Can a new judge keep collecting accounts receivable and retirement benefits from a former law firm, and what disqualification follows?

Currency note

The Board withdrew this opinion by Opinion 2021-06 on August 6, 2021; it is no longer current guidance. It also interprets the former Ohio Code of Judicial Conduct, which the Board flagged as superseded by the Ohio Code of Judicial Conduct effective March 1, 2009. Treat this page as historical context, not current guidance. Verify against the current Ohio Code of Judicial Conduct before relying on any specific rule or requirement mentioned here.

Plain-English summary

A newly elected or appointed judge asked whether they could continue receiving money from a former law firm after taking the bench, and how to report it. The Board concluded that neither the Code of Judicial Conduct nor the Rules of Professional Conduct require a new judge to forfeit fees earned for legal services rendered before assuming office. For hourly and flat-fee matters, the judge may collect the agreed amounts as accounts receivable. For a contingent-fee matter completed before the judge is sworn in, the judge may collect the agreed contingent fee. For a contingent-fee matter not yet completed, the Board advised that the most prudent approach, as an ethical matter (the legal question of entitlement being outside its authority), was for the judge to accept quantum meruit compensation once the contingency occurs, mirroring how a discharged lawyer is compensated under Reid, Johnson, Downes, Andrachik & Webster v. Lansberry.

The Board tied the receipt of former-firm money to mandatory disqualification. Under Canon 3(E)(1), a judge must disqualify from any proceeding in which impartiality might reasonably be questioned, and the Board concluded that receiving payments from a former firm always implicates that canon when the firm appears as counsel; Canon 3(E)(1)(c)'s economic-interest ground may also apply on particular facts. Remittal of disqualification under Canon 3(F) will usually be unavailable, because a reasonable person would likely perceive a personal bias toward the paying firm, though remittal might occasionally be appropriate for an insignificant amount.

The Board reached the same result for retirement benefits. Rule 5.6(a) of the Rules of Professional Conduct expressly permits firm agreements conferring retirement benefits, so a partner who leaves for the bench may receive an agreed percentage of fees on the judge's former clients for an agreed number of years. But disqualification under Canon 3(E)(1) follows for as long as the payments continue, and the Board cautioned that a judge and former firm should not maintain a financial relationship indefinitely; Canon 2(C) directs a judge to avoid continuing business relationships with lawyers likely to appear and to manage finances to minimize disqualifications. On reporting, Canon 2(D)(3)(a) requires the judge to list the former firm as a source of income on the annual financial disclosure statement, but such payments need not appear on the Quasi-Judicial or Extra-Judicial Activity Compensation Report because they arise from the pre-bench practice of law.

Common questions

Q: Did a new judge have to give up fees earned before taking the bench?

A: No. The opinion concluded no rule requires forfeiture of legal fees earned before assuming judicial office; the judge may collect them as accounts receivable.

Q: How were unfinished contingent-fee matters handled?

A: Per the opinion, the most prudent ethical approach was for the judge to take quantum meruit compensation once the contingency occurred, for services performed before taking the bench.

Q: What was the disqualification consequence of taking former-firm money?

A: The opinion concluded the judge must disqualify, under Canon 3(E)(1), from any case in which the former firm is counsel for a party while the payments continue.

Q: Could the judge receive former-firm retirement benefits?

A: Yes. The opinion concluded Rule 5.6(a) permits retirement-benefit agreements, but the same disqualification applies and the relationship should not continue indefinitely.

Background and rules framework

The opinion applies the former Ohio Code of Judicial Conduct: Canon 4(F) (a judge shall not practice law), Canon 3(E)(1) and (E)(1)(c) (disqualification), Canon 3(F) (remittal), Canon 2(C) (avoiding continuing business relationships and minimizing disqualifications), and Canon 2(D)(3) (financial-disclosure and activity-compensation reporting) (Model Code of Judicial Conduct Canons 2, 3). It also applies Ohio Prof. Cond. R. 5.6(a), which permits agreements on retirement benefits (Model Rule 5.6).

