Panel weighs legal-fee issue for legislators
3rd-party funds can be seen as gifts, draft opinion states
A third party’s payment of legal fees in a lawsuit in which legislators are plaintiffs can be an acceptable gift potentially reportable in a statement of financial interest, attorneys for the Arkansas Ethics Commission said in a draft advisory opinion.
The advisory opinion is being drafted in response to a request from state Sen. Alan Clark, R-Lonsdale. Clark is one of 18 lawmakers named as plaintiffs in a lawsuit alleging that Gov. Asa Hutchinson’s response to the coronavirus pandemic exceeds his authority. The case is on appeal to the Arkansas Supreme Court.
In an Oct. 5 letter to Ethics Commission Chairwoman Ashley Driver Younger, Clark asked the commission whether the expense of the litigation could be considered a gift to the legislative plaintiffs. Another plaintiff, Rep. Dan Sullivan, R-Jonesboro, has said that the Northeast Arkansas Tea Party and Reopen Arkansas collected the money to pay for the suit.
The draft notes that the commission refrains from opining about the permissibility of a specific past event, so the draft opinion is not applicable to the lawsuit Clark asked about. But it said that his questions present an opportunity for the commission to highlight issues that legislators could face in future situations.
At its meeting Friday, the five-member commission asked the staff attorneys to rewrite the opinion for clarity and present it to the panel again at a later date to be voted on for approval.
The draft opinion states that the legal fees meet the state’s definition of a gift, but not necessarily one that would be prohibited. It appears that the individual or individuals paying the legal bills are motivated to challenge executive orders concerning covid-19 rather than rewarding the legislators named as plaintiffs, the draft says.
“While the payment of legal fees associated with such a lawsuit may not seem like what people traditionally think of as a gift, payments of more than $100 meet the definition,” the attorneys wrote. “Accordingly, such a payment would be a gift that is potentially reportable on a legislator’s Statement of Financial Interest (“SFI”) but not prohibited under Ark. Code Ann. 21-8-801.”
Arkansas Code Annotated 21-8-402(5)(A) defines the term “gift” to mean any payment, entertainment, advance, services, or anything of value, unless consideration of equal or greater value has been given therefor, excluding anything with a value of $100 or less unless it comes from a lobbyist or any person or entity acting on behalf of a lobbyist.
The legal fees could be reported on a pro-rata share for each legislator plaintiff, the draft says. For instance, if the total legal fees were $10,000 for the 18 legislator plaintiffs and the seven non-legislator plaintiffs, then each plaintiff would have received a $400 gift.
Clark did not return an email seeking comment on the draft opinion Friday afternoon.
According to the website of the Northeast Arkansas Tea Party, “people of Arkan
sas across the entire state” had raised more than $10,000 to fund the legal services.
In addition to Clark and Sullivan, the plaintiffs in the lawsuit are: Sens. Bob Ballinger, R-Berryville; Kim Hammer, R-Benton; Terry Rice, R-Waldron; and Gary Stubblefield, R-Branch, as well as Reps. Mary Bentley, R-Perryville; Harlan Breaux, R-Holiday Island; Bruce Cozart, R-Hot Springs; Justin Gonzales, R-Okolona; Stephen Meeks, R-Greenbrier; Josh Miller, R-Heber Springs; John Payton, R-Wilburn; Marcus Richmond, R-Gravelly; Laurie Rushing, R-Hot Springs; Brandt Smith, R-Jonesboro; Nelda Speaks, R-Mountain Home; and Richard Womack, R-Arkadelphia.
Pulaski County Circuit Judge Wendell Griffen dismissed the case in October, ruling that Hutchinson, in his response to the pandemic, had acted within the scope of the powers delegated to his office by the 1973 Arkansas Emergency Services Act. Attorneys for the plaintiffs filed notice of appeal to the Arkansas Supreme Court earlier this month.
Much of the Arkansas Ethics Commission’s discussion Friday focused on how participating in the lawsuit might be politically beneficial for the lawmakers.
“It’s got to have a political value for these folks,” Commissioner Lori Klein said. “I would argue that being able to be a part to this lawsuit is of value in terms of generating contributors and generating voters later on.” Commissioners Scott Irby, Alice Eastwood and Denese Fletcher said they agreed. Irby said the payment of the legal fees is likely a benefit for both the lawmakers and the donors.
“It’s probably a mutual benefit,” he said. “These legislators can say, ‘I’m fighting the good fight.’”
Klein added that the legislators’ participation in the lawsuit could also be considered constituent service because some are representing the opinion of people who live in their districts.
Commission Director Graham Sloan said the determining factors for permissibility and reporting for gifts were the amount and whether a lobbyist was involved, not any “nebulous” benefits.
“If somebody gives you an ad and you hit a home run and it doubles your business, it’s still the cost of the ad that decides. I personally would be hesitant to weigh the value of being named a plaintiff. … That’d be hard to quantify,” Sloan said. “You’d have to look at the subjective intent of the donor and that is hard to do, but that’s just the way the law’s written.”
Eastwood, the commission’s vice chairwoman, said she wanted to see the advisory opinion redrafted to make it more clear. She said earlier in the meeting that it wasn’t clear to her that the payment of legal fees was considered a gift upon reading the draft.
“I would like to see this rewritten in a way that’s, you know, kind of based on the analysis that we’ve been talking about, just so it’s clear,” she said.