Two Career Couples and Conflicts of Interest: FTC Commissioner Declines to Recuse Herself

Here's an increasingly common problem: a two-career couple raises conflict of interest questions.  The FTC Commission Chair, Deborah Platt Majoras, has denied requests to recuse herself from ruling on the proposed merger of Google and Double-click.  Majoras's statement is here.  A news article on the issue is here.

According to Majoras's statement, her husband is a non-equity partner at Jones Day, where other lawyers are handling a related aspect of the merger proposal in Europe for Double-click.  Simpson Thacher is representing Double-click on the matter before the FTC.  Her husband is not working on any matters for any of the parties appearing before the FTC, and he's no longer an equity partner.  I don't have the government regs in front of me, so I can't comment on whether recusal is required.  But here are some thoughts:

• If this represents a mandatory recusal, it's hard to be a high-powered, two-career couple with one person in government law and one in biglaw.
• According to Majoras's statement, she formerly recused herself from Jones Day matters because her husband was an equity partner, but now she doesn't always need to recuse herself in those situations, because her husband became a non-equity ("fixed participation") partner.  If Majoras is legally correct, I assume that we will see that strategy adopted more often.  But note that fixed participation partners can still earn partner-like salaries, and that the salaries could vary year by year.  And it may be common that the biglaw spouse (or SO) bounces back to full equity status once her/his spouse finishes the government stint.  In other words, depending on the facts the strategy might be viewed as form over substance.
• The matter is a reminder that, to paraphrase Ron Rotunda, just because ethics are good things it doesn't mean that more ethics rules are always good things.  (Or, as I say, "sometimes 'ethics' is just a brick they throw at you.")  Ethics rules get used as strategic weapons by people with private agendas.  We need to find a golden mean: enough conflict regulations to protect the process and public confidence in the process, but not so many that we strangle the process.  Conflicts rules must be rules of reason and not rules of empty formalism.

Comments

[Monroe Freedman]

1) Candidly, John, all else equal, would you want to litigate before a Commissioner whose husband is a partner in the opposing law firm?

2)All else equal, might not a client choose the law firm that has a partner who shares pillow talk, dinner conversation, and family income with the Commissioner before whom the client will be litigating?

3)More to the legal point, "might" not a reasonable person "question" the Commissioner's impartiality?

[John Steele]

Monroe,

Your questions cut right to the chase, but as you are aware they don't apply to this particular matter. Jones Day is not handling the FTC matter; and the spouse is not an equity partner.

But the direct answer to your question is "heck no." And, as I understand it, under your facts the Commissioner previously did disqualify herself and would continue to do so today if the fact pattern arose again.

[Monroe Freedman]

John,

I agree that the Jones Day connection is inadequate (on the facts we have).
But, for reasons you point out, the fact that the husband is not an equity partner is meaningless.

During the early controversy in the 1970s over screening and the revolving door, Lloyd Cutler conceded that the fact that the screened partner would receive no fees from the particular matter was just a talking point and not a significant consideration for any practical purpose.

[steve lubet]

The analogous area of judicial ethics often considers the precise nature of relative's employment. Generally, a judge is only disqualified if a relative (within the third degree) is "acting as a lawyer" in the proceeding; and not if the relative works for a law firm that represents a party.

In addition, however, a judge is also disqualified if a family member has an interest that may be affected by the outcome of the proceeding. Most obviously, that would apply to a partner in a law firm handling the matter on contingency. Other cases have extended that rationale to partners in non-contingency matters, but they have usually drawn the line at salaried associates. It is not obvious where non-equity partners would fit on the continuum.

SL

[Monroe Freedman]

The provisions you cite, Steve, are in addition to the general restriction regarding whether the judge's impartiality might reasonably be questioned. I believe that shared family income and the significant potential for ex parte conversation fall in that category.

[anon]

Monroe: The problem is, in DC, a lot of people work for the gov't and/or private firms. If you just allow anything that could be question to be a conflict, either you're going to disenfranchise many people (and most likely disproportionately women) from the workforce, or nothing will get done.

Also, how far do you go to say it is questionable? Jones Day is a 2000+ person firm, and the husband isn't working on the case / receiving direct benefits from it. Why is it reasonable to assume that through two lines of connection that the commissioner is being improperly affected? How tenuous does the connection have to be before there is no question of impartiality? The problem with people asserting these types of disqualifications is they usually lack a basic understanding of social network theory, which tells us that the greater the number of links, the number of disqualifications will increase exponentially. This is going to be especially true in a tight-nit highly cohesive network like DC. If you impose 3rd degree connections without personal involvement, you will probably disqualify 90% of DC's biglaw partners / gov't officials. With even 2nd degree connections without personal involvement, you are disqualifying a huge number of people, with almost no marginal benefit in ethics gained.

Lastly, its good to note that the people requesting the recusals are public interest groups, and they are requesting recusals from those on the commission who they think will rule against them, which correlate well with those who have biglaw connections. Should NGOs be able to skew the political process by disqualifying those they want based on the ultimate goal they want to achieve?

[Monroe Freedman]

I have difficulty working up sympathy for the bloated megafirms that created the problem. The public interest firms, upon whom you seek to put the onus, are not the source of the problem, nor are they trying to “skew the political process.” Rather, they are relying upon traditional rules of lawyers’ ethics and of due process of law to prevent the unfair and unconstitutional skewing of judicial and administrative proceedings. (For discussion of the relevant due process cases, see Freedman & Smith, Understanding Lawyers’ Ethics 237-239 (3d ed., 2004).)

Nor should the ethical/due process issue be overridden by what you call “social network theory.” More to the point is common sense and common experience. Husbands and wives share family incomes and private conversations. The people you call “biglaw partners” are likely to be ambitious for status and money. The husband who is a partner in the megafirm owes fiduciary obligations both to the firm’s partners and to the firm’s clients. He might also have a team mentality that, as a practical matter, might be even stronger than his consciousness of his fiduciary obligations. And note that we’re talking about matters, like a merger of Google and Double-click, that involve amounts of money – and of temptation for both the husband and wife – that are something in excess of the $12 that was at issue in Tumey v. Ohio.

Also, consider how silly your contention is. You say, “either you're going to disenfranchise many people (and most likely disproportionately women) from the workforce, or nothing will get done.” Applying traditional conflict of interest and due process rules might cause the husband for a time to join a smaller law firm, teach at a law school, or go into public service himself, but the bugaboo that many people are going to be excluded from the workforce, or that “nothing will get done,” is hardly a reasoned argument.

Of course, the parties who invoke the conflict of interest rules are doing so for strategic reasons – just as those who invoke the hearsay rule or the privilege against self-incrimination or social network theory do so for tactical reasons. Indeed, it would be a mark of incompetence if a lawyer in litigation did not have a tactical reason for any motion or objection that he or she raised. Having noted that irrelevant point, perhaps we can get to the merits. As I asked earlier:

1) All else being equal, would you want to litigate before a Commissioner whose husband is a partner in the opposing law firm?

2)All else equal, might not a client choose the law firm that has a partner who shares pillow talk, dinner conversation, and family income with the Commissioner before whom the client will be litigating?

3)More to the ethical, legal, and constitutional point, "might" not a reasonable person "question" the Commissioner's impartiality?