Citations and references

Code of Judicial Conduct and Rules of Professional Conduct:

• Former Ohio Code of Judicial Conduct Canon 4(F), Canon 3(E)(1), Canon 3(F), Canon 2(C), Canon 2(D)(3) (Model Code of Judicial Conduct Canons 2, 3)
• Ohio Prof. Cond. R. 5.6(a) (Model Rule 5.6)

Cases:

• Reid, Johnson, Downes, Andrachik & Webster v. Lansberry, 68 Ohio St.3d 570 (1994), quantum meruit recovery for a discharged contingent-fee lawyer

Other opinions cited:

• Ohio BPC Op. 95-3 (1995): new judge's disqualification while collecting former-firm accounts receivable

See also

• Ohio BPC Op. 2006-007: Judge on the Board of a Non-Profit That Contracts With the Court
• Ohio BPC Op. 1991-027: Judge Involvement in a Business Joint Venture
• Ohio BPC Op. 1989-010: Judge Disqualification and the Third-Degree-Relative Rule

Source

• Landing page: https://ohioadvop.org/advisory-opinion-index/
• Original PDF: https://www.ohioadvop.org/wp-content/uploads/2017/04/Op_07-002.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

The Supreme Court of Ohio
BOARD OF COMMISSIONERS ON GRIEVANCES AND DISCIPLINE
65 SOUTH FRONT STREET, 5TH FLOOR, COLUMBUS, OH 43215-3431
(614) 387-9370 (888) 664-8345 FAX: (614) 387-9379
www.sconet.state.oh.us

                                       OFFICE OF SECRETARY
                                OPINION 2007-2
                              Issued April 13, 2007
                         Withdrawn by Adv. Op. 2021-06

[Former CJC Opinion-provides advice under the former Ohio Code of Judicial Conduct which is
superseded by the Ohio Code of Judicial Conduct, eff. 3/1/2009.]

Syllabus: A new judge is not restricted by the Ohio Code of Judicial Conduct or
the Ohio Rules of Professional Conduct from receiving accounts receivable from
his or her former law firm for legal services provided by the judge prior to
assuming judicial office, but during this time the judge must disqualify from cases
in which the former firm is counsel for a party. In hourly rate matters, the judge
would be entitled to receive the accounts receivable reflecting the number of
hours billed by the judge times the agreed upon hourly rate. In flat fee matters,
the judge would be entitled to receive the accounts receivable for the agreed
upon flat fee. In a contingent fee matter that is completed before the judge is
sworn into office, the judge would be entitled to receive the accounts receivable
for the agreed upon contingent fee rate in the fee agreement. In a contingent fee
matter that is not completed before the judge is sworn into office, the most
prudent approach is for the judge to accept compensation, once the contingency
occurs, based upon quantum meruit for the services performed prior to assuming
judicial office.

A new judge is not restricted by the Ohio Code of Judicial Conduct or the Ohio
Rules of Professional Conduct from receiving retirement benefits from his or her
former law firm pursuant to a law firm agreement. For example, pursuant to a
retirement agreement, a judge may receive a percentage of the legal fees earned
by other attorneys in the firm for providing legal services to the judge’s clients
while the judge was with the firm and during an agreed upon number of
years after the judge’s departure from the law firm. During the time the judge
receives retirement benefits from his or her former law firm, the judge must
disqualify from cases in which the former firm is counsel for a party. The
time period for receiving retirement benefits should be reasonable in order
to minimize the number of cases in which the judge will be disqualified. A judge
and a former law firm should not maintain a financial relationship ad infinitum.

Pursuant to Canon 2(D)(3)(a), if a judge receives payments from his or her
former law firm of accounts receivable for legal services provided by the
judge prior to assuming judicial office and or receives payments of retirement
benefits from his or her former law firm pursuant to the law firm agreement,
the judge must list the former law firm as a source of income on the
annual financial
Op. 2007-2 2

disclosure statement. Such payments are not required to be reported on the
Quasi-Judicial or Extra-Judicial Activity Compensation Report.

Opinion: This opinion addresses questions regarding a judge receiving
compensation from a former law firm for accounts receivable and retirement
benefits.

  1. Is it proper for a new judge to receive accounts receivable from
     his or her former law firm for legal services provided by the
     judge prior to taking the bench?

  2. Is it proper for a new judge to receive retirement benefits from
     his or her former law firm pursuant to the law firm’s partnership
     agreement through which the judge is paid a percentage of the
     legal fees earned by other attorneys in the firm for providing
     legal services to the judge’s clients while the judge was with the
     law firm and during an agreed upon number of years following
     the judge’s departure from the law firm?

  3. Must a judge report payments received from a former law firm
     on the Financial Disclosure Statement and the Quasi-Judicial or
     Extra-Judicial Activity Compensation Report?

Question 1

The Ohio Code of Judicial Conduct and the Ohio Rules of Professional Conduct
do not provide direct guidance regarding a judge’s compensation from his or her
former law firm during the judge’s transition from law firm practice to judicial
service. Advice as to the questions raised require a construction of the rules.

