May a former law firm in which a judge owns a minority share accept discounted legal services?

Plain-English summary

The inquiring judge retained a one-third interest in a former three-member law firm organized as an LLC. The LLC was sued over another member's alleged conduct, and its lawyers offered free or discounted representation. The judge was neither a party nor personally liable and could not decide alone whether the LLC accepted the offer. Source: Opinion 22-01, pp. 1–2.

The committee said Rule 21-313(A) bars a judge from accepting valuable legal services from lawyers likely to appear before the judge. Here, it found the LLC, a separate client, would receive the representation. Because the judge had only a minority interest and no individual power to reject it, the committee concluded that the rule's blanket gift prohibition did not apply. Source: Opinion 22-01, pp. 1–2.

The committee then applied Rule 21-211(A). It found that the firm's representation of the LLC raised a reasonable question about the judge's impartiality in cases involving that firm or its lawyers. It called for the judge to leave any such pending case and avoid presiding in such cases for an indefinite period. Source: Opinion 22-01, pp. 2–3.

In practice

Under this 2022 opinion, the LLC could accept the offered legal services without triggering the judge's gift prohibition on the stated facts. The committee recommended abstaining from an LLC vote on the offer and disqualification from proceedings involving the representing lawyers. Source: Opinion 22-01, pp. 2–3.

Common questions

Q: Was the discounted representation treated as a gift accepted by the judge?

A: No. The committee said the separate LLC was the client, the judge was not personally involved in the suit, and the minority interest did not allow the judge to refuse the offer alone. Source: Opinion 22-01, p. 2.

Q: Could the judge continue hearing cases involving the LLC's lawyers?

A: The committee concluded that their representation reasonably called the judge's impartiality into question and recommended removal from such cases, including pending ones. Source: Opinion 22-01, pp. 2–3.

Q: Did the committee address the judge's vote on accepting the offer?

A: Yes. It recommended that the judge abstain from any LLC vote on the issue. Source: Opinion 22-01, p. 2.

Background and rules framework

The opinion interpreted New Mexico Code of Judicial Conduct Rule 21-313(A), the gift provision, and Rule 21-211(A), the disqualification provision. It discussed Comment 4 to Rule 21-313 on gifts to others that may indirectly benefit a judge, and cited Advisory Opinion 2021-07 on legal services from lawyers who may appear before a judge. Source: Opinion 22-01, pp. 1–3.

Citations and references

New Mexico Code of Judicial Conduct:

• Rules 21-313(A) and 21-211(A), and Rule 21-313 Comment 4. Source: Opinion 22-01.

Other opinions cited:

• New Mexico Advisory Opinion 2021-07, on Rule 21-313(A)'s gift prohibition. Source: Opinion 22-01, p. 1.

See also

• AL Judicial Ethics Op. 94-514: Gift from a Lawyer
• AL Judicial Ethics Op. 02-803: Event Tickets and Recusal

Source

• Landing page: New Mexico judicial advisory opinions
• Original PDF: Advisory Opinion 22-01

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

SUPREME COURT W
LAIN LISPAnY
SANTA FE, NE MEXiCO

Advisory Committee on the Code of Judicial Conduct
Hon. James J. Wechsler, Co-Chair (ret.)
This is an advisory opinion by the New Mexico Advisory
Hon. Kristina Bogardus, Co-Chair
Committee on the Code of Judicial Conduct, Advisory
Paul L. Biderman, Esq.
opinions are responses to inquiries from judges seeking
Prof. Robert L. Schwartz
guidance on judicial ethics questions. They are not issued,
Hon. Freddie Romero
approved, or endorsed by the New Mexico Supreme Court;
Hon. Sandra Engel
nor are they binding.

