502 Determinations

Sample recommendation for participation in a matter where spouse's law firm (or parent's employer/firm) represents a party

To:      Component Head or Deciding Official/Designee for Ethics Matters

From:  Deputy Designated Agency Ethics Official

Re:      Request for a Determination Pursuant to 5 C.F.R. 2635.502

(Employee's name) has been working for about a week on a brief in (case name) that must be filed by (date) in the ____ court. He/She just learned that the defendant has retained (firm name) as new counsel, and (employee's wife/husband/parent/child) is a (partner/associate) at this firm. (Employee's spouse) has not worked and will not work on this case, nor communicate with any member of the firm about this case.

Sample text if spouse is a partner and the firm segregates profits from spouse’s share:
Further, (firm name) has agreed to ensure that (the spouse) does not receive any share in the fees that are generated by the firm from this case. This action by the firm ensures that (employee's name's) participation in this matter will not implicate 18 U.S.C. § 208, which prohibits a government employee from participating in a matter in which he/she, his/her spouse, or minor child has a financial interest. (Continue with 502 discussion below)

Sample text if the spouse is a salaried employee who receives a bonus that will be based, in small part, on the firm’s revenues:
As a salaried associate at (firm name), (employee's spouse)'s annual salary is predetermined and not dependent on firm revenues. (Employee's spouse) also may be entitled to a bonus. It is our understanding that a bonus for salaried employees is based primarily on performance, however, the pool of available funds for a bonus may be influenced by the firm's total revenue. Pursuant to 18 U.S.C. 208(a), a federal employee is prohibited from participating personally and substantially in a particular matter in which he has a financial interest unless he obtains a waiver. A waiver may be granted upon a written determination that the financial interest involved "is not so substantial as to be deemed likely to affect the integrity of the service that the government may expect from" the employee. 18 U.S.C. 208(b)(1). Given the firm's significant annual revenues, we expect its earnings based on representation in this case likely will have a minimal impact on the pool of total funds available for salaried employee bonuses, and even lesser impact, if any, on the amount awarded to (employee's spouse). These circumstances are far from being sufficiently substantial as to affect the integrity of (employee)'s performance of his duties. Accordingly, we believe a waiver is appropriate under Section 208 in this instance.

Pursuant to 5 C.F.R. 2635.502, an employee must to take appropriate steps to avoid an appearance of loss of impartiality in the performance of his official duties. Where an employee knows that a person with whom he has a "covered relationship" is or represents a party to the matter, he should not participate in the matter without informing an agency official and receiving authorization to participate. Included in the definition of a "covered relationship" is a person for whom the employee's (spouse/parent/dependent child) serves as an employee, general partner, or attorney. An employee may be authorized to participate in the matter if the agency designee determines that the interest of the Government in the employee's participation outweighs the concern that a reasonable person may question the integrity of the agency's programs and operations.

Here, (employee's name)'s financial interest is (removed by virtue of the firm's segregation of its profits from (employee's spouse's) share.) or (minimal and a waiver is appropriate.) In addition, given the time constraints, the employee's familiarity with the facts and issues of this case, it would be extremely difficult for another attorney to take over this assignment. Moreover, given the case loads and assignments pending with other members of the office, it would be a hardship practically to reassign this case. Given these factors, I believe you may determine that (employee's name)'s participation in the case is appropriate, and the Department's interest in (employee's name)'s participation outweighs any appearance of impropriety.

 

APPROVE                _____________

DISAPPROVE          _____________

_____________________                  ___________
Component Head’s Name                           Date
and Title

Additional Considerations:
1. A waiver also may be appropriate for a new assignment if there is a particular Department interest in having an employee work on the matter, even though the spouse's firm represents a party.
2. If a close relative other than a spouse, parent, or child is an employee of a firm that is or represents a party, 5 C.F.R. 2635.502 would be triggered and warrants a similar analysis.


Sample recommendation for participation in a matter where an employee's former law firm represents a party

To:      Component Head or Deciding Official/Designee for Ethics Matters

From:  Deputy Designated Agency Ethics Official

Re:      Request for a Determination Pursuant to 5 C.F.R. 2635.502

(Employee's name) joined (division/section/office) on (date). Before joining the Department, (employee's name) was a partner/associate at (law firm name). The (division/section/office) would like (employee's name) to work on (case name). However, (former firm name) represents (party name). (Employee's name)'s only continuing tie with the firm is his/her vested interest in its retirement plan. He/She has no control over the investments of the retirement plan, which are managed by independent trustees and are widely diversified, and no further contributions are made by him/her or the firm. This matter was not pending at the firm when (employee's name) was employed there, nor has (employee's name) represented the (party) in any other matter.

