Accepting Indemnification of Legal Fees and Expenses
October 1, 2001
CJE Opinion No. 2001-13
You have asked whether you may accept from your former employer (“the institution”) indemnification for any legal fees and expenses you might incur in connection with providing testimony, or preparing to provide testimony, in a matter pending in the trial court. The institution is a party to the litigation. As a matter of practice, you do not sit on matters involving either the institution or the law firm representing you in connection with your testimony or potential testimony.
The institution, pursuant to its own written regulations, indemnifies its officers or former officers “against all liabilities and expenses including . . . counsel fees reasonably incurred . . . in connection with the defense or disposition of any action, suit or proceeding in which he may be involved . . . while in office or thereafter, by reason of being or having been [an officer of the institution].”
In CJE Opinion 95-7, we stated that a judge who served on the board of directors of the National Railroad Passenger Corporation, commonly referred to as “Amtrak,” could accept a Rail Travel Privilege Card which would, with minor exclusions, provide the judge and his wife with free and unlimited personal rail travel within the Amtrak system. We noted that all former board members were issued such cards and we viewed the “pass” as a form of deferred compensation for services rendered prior to the individual’s appointment as a judge. While we view the indemnification of legal fees as reimbursement and not deferred compensation, we point out CJE Opinion 95-7 as one example of a situation where a judge may properly receive the same benefit from prior employment as others who have served in the identical capacity.
A judge’s ability to do so, however, is not unrestricted. Canon 5(C)(1)) states that:
“A judge should refrain from financial and business dealings that tend to reflect adversely on his impartiality, interfere with the proper performance of his judicial position, or involve him in frequent transactions with lawyers or persons likely to come before the court on which he serves.”
In your situation, the institution provides indemnification to all individuals who serve or have served in your former position at the institution. It is significant that the provision for indemnification is codified in the regulations under which the institution carries out its business. The codification reinforces the point that your position as a judge is wholly unrelated to the benefit conferred. Moreover, you already recuse yourself in matters involving the institution. Accordingly, your acceptance of the indemnification will not “reflect adversely on your impartiality.” Nor does it appear that acceptance of indemnity will “interfere with the proper performance of your judicial position.” Furthermore, acceptance of the indemnification is not likely to involve you in “frequent transactions with lawyers or persons likely to come before the court on which you serve.” This indemnification issue is likely to arise in the future on an infrequent basis, if at all, and, the likelihood diminishes as your service on the bench continues to push your prior employment into the past.
Our advice is that the Code of Judicial Conduct does not preclude your acceptance of indemnification from your former employer of any legal fees you may incur in connection with your testimony and/or the preparation of your testimony.
Since such indemnification is an expense reimbursement and not compensation, it need not be reported pursuant to Canon 6(C). Your obligation under Canon 6(C), however, is separate and distinct from an obligation, if any, to report the indemnification amount to the State Ethics Commission under Chapter 268B of the General Laws.