Does a county attorney have a nepotism or conflict-of-interest problem if a relative's law firm contracts with the county?

Plain-English summary

The Harris County Attorney, Christian Menefee, brought the Attorney General a real situation about his own office. He had taken office in January 2021, and his father-in-law owns an interest in a law firm that already had contracts with Harris County to collect delinquent receivables. He filed an affidavit disclosing the relationship, planned to delegate the choice of a collection firm to a senior attorney with no ties to his father-in-law's firm, and planned to abstain from related decisions. He asked whether that approach satisfied the nepotism law in Government Code chapter 573 and the conflict-of-interest law in Local Government Code chapter 171.

On nepotism, the AG's answer was that the statute did not reach these contracts. Section 573.041 bars a public official from appointing, confirming, or voting to appoint a relative within the third degree of consanguinity or the second degree of affinity to a position compensated from public funds. A father-in-law is within the prohibited degree of affinity. But the AG, following prior opinions, read the nepotism statute as prohibiting the appointment only of a natural person, not a business entity. The county's contracts are with a law firm operating through a limited liability partnership, so section 573.041 did not prohibit them.

On conflicts of interest, the AG looked at who actually makes the decision. Chapter 171 requires a local public official with a substantial interest in a business entity to file an affidavit and abstain before a "vote or decision" on a matter that will have a special economic effect on that entity. In a county with more than 1.25 million people, Local Government Code section 89.001 gives the county attorney the job of selecting special counsel, but it makes that selection "subject to the court's approval," meaning the commissioners court awards the contract. Awarding the contract clearly has a special economic effect on the firm, but the AG noted that is the commissioners court's decision, not the county attorney's. The county attorney proposes or recommends; the commissioners court votes or decides. Drawing on AG Opinion KP-0244, where officials who could only negotiate (not approve) a transaction were outside section 171.004, the AG concluded a court would likely find that the county attorney's approval-bound selection of special counsel is not a "vote or decision" that triggers section 171.004(a).

What this means for you

This describes what the opinion holds. It is the AG's 2021 reading; statutes can change, so confirm current law before relying on it.

County attorneys and other elected county officials

The opinion treats the nepotism bar as reaching appointments of natural persons, not contracts with a business entity such as a law firm. For conflict-of-interest purposes, it ties the chapter 171 affidavit-and-abstention duty to officials who actually vote or decide, and reads a county attorney's section 89.001 selection of special counsel, which the commissioners court must approve, as falling outside that duty.

Commissioners courts

The opinion locates the operative "vote or decision" on awarding special-counsel contracts in the commissioners court, which holds the approval authority under section 89.001.

Counties contracting with law firms

The opinion addresses the specific facts presented (a firm operating as a limited liability partnership, with the official recommending but not awarding). It does not resolve every nepotism or conflict question that a different structure or a different official's authority might raise.

Common questions

Q: Does the nepotism law block a county from contracting with a relative's law firm?
A: Not on these facts, per the AG. Section 573.041 prohibits appointing a related natural person, not contracting with a business entity, and the firm here operates as a limited liability partnership.

Q: Is a father-in-law a covered relative under the nepotism statute?
A: A father-in-law is within the prohibited degree of affinity, but the AG said the statute reaches appointments of individuals, so it did not bar the county's contracts with the firm.

Q: Did the county attorney have a chapter 171 conflict that required an affidavit and abstention?
A: The AG concluded a court would likely find the county attorney's selection of special counsel is not a "vote or decision" under section 171.004(a), because the commissioners court holds the approval authority.

Q: Who actually awards the special-counsel contract?
A: Under Local Government Code section 89.001, in a county with more than 1.25 million people the county attorney selects special counsel, but the commissioners court approves the contract.

Q: Does this mean conflict-of-interest rules never apply to a county attorney?
A: No. The opinion is limited to whether the section 89.001 selection, subject to commissioners court approval, is a "vote or decision." It notes that an individual official's participation in some decisions can violate section 171.004 (Walk v. State).

Background and statutory framework

Two statutes frame the question. The nepotism law, Government Code chapter 573, bars appointing relatives within the third degree of consanguinity or the second degree of affinity (sections 573.041, 573.002), and a father-in-law falls within the affinity degree (sections 573.023, 573.024(a)(2), 573.025). Prior AG opinions (JC-0585; DM-0076) read the bar as reaching only natural persons. The conflict-of-interest law, Local Government Code chapter 171, requires a local public official with a substantial interest in a business entity to file an affidavit and abstain before a vote or decision that will specially affect the entity (sections 171.001, 171.002, 171.004). Chapter 171 also lets a relative's substantial interest be imputed to an official under section 171.002(c), though the AG noted that imputation did not apply to the facts here.

The decisional structure comes from Local Government Code section 89.001, under which the county attorney in a large county selects special counsel subject to commissioners court approval, with the Tax Code section 6.30 authority to contract for delinquent-collection services in the background. The AG relied on Walk v. State for the point that an individual official's participation in certain decisions can violate section 171.004, and on AG Opinions KP-0244 and GA-0510 for the principle that section 171.004 applies only to an official who may participate in the governmental entity's vote or decision.