Newly elected or appointed full-time judges must relinquish the practice of law
upon assuming judicial office. Canon 4(F) prohibits a full-time judge from the
practice of law, with narrow exceptions for pro se actions and for uncompensated
legal advice, document drafting or revisions for members of the judge’s family.
[Pursuant to the Compliance Section of the Code of Judicial Conduct, part-time
judges are not subject to Canon 4(F)].

                              Canon 4(F)

  A judge shall not practice law. Notwithstanding this prohibition, a
  judge may act pro se and, without compensation, may give legal
  advice to and draft or revise documents for a member of the judge’s
  family.

Op. 2007-2 3

                               Terminology

   “Member of the judge’s family” denotes a spouse, child, grandchild,
   parent, grandparent, or other relative or person with whom the
   judge maintains a close familial relationship.

Newly elected or appointed judges are not expected or required to forego
compensation for legal services they provided before assuming judicial office.
No rule in either the Code of Judicial Conduct or the Rules of Professional
Conduct can be construed to require such forfeiture of legal fees earned prior to
taking the bench.

Often the compensation due to the judge will be straightforward, such as when
the legal services were provided pursuant to an hourly fee or flat fee agreement.
In hourly rate matters, the judge would be entitled to receive the accounts
receivable reflecting the number of hours billed by the judge times the agreed
upon hourly rate. In flat fee matters, the judge would be entitled to receive the
accounts receivable for the agreed upon flat fee.

But sometimes, the compensation due to the judge is less clear, such as in
contingent fee matters that are not completed before the judge assumes judicial
office. If the contingent fee matter is completed before the judge is sworn into
office, the judge would be entitled to receive the accounts receivable for the
agreed upon contingent fee rate in the fee agreement. But if the contingent fee
matter is not completed before the judge is sworn into office, there is no clarity as
to how the judge is to be compensated. Is the judge entitled to compensation
based upon the agreed upon contingent fee rate or is the judge entitled to
compensation based on quantum meruit? Is the judge entitled to compensation
before the contingency occurs or must the contingency occur?

Questions regarding compensation to judges pursuant to contingent fee
agreements in matters that are not completed before being sworn into office raise
both legal and ethical issues. The legal issues are outside the advisory authority
of this Board. The Board must limit its advice in this opinion to the Ohio Code of
Judicial Conduct and the Ohio Rules of Professional Conduct. See Gov.Bar R. V
§ (2) (C).

The Board’s guidance from an ethical standpoint is as follows. The most prudent
approach in a contingent fee matter that is not completed before the judge takes
the bench is for the judge to accept compensation, once the contingency occurs,
based upon quantum meruit for services performed prior to assuming judicial
office. In some circumstances, such as when the contingency fee matter was
nearly completed before taking judicial office, the quantum meruit compensation
might equal the agreed upon percentage rate in the contingency fee contract. In
other circumstances, such as when the contingency fee matter was undertaken
shortly prior to taking the bench and little work was performed by the judge on
Op. 2007-2 4

the matter, the quantum meruit would most certainly not approach the agreed
upon contingent fee. A trial court considers the totality of the circumstances
involved in a situation when called upon to determine quantum meruit. Reid,
Johnson, Downes, Andrachik & Webster v. Lansberry (1994), 68 Ohio St.3d 570,
576-77.

This approach avoids any ethical concern that a judge remains involved in or
responsible for legal services occurring after he or she assumes judicial office
and is no longer permitted to engage in the practice of law. The approach of
waiting until the contingency occurs, is in synchrony with the court’s holding that
a discharged lawyer is to be compensated in a contingency fee matter on the
basis of quantum meruit, but is not entitled to compensation unless and until the
contingency occurs. Reid, Johnson, Downes, Andrachik & Webster v. Lansberry
(1994), 68 Ohio St.3d 570, 573-75.

A judge who is receiving payments from a former law firm of accounts receivable
for legal services provided prior to assuming judicial office is required to
disqualify from cases in which the former firm is counsel for a party. Canon
3(E)(1) states “[a] judge shall disqualify himself or herself in a proceeding in
which the judge’s impartiality might reasonably be questioned.” Further, Canon
3(E)(1)(c) requires disqualification when a judge “has an economic interest in the
subject matter in controversy or in a party to the proceeding or has any other
more than a de minimis interest that could be substantially affected by the
proceeding.” Canon 3(E)(1) will always be implicated when a judge is receiving
payments from a former firm. Such payments would cause a reasonable person
to question the judge’s impartiality. Canon 3(E)(1)(c) may or may not be
implicated depending upon particular facts and circumstances that might exist.

In Opinion 95-3, the Board advised that “[a] newly elected judge should disqualify
himself or herself from hearing cases advocated by a former law partner, when
the judge is receiving income collected from accounts receivable of the former
law partnership.” Ohio SupCt., Board of Commissioners on Grievances and
Discipline, Op. 95-3 (1995).

