Can a municipality include its township attorney's fees in the condemnation costs it requires a developer to reimburse, without creating a conflict of interest?

Plain-English summary

The inquirer was township attorney for a developing community handling numerous subdivision applications. In some cases the planning board conditioned subdivision approval on off-site street and drainage improvements at the developer's cost, and required the developer to agree that, if the developer could not reasonably acquire needed off-site property, the township would condemn it with all condemnation costs borne by the developer; a similar situation arose from a zoning-board variance requiring acquisition of a strip of land. The attorney was appointed annually and paid by the municipality at the same hourly rate as other municipal work, with the developer depositing or reimbursing the municipality for the required funds. He asked whether the municipality could enter such an agreement.

The Committee read the inquiry as raising two questions. The first, the propriety of the condemnation procedure itself, it found to encompass matters of law outside its jurisdiction, noting Opinion 337 had treated a related land-use question as a legal matter. The second was whether the manner of paying the attorney, by conducting the proceedings in the municipality's name and including his fees in the acquisition costs, was permissible under DR 5-105(A) and (C) and the Committee's prior opinions.

Distinguishing Opinion 69, where it had found it unethical for a municipal attorney to be paid indirectly by a developer while in substance representing both, the Committee stressed that there the attorney would effectively advise the developer. Here, by contrast, the township attorney's representation was limited to the municipality, and the legal services were performed solely for the municipality and not subject to the developer's approval. On those facts the Committee saw no impropriety in including the legal fees as part of the municipality's improvement or condemnation costs, and held the arrangement did not violate DR 5-105(A) and (C).

Currency note

This opinion was issued in 1980, before New Jersey's adoption of the 2004 revisions to the Rules of Professional Conduct, and predates the 1984 replacement of the Disciplinary Rules by the RPCs. The conflict rule it applied (DR 5-105) now corresponds broadly to RPC 1.7. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Could the municipality bill its attorney's fees to the developer?

A: Yes, on these facts. The opinion concluded that including the township attorney's fees in the reimbursed acquisition costs did not violate DR 5-105 where the attorney represented only the municipality.

Q: What distinguished this from the earlier prohibition in Opinion 69?

A: In Opinion 69 the arrangement would have had the attorney effectively advising the developer; here the services were performed solely for the municipality and were not subject to the developer's approval.

Q: Did the Committee rule on whether the condemnation procedure itself was proper?

A: No. It treated that as a question of law outside its jurisdiction.

Background and rules framework

The opinion applied DR 5-105(A) and (C) on conflicting representations, with the Municipal Land Use Law as context. In current New Jersey terms the analysis maps onto RPC 1.7 (concurrent conflicts of interest). The dividing line the Committee drew was whether the attorney's services were rendered solely for the municipality or in substance also for the developer who funded them.

Citations and references

Rules of Professional Conduct:

• MR 1.7 / NJ RPC 1.7 (concurrent conflicts of interest); decided under former DR 5-105(A) and (C)

Other opinions cited:

• NJ ACPE Opinion 69, 88 N.J.L.J. 97 (1965) (municipal attorney paid indirectly by a developer while in substance representing both is unethical)
• NJ ACPE Opinion 337, 99 N.J.L.J. 588 (1976) (municipal attorney's deed-of-easement work for the municipality not unethical)

See also

• NJ ACPE Op. 489: Assistant County Counsel as Special Counsel to a Municipality
• NJ ACPE Op. 702: Developer Rule and Municipal Attorney Conflict
• NJ ACPE Op. 469: Employment by Two Law Firms and a State Agency

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp465-1.html
• Issuing authority: New Jersey Supreme Court Advisory Committee on Professional Ethics, via the NJ Courts Supreme Court Committees page

Original opinion text

Reproduced from a full-text mirror of the official opinion for research purposes. The linked official source controls.

106 N.J.L.J. 509, December 18, 1980

OPINION 465

Conflict of Interest - Municipal Attorney - Municipality's Collecting Attorney's Fees from Developer in Improvement and Condemnation Proceedings

