JI-37

May 22, 1991

SYLLABUS

A judge is disqualified from hearing a matter if within the previous two years the judge has been a member of the law firm appearing in the matter. A bonus for work performed prior to a judge assuming judicial office and paid by the judge's former law firm does not extend the two-year period of disqualification.

A judge need not report to the State Court Administrator a bonus from the judge's former law firm received one month after the judge's appointment to the bench.

References: MCJC 6; J-4; JI-20; CI-832; MCR 2.003(B).

TEXT

A newly appointed judge has inquired whether MCJC 6 requires the judge to report the bonus from the judge's former law firm for work performed during 1990, but received by the judge in 1991 after the judge assumed office. The judge also inquires whether MCR 2.003(B)(4), which imposes a flat prohibition against the judge's hearing cases where former firm members appear for two years after assuming the judicial office, also requires recusal two years after receipt of the last payment from the former firm.

In JI-20, a judge was not disqualified from presiding over matters in which a member of the judge's former law firm appears while the judge receives payments from an independently administered pension plan after the two year period. The opinion states:

"In this instance the 'late payment' is not from the former law firm of the judge but from the insurance company. Since the former law firm is not making the payment, does not control the funds, and was not responsible for the timing or amount of the payments, the judge need not recuse from matters in which the former law firm appears while receiving payments from the independently administered plan."

In J-4 we held that regular, periodic, or one-time disbursements to a judge from a lawyer or law firm appearing as an advocate in a matter before the judge do not require the judge's automatic disqualification, unless the matter over which the judge presides is a matter which affects the disbursement. The judge should disclose the relationship on the record, and recuse unless the parties ask the judge to proceed.

Since the bonus payment was received shortly after the judge took office, the two-year recusal rule under MCR 2.003(B) adequately addresses the situation.

MCJC 6 is the sole authority requiring financial disclosure. It states:

"A judge may receive compensation and reimbursement of expenses for the quasi-judicial and extra-judicial activities permitted by this Code, if the source of such payments does not give the appearance of influencing the judge in his judicial duties or otherwise give the appearance of impropriety, subject to the following restrictions:

1. [Reasonable compensation.] . . . .
2. [Expense reimbursement beyond actual cost of travel, food and lodging.] . . . .
3. Financial Reports. A judge should report the date, place, and nature of any services for which he received compensation and the amount of remuneration received and complete detailed information of all contributions of money or of a tangible thing of value by any person, party, committee, organization, firm, group, or entity to any person, party, committee, organization, firm, group, or entity, directly or indirectly, to or for the judge's benefit for any purpose whatever, including, but not limited to, a contribution for a judicial campaign or otherwise and of all disbursements or use of contributions, all on forms to be prescribed by the state court administrator . . . ."

Based upon the language of MCJC 6, CI-832 held that a judge should report the source and amount of rental income received from lawyers.

In the present inquiry, the bonus the judge received was for services rendered before the judge took office. Therefore it is not compensation "for the quasi-judicial and extra-judicial activities permitted by this Code . . . , subject to . . . financial reports." MCJC 6. Delayed compensation for services rendered prior to taking judicial office are not subject to financial disclosure.

The purpose of financial disclosure is both to guard against impermissible financial activity and to discourage and expose untenable conflicts of interest. While comprehensive disclosure of financial information requires the reporting of all income, assets, positions and relationships, and other forms of beneficial ownership, only ten jurisdictions require disclosure of income or obligations from former clients; Michigan is not one of them.

The Proposed Michigan Code of Judicial Conduct (1991), Rule 4I, Comment, states:

". . . a judge [is required to] recuse in any proceeding in which the judge has an economic interest. . . . Rule 4D requires that a judge refrain from engaging in business and from financial activities that might interfere with the impartial performance of judicial duties; Rule 4H requires a judge to report all compensation the judge received for activities outside the judicial office. A judge has the rights of any other citizen, including the right to privacy of the judge's financial affairs, except to the extent that limitations established by law are required to safeguard the proper performance of the judge's duties."

It would appear that even under proposed revisions of the Code, receiving the former law firm bonus one month after the judge's appointment to the bench neither extends the two-year disqualification period nor requires financial disclosure.