adopts Advisory Opinion No. 00-005-E in response to this request and by attachment incorporates it into this opinion.

Based solely on the facts and circumstances presented by the requestor, the Commission's opinion is as follows.

Code Section 25-4-105(3)(a), cited above, provides that a public servant of a governmental entity, including the board attorney of a county board of supervisors, shall not have a material financial interest in any business which is a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent.

The requestor as the board attorney for the county board of supervisors stands in the same position as the board attorney for the board of trustees of the public school district discussed in the attached Advisory Opinion No. 00-005-E.

Therefore, like the board attorney for the board of trustees of the public school district, the requestor as attorney for the county board of supervisors would violate Code Section 25-4-105(3)(a) should the county board of supervisors contract with a bank to serve as its depository, or for any other reason, if the requestor was a member of the bank's board of directors and had a material financial interest in the bank. Also, the requestor is directed to Advisory Opinion No. 00-005-E and its attached advisory opinion which state that being a member of a bank's board of directors does not fall within the statutory exception found in Code Section 25-4-105(4)(a), cited above, which refers only to an officer or stockholder.

Notwithstanding the above, the question presented here is whether the requestor will violate Code Section 25-4-105(3)(a) should a partner in his law firm serve as a member of the bank's board of directors and the county board of supervisors select the bank as its depository.

This Commission has consistently recognized that the professional rules governing attorneys consider any contract to represent a client held by one partner of a law firm is actually held by the law firm and thereby its other partners. A law firm's partner is not to hold himself apart from the law firm to represent one or more clients. This understanding is consistent with opinions of the Mississippi State Bar.

In fact, a governmental entity's contract for legal services can certainly result in the law firm being an agent of the governmental entity and thereby all its partners being public servants of the governmental entity not just the one designated as the "board attorney."

However, it is clear that the State Legislature in passing the exception found in Code Section 25-4-105(4)(a) intended that banks be able to serve as depositories for local governmental entities if the public servant individually did not hold a position with the bank, such as board of director member, whereby a fiduciary and/or trust responsibility was owed the bank thus conflicting with the public servant's public fiduciary and/or trust responsibility.⁽¹⁾

Therefore, the narrow and limited variation from the principle that a law firm's partners are not to hold themselves apart from the law firm in representing public clients is set forth below.

A law partner of an attorney of a local governmental board may serve on the board of directors of a bank selected by said local governmental board as its depository without violating Code Section 25-4-105(3)(a) if the following circumstances exist.

The circumstances are:

1. The law partner serving as board attorney is individually employed by the local governmental board as anticipated by Code Section 19-3-47(1)(a) and the law firm is not employed by the local governmental board as anticipated by Code Section 19-3-47(2). The board attorney must be paid as an employee of the local governmental board and no fees and/or other compensation paid by the local governmental board for legal services can accrue, directly or indirectly, to the law firm or benefit, directly or indirectly, the law firm.

2. The law partner serves as a member of the bank's board of directors in his individual capacity and all fees and compensation paid for such individual service by the bank accrues to the law partner individually and not to the law firm.

3. The board attorney has properly notified the local governmental board of his law partner's service on the bank's board of directors prior to any depository selection and the board attorney has properly recused himself from the local governmental board's depository selection to comply with the public policy mandate set forth in the above cited Code Section 25-4-101.⁽²⁾

The requestor is advised that this opinion is limited solely to the limited factual circumstance of a law partner of an attorney of a local governmental board serving on the board of directors of a bank selected by the local governmental board as its depository when the board attorney is individually employed by the local governmental board.

Therefore, the requestor is cautioned that other factual circumstances such as the law firm or its partners having a material financial interest in the bank by way of other contractual interests and/or other pecuniary benefits or such as the law firm or its partners having other contractual arrangements with the local governmental board are not addressed by this opinion. Such additional factual circumstances could certainly result in a violation of Code Section 25-4-105(3)(a) or other state conflict of interest laws.
 
 
 
 
 
 

Ronald E. Crowe

Executive Director

1. Board member of governmental bodies and boards always have such a fiduciary and/or trust responsibility that conflicts with there public fiduciary and/or trusts responsibilities when their bodies or boards contract with banks because of the prohibitions imposed specifically on public board members by Constitutional Section 109 and Code Section 25-4-105(2).

2. The requestor is referred to the attached Advisory Opinion No. 00-005-E in regard to the discussion of Code Section 25-4-101 and what constitutes a total and complete recusal. (Infra pgs. 7-8.)