June 28, 2022

1011,Lt •

Re: AO-22-01
Dear 111111Maimi
You previously practiced in a three-member law firm that operated as a limited liability company; you had and continue to have a one-third share. The LLC ceased business operations in 2018. Thereafter, one of the members was alleged to have fired a gun at a former client of the law firm. The former client filed a lawsuit against that LLC member, the LLC, and others. You and the other LLC member were not named as parties, and you do not have reason to believe that the former client will seek to hold you personally liable. Insurers have declined coverage of the LLC's defense in the lawsuit because the policies were issued to you and the other LLC member, not the LLC.
The LLC does not have assets other than an amount it received as tax refunds. The law firm that has represented the LLC in the lawsuit has offered to provide free or discounted-fee representation in the case. You have asked the Advisory Committee on the Code of Judicial Conduct whether Rule 21-313(A) NMRA prohibits the LLC from accepting such representation.
Rule 21-313(A) provides
A judge shall not accept any gifts, loans, bequests, or other things of value, if acceptance is prohibited by law or would appear to a reasonable person to undermine the judge's independence, integrity, or impartiality, or if the source is a party or other persons, including a lawyer, who has come or is likely to come before the judge, or whose interests have come or are likely to come before the judge.

Free or discounted-fee legal services are gifts or "things of value" under Rule 21-313(A).
Thus, the rule prohibits a judge from accepting free or discounted-fee legal services from a lawyer "who has come or is likely to come before the judge." Id. It is a blanket prohibition based on a judge's obligation to avoid placing himself or herself in a situation that may give rise to the judge's disqualification. AO 2021 - 07, December 2, 2021. Because of the nature of the practice of the law

firm representing the LLC, you anticipate that there will be a time in which the law firm, or its lawyers, will have a case before your court.
In the circumstances you describe, you are not directly receiving legal services. The LLC is a defendant in the lawsuit; you are not. You are not subject to personal liability and do not have the ability to control the lawsuit. The law firm providing representation in the case is offering free or discounted legal services to its client, the LLC, not to you. The LLC, under law, is a separate entity. While without free or discounted legal services, your one-third share of the LLC's assets could be used to pay legal fees, with only a one-third interest in the LLC, you are unable to individually make any decision concerning whether to accept the offered, free or discounted legal services.1 The blanket prohibition of Rule 21-313(A) is designed to avoid any appearance of impropriety by precluding a judge from accepting a gift (something of value) from certain persons including lawyers who have or may appear before the judge. The prohibition obviates the need for a disqualification analysis under Rule 21-211 NMRA that would be required if the judge were able to accept such a gift. Rule 21-313(A) contemplates, however, that the gift is offered to the judge, and the judge has the discretion to refuse (not accept) the gift.
While not directly on point, comment 4 to Rule 21-313 addresses gifts that may indirectly benefit a judge. The comment observes that gifts made to family members may have the improper intent of evading the rule and indirectly influencing the judge. Rule 21-313, comment 4. The comment states that this concern is reduced when the gift is primarily being made to the family member, not the judge. Id. It recognizes that a judge is not in a position to refuse a gift made to another and instructs a judge to remind family members of the Code's restrictions on the judge "and to take these restrictions into account when making decisions about accepting such gifts or benefits." Id. According to the comment, "Rule 21-313 NMRA applies only to acceptance of gifts or other things of value by a judge." Id.
The Committee does not believe that Rule 21-313(A) prohibits the acceptance of free or discounted legal services by the LLC because (1) the LLC is the client, not you; (2) you are not directly involved in the lawsuit or subject to personal liability; and (3) you only have a minority interest in the LLC that does not enable you to refuse the offer. Under these circumstances, you are sufficiently attenuated from the representation of the LLC that the blanket prohibition of Rule 21-313(A) would not apply. The Committee recommends that you abstain from any LLC vote on the issue.
Our conclusion triggers a disqualification analysis under Rule 21-211 regarding the law firm representing the LLC and its lawyers who may appear in your court. Rule 21-211 provides that a judge is disqualified from presiding in any proceeding "in which the judge's impartiality

1 Without the law firm's free or discounted legal services, the former client suing the LLC would likely not have any assets to satisfy any judgment in that the LLC's assets would likely be entirely consumed to pay legal fees.

2

might reasonably be questioned," including when the judge has a personal bias concerning a lawyer in the proceeding. Rule 21-211(A). The Committee believes that in the circumstances you describe the law firm's representation of the LLC gives rise to a reasonable question as to your impartiality in a case in which the law firm or its lawyers are involved. The Committee recommends that you remove yourself from any such case presently before your court and not preside in any such case for an indefinite period of time.

es J. Wechsler
Co-Chair

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