The inquirer is township attorney for a municipality which apparently is a developing community with numerous applications for extensive residential subdivisions. He states that in many instances the proposed subdivisions surround small residential lots, which are not owned by the developer, and that in other instances there are other subdivision problems which arise from time to time. It appears, further, that the municipal planning board in one instance had made a determination that the proposed subdivision necessitated off-site street and drainage improvements (widening, curbs, gutters, etc.) and "with the developer's consent under the terms hereinafter set forth, conditioned subdivision approvals upon such off-site improvements being completed at the cost of the developer... In addition, the planning board and the township committee require that in the event the developer might not be able to reasonably acquire off-site property, the developer enter into an agreement wherein, if the developer could not acquire the necessary property, the township would condemn, with all costs of condemnation being borne by the developer." He states further that, additionally, a similar situation has arisen emanating from the zoning board of adjustment concerning a variance application with respect to an undersized lot. The zoning board of adjustment granted approval subject to the developer's acquiring a 10-foot strip of land from a large neighboring undeveloped tract in order to provide enough room for a narrow roadway to be constructed to permit ingress and egress for emergency vehicles. With reference to the foregoing, the inquirer, as the township attorney, has asked if the municipality could enter into an agreement with a developer similar to that of the planning board with reference to street improvements.

It appears that the township attorney is appointed annually by the municipality and would be paid by the municipality at the same hourly rate as is all other municipal work. The developer would deposit or reimburse the municipality for such funds required to cover all costs and fees. The inquiry as submitted to us does not set forth specifically enumerated questions, but merely sets forth a statement of facts. The memorandum submitted by the inquirer with the statement of facts is substantially along the same lines as the inquiry, excepting that one can gather from the memorandum that the specific question for which the inquirer seeks an opinion is two-fold, viz: 1. Is the suggested procedure of condemnation by the municipality in aid of the developer's needs for purposes of compliance with local law and/or planning board or board of adjustment requirements proper? and 2. Is the manner of the attorney's being paid for his legal services and costs, namely by conducting the proceedings in the name of the municipality and having the municipality include his fees as part of the acquisition costs, permissible under the provisions of the Municipal Land Use Law as well as DR 5-105(A) and (C), as well as being in accord with our prior opinions?

It appears as to the first question, namely the propriety of the proposed course of procedure, that it definitely encompasses matters of law which are not within our jurisdiction. In Opinion 337, 99 N.J.L.J. 588 (1976) this Committee held that: "The review revision or preparation by the municipal attorney of a deed of easement to the municipality which a developer is required by the municipal planning board to execute and deliver incident to subdivision approval is not unethical. The attorney in such a case was properly representing a municipality which is entitled to have its interests properly protected. We see no conflict in this matter. The propriety of the municipality's requiring the developer to reimburse it for the municipal attorney's fees incident to the performance of his services involves a matter of law as to which we express no opinion."

As to the second question, the facts in the instant presentation are somewhat different from the facts presented in the inquiry resulting in our Opinion 69, 88 N.J.L.J. 97 (1965), wherein we held that "(I)t would obviously be unethical for a municipal attorney to directly accept fees from such a developer and represent him as well as the municipality. Does the indirect payment of the fee by depositing it with the municipality change the proscribed conduct? We think not." It is to be noted that the facts involved in Opinion 69 indicated that the developer offered to permit the municipal body or agency which was concerned with the required extensive "planning, regulations, agreements, specifications and other lengthy documentation in connection with the proposed development" to do the particular legal work through its own attorney or attorneys. The inquiry as submitted further stated "the attorney or attorneys, who are appointed annually by the municipal body or agency, would at all times represent the municipality or agency and at no time represent the developer and would act under the direction and restrictions of the respective municipal body or agency conferring with the developer only at such times as their acceptance or disapproval of the proposal or other document may be required" without being in the position of advising the developer. We stated that "our view is not changed by the assertion that the attorney 'would at all times represent the municipality... and at no time represent the developer.' The practicalities of the undertaking refute the words. It is, for example, difficult to see how a municipal attorney could apply for a subdivision approval, a building permit or a zoning variance for the builder and be representing the municipality only. And it is equally difficult to understand how the municipal attorney could confer with 'the developer at such times as their acceptance or disapproval of the proposal or other document may be required' without being in the position of advising the developer. To say the least, he would undoubtedly find it his duty to contend for (the municipality) that which duty to (the developer)... would require him to oppose." We, therefore, held that under the circumstances, it would be unethical for the attorney for the municipal body or agency to perform the required services under the facts as presented.

In the instant inquiry, however, the representation by the township attorney is limited to that of attorney for the municipality and the legal services as called for by the municipality relate to services being performed solely for the municipality and not subject to the approval of the developer. Under these circumstances, we see no impropriety in the inclusion of the legal fees as part of the costs incurred by the municipality with reference to the improvements or condemnation proceedings, and such action will not be in violation of DR 5-105(A) and (C).