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Opinion 16

Two newly appointed Superior Court judges have requested opinions from the Commission concerning (a) the continued ownership of office buildings, and (b) the method of payment for their interests in the assets of their former law partnerships. The matters are discussed separately below.

The Office Buildings

One judge owns a building jointly with a former law partner and he wants to know if it would be appropriate for them to rent the building to a new law firm that includes the judge’s former partner (the co-owner of the building). The other judge is the sole owner of a building and he asks whether it would be proper for him to rent it to a partnership that includes his former partner. In each instance, the members of the partnership that would lease the building practice regularly in the court on which the judge serves. It is assumed that any rental arrangement would be fair and reasonable from the standpoint of all parties under prevailing local economic conditions.

Rule 3.11 of the Code of Judicial Conduct provides in part:

(B) Judges should refrain from financial and business dealings with lawyers, litigants, and others that tend to reflect adversely on their impartiality, interfere with the proper performance of their judicial duties, or exploit their judicial positions.

(C) Subject to the requirement of Rule 3.11 (B), judges may hold and manage investments, including real estate, and engage in other remunerative activity including the operation of a business, as long as the business is not related to court-directed services.

Subsection (C) clearly permits a judge to hold and manage real estate investments “subject to the requirement of Rule 3.11 (B),” and our inquiry is thus whether the proposed investments would comply with subsection (B).

The question cannot be easily answered. A long term lease arrangement might necessitate fairly frequent routine contacts, and this sort of business relationship with lawyers might tend to reflect adversely on the judge’s impartiality in the opinion of some members of the public. There would obviously be a potential for disputes between the parties if they should disagree as to their rights and obligations under the lease agreement. This type of office building is to some extent a single-purpose structure, particularly in a non-urban area and if a judge should become dependent to a significant degree upon the rental income for his livelihood, the decision of a lessee law firm as to whether to renew the lease after the expiration of the original term might have undesirable personal impact upon him. For all these reasons, and other instances of possible conflict that might be imagined, the Commission recommends strongly that a judge should refrain from embarking initially upon this type of financial and business dealing while he is serving as a judge.

However, the Commission does not believe that the foregoing reasoning applies to a newly appointed judge who owns or has an interest in an office building already in existence at the time of his appointment. Such a prohibition would unduly penalize the judge and would not be in keeping with the spirit and intent of Rule 3.11(B)  as adopted in Georgia. It is proper for a newly appointed judge either to continue to retain an ownership interest in a building already leased or to enter into a lease after he becomes a judge. Accordingly, it is the judgment of the Commission that the proposed leases in this instance are permissible. We do suggest that each judge should, to the extent reasonably possible, minimize any direct business dealings between himself and the lessee law firm.

Interest in Partnership Assets

Each judge has reached a definite agreement with his former partner(s) for the sale of his interest in firm assets, and his question is whether it would be permissible for payment to be made over a period of time rather than in cash. The sale of a lawyer’s interest in the assets of a partnership is a necessary incident to his ceasing practice to become a judge. It would be unfair and unrealistic in many instances to expect the remaining partner(s), particularly in the case of a small firm, to pay cash for the interest of the withdrawing partner. There should be minimal contact between the parties under this arrangement and there is less chance of future controversy here than in the case of a rental contract. Assuming the payment of a fair amount and a term that is as short as is reasonably possible under the circumstances, the Commission does not believe that a deferred payment arrangement is objectionable.

[Pertinent Code of Judicial Conduct provisions: Rules 1.2(B), 2.4(C), 3.11(B), 3.11(D). Cross reference to other relevant opinions for review: #12, #35, #49, #130, #221.]

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