As stated in Opinion 95-3:

  Recusal avoids the appearance of impropriety that would occur if a
  law firm financially indebted to a judge appeared before that judge.
  Recusal is consistent with the ethical requirement of Canon 3(C)(1)
  of the Ohio Code of Judicial Conduct that “[a] judge should
  disqualify himself [herself] in a proceeding in which his [her]
  impartiality might reasonably be questioned.”          Under some
  circumstances recusal might be required under Canon 3(C)(1)(c).
  Canon 3(C)(1)(c) provides that a judge should disqualify himself or
  herself in instances where the judge has “any other interest that
  could be substantially affect[ed] by the outcome of the proceeding.”

Op. 2007-2 5

  Thus, under Canon 3(C)(1)(c), recusal would be required when a
  judge’s financial relationship with a law firm advocating a case
  would be substantially affected by the outcome of the case.

[Through amendments to Canon 3(C), effective May 1, 1997, Canon 3(C)(1)
became Canon 3(E)(1) with a modification in Canon 3(E)(1) that a judge “shall
disqualify” rather than “should disqualify.” Canon 3(C)(1)(c) became Canon
3(E)(1)(c) with several modifications one being that “any other interest that could
be substantially affect[ed] by the outcome of the proceeding” became “any other
more than a de minimis interest that could be substantially affected by the
proceeding.”]

Pursuant to Canon 3(F), there is a procedure for remittal of disqualification.
Remittal is appropriate only for a disqualification based other than on personal
bias or prejudice. The decision to remit disqualification of a judge must be made
independently by the parties and lawyers outside the presence of the judge.

                Canon 3(F) Remittal of Disqualification

  If, following disclosure of any basis for disqualification other than
  personal bias or prejudice concerning a party, the parties and
  lawyers, without participation by the judge, joint request that the
  judge should remit his or her disqualification, the judge may
  approve and participate in the proceeding. The request and
  approval shall be incorporated in the record of the proceeding.

Remittal of disqualification, in most circumstances, will not be appropriate when a
judge is receiving money from a former law firm. Canon 3(E)(1)(a) requires
disqualification where “[t]he judge has a personal bias or prejudice concerning a
party or a party’s lawyer, or personal knowledge of disputed evidentiary facts
concerning the proceeding.” It is likely that a reasonable person would believe
that a judge who is receiving payments from his or her former firm will have a
personal bias for the former firm. Albeit, there may be occasional instances
where a judge is due only an insignificant amount and the parties may decide
independently that there should be a remittal of the judge’s disqualification.

In conclusion to Question 1, the Board advises as follows. A new judge is not
restricted by the Ohio Code of Judicial Conduct or the Ohio Rules of Professional
Conduct from receiving accounts receivable from his or her former law firm for
legal services provided by the judge prior to assuming judicial office, but during
this time the judge must disqualify from cases in which the former firm is counsel
for a party. In hourly rate matters, the judge would be entitled to receive the
accounts receivable reflecting the number of hours billed by the judge times the
agreed upon hourly rate. In flat fee matters, the judge would be entitled to
receive the accounts receivable for the agreed upon flat fee. In a contingent fee
matter that is completed before the judge is sworn into office, the judge would be
Op. 2007-2 6

entitled to receive the accounts receivable for the agreed upon contingent fee
rate in the fee agreement. In a contingent fee matter that is not completed before
the judge is sworn into office, the most prudent approach is for the judge to
accept compensation, once the contingency occurs, based upon quantum meruit
for the services performed prior to assuming judicial office.

Question 2

According to the request before the board, a partner who leaves the law firm to
assume the bench is considered under the law firm agreement to be a retiring
partner subject to retirement benefits. Pursuant to the law firm agreement, the
judge would receive a percentage of the fees earned on legal services provided
by other attorneys in the firm to the judge’s clients while the judge was with the
law firm and during an agreed upon number of years after the judge’s departure
from the law firm.

There is nothing in the Ohio Code of Judicial Conduct or the Ohio Rules of
Professional Conduct that restrain the conferring of such an agreed upon
retirement benefit upon a partner who leaves a law firm to assume judicial duties.

Rule 5.6(a) of the Ohio Rules of Professional Conduct recognizes that law firms
and lawyers are permitted to enter into agreements regarding the benefits to be
conferred upon retirement.

                                 Rule 5.6

   A lawyer shall not participate in offering or making either of the
   following:

   (a) a partnership, shareholders, operating, employment, or other
       similar type of agreement that restricts the right of a lawyer to
       practice after termination of the relationship, except an
       agreement concerning benefits upon retirement. [Emphasis
       added].