Citations and references

Statutes:

• Tex. Gov't Code § 573.041 and §§ 573.002, 573.023–.025 (nepotism; covered relatives)
• Tex. Loc. Gov't Code § 171.004 and §§ 171.001, 171.002 (conflict of interest; substantial interest)
• Tex. Loc. Gov't Code § 89.001 (special counsel selection and approval); Tex. Tax Code § 6.30 (delinquent-collection contracts)

Key case:

• Walk v. State, 841 S.W.2d 430 (Tex. App.—Corpus Christi 1992, writ ref'd) (an individual official's participation in certain decisions can violate section 171.004)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/ken-paxton/kp-0376
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2021/kp-0376.pdf

Original opinion text

PAXTON
ATTORNEY GENERAL OF TEXAS

July 12, 2021

The Honorable Christian D. Menefee
Harris County Attorney
1019 Congress, 15th Floor
Houston, Texas 77002-1700

Opinion No. KP-0376

Re: Applicability of Local Government Code chapter 171 regarding conflicts of interest and Government Code chapter 573 regarding nepotism to a county attorney whose father-in-law is a partner at a law firm that contracts with the county (RQ-0395-KP)

Dear Mr. Menefee:

You ask about the applicability of Local Government Code chapter 171 regarding conflicts of interest and Government Code chapter 573 regarding nepotism to a county attorney whose father-in-law is a partner at a law firm that contracts with the county.¹

Background

You state that you took the oath of office as Harris County Attorney on January 1, 2021. Request Letter at 1. You tell us your "father-in-law holds an ownership interest in a law firm that has existing contracts with Harris County for the collection of delinquent receivables." Id. You inform us that you have filed an affidavit with the county clerk's office disclosing the relationship and circumstances concerning county contracts with your father-in-law's firm. Id. You state that you will delegate the authority to choose a collection firm to a senior attorney in your office who has no connections to your father-in-law's firm and you will "abstain from participating in relevant decisions regarding the County's contracts with private law firms for the collection of delinquent receivables." Id. at 1–2. You ask whether such action complies with the conflict-of-interest provisions in chapter 171 of the Local Government Code and the nepotism prohibitions in Government Code chapter 573. Request Letter at 2. Before addressing issues under chapter 171, we consider the potential application of the nepotism statutes.

Government Code Chapter 573—Nepotism

Section 573.041 of the Government Code provides as follows:

A public official may not appoint, confirm the appointment of, or vote for the appointment or confirmation of the appointment of an individual to a position that is to be directly or indirectly compensated from public funds or fees of office if:

(1) the individual is related to the public official within a degree described by [statute];

. . . .

TEX. GOV'T CODE § 573.041(1). Chapter 573 "applies to relationships within the third degree by consanguinity or within the second degree by affinity." Id. § 573.002. Thus, section 573.041 generally prohibits a public official from appointing "an individual to a position . . . compensated from public funds" who is related to the public official within the third degree by consanguinity or within the second degree by affinity. Id. § 573.041(1). A father-in-law is within the prohibited degree of affinity. See id. §§ 573.023, .024(a)(2), .025(a)–(b). But you tell us that the county has contracts for collection services with a business entity—here a law firm (operating through a business entity in the form of a limited liability partnership), and not an individual. Request Letter at 1. The nepotism statute prohibits the appointment only of a natural person, not a business entity. See Tex. Att'y Gen. Op. Nos. JC-0585 (2002) at 3; DM-0076 (1992) at 2–3. Accordingly, section 573.041 would not prohibit the contracts with the law firm (operating through a business entity) as you describe them.

Local Government Code Chapter 171—Conflicts of Interest

Chapter 171 of the Local Government Code restricts a local public official's authority to participate in a vote or decision on any matters involving a business entity in which the official has a substantial interest. See TEX. LOC. GOV'T CODE § 171.004.² Subsection 171.004(a) requires a local public official with a substantial interest in a business entity to file, "before a vote or decision on any matter involving the business entity . . . , an affidavit stating the nature and extent of the interest" and to "abstain from further participation in the matter" under certain circumstances. Id. § 171.004(a).³

Under a different chapter of the Local Government Code (Chapter 89), the Harris County Attorney (as a county with a population of more than 1.25 million) has a duty to make the initial selection of a special counsel for legal services, subject to commissioners court approval:

(a) The commissioners court of a county with a population of more than 1.25 million may employ an attorney as special counsel.

(b) The special counsel may be employed to:

(1) represent the county in any suit brought by or against the county;

. . .

(c) The county attorney shall select the special counsel. If the county does not have a county attorney, the district attorney or criminal district attorney shall select the special counsel. The selecting officer shall determine the terms and duration of employment of the special counsel, subject to the court's approval.

Id. § 89.001(a)–(c); see also TEX. TAX CODE § 6.30(a), (c) (authorizing county to contract with a competent attorney for the collection of delinquent taxes). Undoubtedly, the award of a services contract to a law firm will have a special economic effect on the firm, but that is not the county attorney's decision to make. Rather, the ultimate decision is vested in the commissioners court. See TEX. LOC. GOV'T CODE § 89.001(a)–(c).

