Is It Permissible for a Judge to Own a Law Practice? Legal and Ethical Considerations

Judicial Conduct and Law Practice Ownership

To understand why it is generally considered improper for a judge to own a law firm, you must first understand the rules of judicial conduct. By way of example, a review of Rule 4.1 of the Code of Judicial Conduct, as promulgated by the American Bar Association, reveals that the rules provide in pertinent part that:
(A) Except as permitted by law, a judge shall not serve as an executor, administrator, trustee, guardian, or other fiduciary except for the estate of a member of the judge’s family or if otherwise permitted by law. A judge shall not act as an arbitrator or mediator or perform other judicial functions in a private capacity that are usually performed by a judge.
(B) A judge shall not practice law.
The rationale behind such rules is that a judge is meant to be impartial and shall avoid any situation which would give the appearance of impropriety. If a judge owned a law firm, such ownership could create the appearance of partiality regarding any litigated matter in which the attorney/owner was involved. In addition , the perception of "double dipping" by a judge would also create a situation giving rise to an appearance of impropriety. That is, receiving compensation for both judicial and non-judicial services would not only raise the perception of partiality, it would also raise an ethical issue with respect to whether or not a judge is using his/her judicial position as leverage to obtain private benefits/compensation.
In addition to the ABA’s Code of Judicial Conduct, many states have promulgated their own judicial ethics opinions clarifying that a judge cannot own a firm due to issues with respect to impropriety and partiality. For example, in Opinion 337, the S.C. Judicial Inquiry Commission, drawing on Law Firm of Gerald M. Stein, P.C. v. Wisconsin No. 2-107-359, 819 F. 2d 213 (7th Cir. 1986) and Supreme Court of New Mexico Advisory Op. No.95-3, found that the arrangements in question were impermissible because they created and/or the appearance of impropriety, and that there would be negative consequences including the risk of embarrassment for the judge and embarrassment for the State of South Carolina.

The Law Governing the Judges and Business Dealings

Throughout the states, there are legal barriers that prevent judges from maintaining an active interest in a law firm. For example, Hawaii prohibits a judge from having "any interest as owner . . . [of] a business entity." (Haw. Rev. Stat. § 601-1). California adopts language similar to Canon 5 of the ASBMR, which states that "[a]n appointive or elected judge shall not assign, delegate or otherwise surrender to others the judge’s judicial or administrative responsibilities or duties . . . ." (Cal. Comm. Jud. Eth. Inquiry Op. No. 59 (1985)). Courts who have addressed this issue have generally concluded that, absent an unequivocal statement to the contrary, a judge is not precluded from participating in the management or investment decisions of a law firm, since such conduct does not necessarily raise questions regarding the impartiality of the judge. See In re Locker, 51 So.2d 765, 767 (Fla. 1951); Atlanta Code of Judicial Conduct § 1.12 (1999). Some state statutes and judicial code provisions explicitly forbid a judge from being a director of a corporation. See e.g., S.C. Const. art. V, § 28; see also N.P.R.C. 8.4. However, other professional responsibility rules specifically allow a judge to serve on the board of a non-profit organization. See e.g., Pennsylvania Bar Associative Opinion No. 2002-112. It is vital for the courts to evaluate the role of the judge in the law firm and the extent to which the judge participates in the management of the firm.

Conflicts of Interest

The landscape of law and judicial conduct is littered with situations that raise questions of conflict of interest, and the situation of a judge owning a law firm is no exception. Upon closer examination, ownership of a law firm by a sitting judge could create multiple conflicts of interest. For this reason, most courts have flatly prohibited judges from operating private businesses. These prohibitions aren’t just limited to law firms; those in the business of providing legal services are also forbidden from operating private businesses. This includes "contract attorneys" who work from homes, or who work for staffing agencies that place attorneys in temporary gigs — precisely the kind of work from which I earned my Texas bar admission in 2012. The reason for this appears fairly clear: the concern is that those who are in the business of providing legal services might be tempted to integrate business considerations into the administration of justice, which would be a clear conflict of interest. For example, if a judge started a law firm, representing only engineering firms, even if solely in administrative matters, they might be less likely to rule against those firms or those that apply the strictures of the relevant Board. Or they might bend the law to favor them, due to their financial interests in continuing to do business with the firms. This could serve as a disincentive to other firms not already in the judge’s rolodex to seek out a similar line of business.
There are some other notable examples of conflicts. Think, for instance, of criminal law practitioners. Even if they were operating as a legal services provider (such as a public defender), their business could be substantially affected by the actions of the judge before whom they appear. Even though they would be public defenders, and therefore representation would be provided by the public, you can bet that they would want to curry favor with the judge, and to win them over to securing more work that — let’s face it — is only awarded to the best and brightest lawyers.
Civic duty is one thing, but if a sitting judge does any private work at all, then their actions might be seen as issuing from their material self-interest. Which is why, to ensure an unbiased judiciary, those who sit on the bench are encouraged to divest themselves of any potential conflicts of interest, so that they might have unbiased judgment. Because they are already entrusted with adjudicating cases where the stakes are high, to hold them subject to outside forces that might affect their performance, or worse, void their decisions, would be catastrophic.