Pursuant to 5 C.F.R. 2635.502, an employee must to take appropriate steps to avoid an appearance of loss of impartiality in the performance of his official duties. Where an employee knows that a person with whom he has a "covered relationship" is or represents a party to the matter, he should not participate in the matter without informing an agency official and receiving authorization to participate. Included in the definition of a "covered relationship" is a person for whom the employee has, within the last year, served as a general partner, agent, or attorney. An employee may be authorized to participate in the matter if the agency designee determines that the interest of the Government in the employee's participation outweighs the concern that a reasonable person may question the integrity of the agency's programs and operations. Although it has been more than a year since (employee's name) was in private practice at (firm name), as a matter of prudence and practice, the Department considers appearance issues beyond the one year period for senior officials working on matters involving a former employer. 5 C.F.R. 2635.501 states that an employee may follow the procedures set forth in Section 502 if there are other circumstances that may raise questions of his impartiality.

Although (employee's name) has not participated in this case thus far, his/her expertise in (subject matter), which is a central issue in this case, and his/her participation would be of substantial benefit for the Department. Moreover, given case load and assignments pending with other staff, as a practical and administrative matter, it would be difficult to assign this matter to another member of the office. In addition, another member of the litigation team will be primarily responsible for communication with (firm name). However, depending on how the litigation proceeds, the case may progress to the point where (employee's name) may have significant contacts with (firm name) regarding settlement or other substantive matters.

For these reasons, I am seeking a formal determination from you to allow (employee’s name) to participate in this matter.

 

APPROVE                _____________

DISAPPROVE          _____________

_____________________                  ___________
Component Head’s Name                           Date
and Title

Additional factors to consider in 502 analysis:
1. How large is the firm; did the employee work in the same office that is handling the current case?
2. Does the employee have a personal relationship with any of the individuals assigned to the case?
3. Has the employee done any work on the matter to date?
4. Is the employee's role supervisory?


Sample recommendation for continued participation in management of a contract

To:      Component Head or Deciding Official/Designee for Ethics Matters

From:  Deputy Designated Agency Ethics Official

Re:      Request for a Determination Pursuant to 5 C.F.R. 2635.502

(Employee’s name) has informed me that on (date), his son, (child’s name) will become a salaried employee of (company name) as a (position/title). As you know, (employee’s name) manages a large contract with (company name) under which various litigation support services are ordered for the component. (Employee’s name)'s son will not be assigned to work on the contract between (company name) and the Department that (employee’s name) manages, so that it is unlikely that he would ever work on that contract 1. Still, (employee’s name) was correct to seek advice on whether there would be a conflict or an appearance of one because of his son's new position. Although I have determined that there would be no actual conflict, in order to avoid an appearance of a lack of impartiality, I advised that he seek a determination from you before continuing to work on the contract in light of his son's position.

18 U.S.C. § 208 bars a Federal employee from participating in a particular matter that could affect the financial interests of the employee or certain other persons, including a minor child's, which are attributed to the employee. Here, because (employee's name)'s son is 27 years old, his interests are no longer attributable to his father. Accordingly, Section 208 would not be implicated.

Similarly, (employee's name) does not have a "covered relationship" with his son's employer pursuant to 5 C.F.R. 2635.502 since his son is not a dependent child. However, Section 502 further states that when an employee is concerned that circumstances involving his personal interests would raise a question regarding his impartiality, he should seek the advice of an ethics official before participating in a particular matter that could be seen to affect those interests. 5 C.F.R. 2635.501 states that an employee may follow the procedures set forth in Section 502 if there are other circumstances that may raise questions of his impartiality. Because there could be questions regarding (employee's name)'s impartiality, in order to protect him and the integrity of the Department's operations, I recommended that he seek a determination from you authorizing his continued participation in managing the contract.

(Employee's name) is the (title/office) and the supervisor overseeing compliance and performance under the contract with (company name). Given (employee's name) familiarity with the terms of the contract, the resources available at (company name), and the length of time he has overseen this contract, it would be a hardship to the Department to reassign his duties. Because his son is a salaried employee and there is no expectation that he will perform any tasks under this contract, neither his nor his father's financial interests will be affected by this contract. I believe that you may determine that the Department's interest in (employee's name)'s continued participation in this contract outweighs the concern that a reasonable person may question the integrity of the Department's programs and operations.

 

APPROVE                _____________

DISAPPROVE          _____________

_____________________                  ___________
Component Head’s Name                           Date
and Title

1. (Employee's name) has informed me that a member of his staff will alert him should his son ever be assigned to work on a task under the contract, and we will review the circumstances at that time.