Thus, the remaining issue with respect to application of section 171.004 is whether a county attorney's selection of special counsel constitutes a "vote or decision" prohibited by subsection 171.004(a)(1). Chapter 171 does not define "vote or decision." Where an individual official such as a county attorney "exercises responsibilities beyond those that are advisory in nature," an individual official's duties generally do not include voting.⁴ Id. § 171.001(1). An individual official's participation in certain decisions may constitute a violation of section 171.004. See Walk v. State, 841 S.W.2d 430, 434–35 (Tex. App.—Corpus Christi 1992, writ ref'd) (holding that a county judge's purchase of supplies under the circumstances constituted a violation).

Under section 89.001, the county attorney proposes or recommends a firm as special counsel but does not vote or decide whether to award a contract—that is the exclusive responsibility of the commissioners court. See TEX. LOC. GOV'T CODE § 89.001(a)–(c). In Attorney General Opinion KP-0244, this office considered the potential application of section 171.004 to a city attorney and city administrator who negotiated a real estate transaction on behalf of the city that would beneficially affect real property that they owned. Tex. Att'y Gen. Op. No. KP-0244 (2019) at 1. In the previous opinion's underlying fact pattern, because the city administrator and the city attorney did not possess the authority to vote or make a decision on the city's acceptance of the proposed agreement, this office determined that section 171.004 did not apply to those officials. Id. at 2–3; see also Tex. Att'y Gen. Op. No. GA-0510 (2007) at 2 (stating "section 171.004 applies only to a local official who may participate in a vote or decision of the governmental entity that will result in a 'special economic effect'" on the official's business or property). No judicial opinion has considered the present question. However, a court would likely conclude that the duty of county attorneys in counties with a population more than 1.25 million under section 89.001 of the Local Government Code to select special counsel to collect the county's delinquent receivables, subject to the approval of the commissioners court, does not constitute a "vote or decision" requiring the county attorney to comply with the conflict-of-interest procedures under subsection 171.004(a) of the Local Government Code.

¹ See Letter and attached brief from Honorable Christian D. Menefee, Harris Cnty. Att'y, to Honorable Ken Paxton, Tex. Att'y Gen. at 1–2 (Jan. 11, 2021) ("Request Letter" & "Brief," respectively) (Brief on file with the Op. Comm.).

² Chapter 171 also defines the following terms that are relevant for purpose of the analysis herein. A "local public official" is "a member of the governing body or another officer, whether elected, appointed, paid, or unpaid," of a county and certain other local governmental entities, "who exercises responsibilities beyond those that are advisory in nature." TEX. LOC. GOV'T CODE § 171.001(1). A "business entity" refers to "a sole proprietorship, partnership, firm, corporation, holding company, joint-stock company, receivership, trust, or any other entity recognized by law." Id. § 171.001(2). A person has a "substantial interest" in a business entity if funds received from it exceed ten percent of that person's gross income for the previous year. See id. § 171.002(a)(2). A substantial interest in a business entity may also be based on ownership of voting stock or shares of the entity. See id. § 171.002(a)(1). With respect to a business entity, the prohibition applies only when the public official's "action on the matter will have a special economic effect on the business entity that is distinguishable from the effect on the public." Id. § 171.004(a)(1).

³ While it does not apply to the facts set out in herein, we note that where a local public official is making vote or decision on a matter, the interest of certain relatives may be imputed to such local public official under subsection 171.002(c):

A local public official is considered to have a substantial interest under this section if a person related to the official in the first degree by consanguinity or affinity, as determined under Chapter 573, Government Code [the nepotism statutes], has a substantial interest under this section.

Id. § 171.002(c).

⁴ When the public official at issue is a voting member of a governmental body, subsection 171.004's application is relatively straightforward—the member before a vote or decision must file the affidavit and must abstain from subsequent participation in the matter unless a majority of the governing body has a similar interests on the same official action. Id. § 171.004(a)–(c). Thus, abstention by a member from further voting or other participation allows a governmental action to occur without involvement of the conflicted public official.

S U M M A R Y

The nepotism statute, subsection 573.041(1) of the Government Code, prohibits a public official from appointing specified relatives to a position but does not apply to a county's award of a collections services contract to a business entity, namely a law firm.

The duty of county attorneys in counties with a population of more than 1.25 million under section 89.001 of the Local Government Code to select special counsel to collect the county's delinquent receivables is subject to the approval of the commissioners court. Accordingly, this does not constitute a "vote or decision" requiring the county attorney to comply with the conflict-of-interest procedures under subsection 171.004(a) of the Local Government Code.

Very truly yours,

KEN PAXTON
Attorney General of Texas

BRENT E. WEBSTER
First Assistant Attorney General

LESLEY FRENCH
Chief of Staff

MURTAZA F. SUTARWALLA
Deputy Attorney General for Legal Counsel

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

WILLIAM A. HILL
Assistant Attorney General, Opinion Committee