   (b) [Omitted.]

Disqualification of the judge who receives retirement benefits from a former firm
is required by Canon 3(E)(1). See discussion of disqualification and recusal in
Question 1.

A consequence of extending the time during which a judge receives payments
from the law firm for legal services provided by attorneys in the firm to the judge’s
former client is that the time during which a judge is required to disqualify from
cases in which the former firm represents a party will likely be longer in duration.
A judge and a former firm should not maintain a financial relationship ad
Op. 2007-2 7

infinitum. See Ohio Sup.Ct, Board of Commissioners on Grievances and
Discipline, Op. 95-3: “As a caveat, payments to a judge from accounts receivable
may include payments for work performed or in progress prior to assuming the
bench, but should not be interpreted as an approval for a judge and a law firm to
maintain a financial relationship ad infinitum.” Further, Canon 2(C)(1)(b) requires
that a judge not engage in continuing business relationships with lawyers or
others persons likely to come before the court on which the judge serves. And,
Canon 2(C)(4) requires that a judge manage his or her financial interests to
minimize the number of cases in which the judge is disqualified.

In conclusion, the Board’s advice is as follows. A new judge is not restricted by
the Ohio Code of Judicial Conduct or the Ohio Rules of Professional Conduct
from receiving retirement benefits from his or her former law firm pursuant to a
law firm agreement. For example, pursuant to a retirement agreement, a judge
may receive a percentage of the legal fees earned by other attorneys in the firm
for providing legal services to the judge’s clients while the judge was with the firm
and during an agreed upon number of years after the judge’s departure from the
law firm. During the time the judge receives retirement benefits from his or her
former law firm, the judge must disqualify from cases in which the former firm is
counsel for a party. The time period for receiving retirement benefits should be
reasonable in order to minimize the number of cases in which the judge will be
disqualified. A judge and a former law firm should not maintain a financial
relationship ad infinitum.

Question 3

Canon 2(D) of the Ohio Code of Judicial Conduct permits a judge to receive
compensation for activities permitted by the Code.

As advised above, the Code does not restrict a judge from receiving payments
for accounts receivable from his or her former law firm for legal services provided
by the judge prior to assuming judicial office or from receiving retirement benefits
from his or her former law firm pursuant to the law firm agreement.

Two public reporting requirements are set forth in the Ohio Code of Judicial
Conduct. Canon 2(D)(3)(a) states the requirement for filing a financial disclosure
statement as required by R.C. 102.02. Canon 2(D)(3)(b) establishes the
requirement for filing a quasi-judicial or extra-judicial activity report.

   Canon 2(D)(3)(a) Public Reports. A judge shall file annually the
   disclosure statement required by section 102.02 of the Revised
   Code with the secretary of the Board of Commissioners on
   Grievances and Discipline of the Supreme Court of Ohio.

   Canon 2(D)(3)(b) A judge shall also file annually a report of any
   quasi-judicial or extra-judicial activity for which the judge received

Op. 2007-2 8

  compensation. This report shall include the date, place, and nature
  of any quasi-judicial or extra-judicial activity for which the judge
  received compensation, the name of the payer, and the amount of
  compensation received. The report shall be file with the Board by
  the fifteenth day of April of each year on forms provided by the
  Board.

Pursuant to Canon 2(D)(3)(a), a newly elected judge, who is receiving payments
of accounts receivable or payment of retirement benefits from his or her former
law firm, must list the former law firm as a source of income on the financial
disclosure statement. Such payments do not need to be reported on the Quasi-
Judicial or Extra-Judicial Activity Compensation Report because the payments
arise from the judge’s practice of law prior to assuming judicial office, not from
quasi-judicial or extra-judicial activity while on the bench.

The Board’s advice is as follows. Pursuant to Canon 2(D)(3)(a), if a judge
receives payments from his or her former law firm of accounts receivable for
legal services provided by the judge prior to assuming judicial office and or
receives payments of retirement benefits from his or her former law firm pursuant
to the law firm agreement, the judge must list the former law firm as a source of
income on the annual financial disclosure statement. Such payments are not
required to be reported on the Quasi-Judicial or Extra-Judicial Activity
Compensation Report.

Advisory Opinions of the Board of Commissioners on Grievances and
Discipline are informal, nonbinding opinions in response to prospective or
hypothetical questions regarding the application of the Supreme Court
Rules for the Government of the Bar of Ohio, the Supreme Court Rules for
the Government of the Judiciary, the Ohio Rules of Professional Conduct,
the Ohio Code of Judicial Conduct, and the Attorney’s Oath of Office.