Examples of Past Scenarios and Consequences

One of the most widely publicized cases in this area occurred in Florida in the late 1960s. Judge Thomas Barkley was elected as a circuit judge in 1966, at which point he held a partnership interest in a law firm, Barkley, McClellan & Smith. In a case involving attorney-client privilege, he recused himself from a case that involved his former partner and Donald McClellan, his law firm colleague. McClellan contacted the State Attorney to investigate and a special prosecutor determined that Barkley had to sever himself from the firm. Barkley complied in November 1968. The State Attorney did not take further action until 1970, at which point it was determined that Barkley’s financial interest in the firm as of November 1968 required him to disqualify himself in all cases in front of the court. Barkley recused himself from 28 cases, including 2 in which he had presided as Judge. On January 14, 1971, Barkley resigned from the bench in order to resolve the outstanding cases. After these cases were transferred to another judge, Barkley commenced a civil suit to invalidate the resolution and recusal orders, claiming a reasonable and good faith belief that the prior orders were subsumed by the 1970 order barring him from serving any case on the circuit court. The plaintiffs sought dismissal of Barkley’s complaint, which was granted by the trial court . Barkley appealed, but the dismissal was upheld by the appellate court. The appellate court held that "where it appears to a judge that his services cannot be rendered impartially to an parties, the judge’s disqualification is mandated and his voluntary recusal is not a sufficient substitute." In Barkley v. Daytona Beach News-Journal Corp., 197 So. 2d 327, 332 (Fla. 1967), the court wrote, "Disqualification under Article V, Section 12(a)(3) of the Florida Constitution is mandatory upon a trial judge when he or she is a ‘party to the proceeding.’ It may not be waived by such judge that his or her services will continue to be impartial." In 2008, a New Jersey judge was disqualified from a case after it was discovered that, for 13 years, she had expressed a clear intent to hire the defendant’s attorney when her tenure was finished. The judge ordered that the attorney be disqualified from the case. The defendant contended that since the case had been called to trial and jurors were selected, the dismissal of the attorney would be prejudicial to his case. The judge disagreed, finding that she had no choice but to disqualify the attorney, as attorneys are obliged "not to make plans at a time when they know they will be in a position to favor or disfavor someone in their professional capacity." The attorney was disqualified, the trial proceeded and a verdict was returned.

Other Career Paths for Judges

Beyond the limitations imposed by the judiciary code, there are other traditional paths that have been worn down by the many judges before you. Legal consulting is one of the most common choices. Judges are more apt to know where their legal expertise and experience is most valuable outside of the bench, and thus can offer a much more durable contribution to a consultancy than a typical attorney-in-practice. Legal consultants also are able to maintain their autonomy, and serve multiple clients, as opposed to a law firm on retainer.
Others choose to teach law. Serving as a Professor of Law gives you a brilliant opportunity to impart what you know to future generations of lawyers in the relative comfort of the classroom.
You also may wish to share your expertise with the public through traditional public speaking. For those familiar with digital methods, given the popularity of TED Talks and their modern equivalent, there’s an increasing demand for speakers which can be expressed online and offline.
Finally, you may not even need to give up wearing a robe to take on a semi-retirement career in the private sector. Some judges have declined to seek another term, or have retired and become arbitrators or mediators outside the courtroom. More judges are needed to arbitrate cases to avoid court clog, while mediators are always needed.

International Stances on Judges and Law Firm Ownership

The permissibility of judges owning law firms is not only a matter of U.S. legal ethics, but also of international concern. Various countries have established different guidelines for their judicial members regarding the possibility of dual practice.
In Canada, the Canadian Judicial Council (CJC) has publicly acknowledged that there are divided opinions on the question of whether judges are permitted to hold an ownership interest in a law firm. However, it has produced a proposed discussion paper stating that the current wording of the Canadian Judicial Ethics Principles and Procedures does not allow judges to own law firms, and has launched an initiative to strengthen the requirements for the ethical conduct of judges in Canada. The main purpose of the initiative is to ensure that all judges understand "the relatively simple concept that judges ought not to engage in behaviour that creates a perception that they do not meet the obligation that they act in a manner that promotes public confidence in judicial integrity and impartiality."
Meanwhile, the UK judiciary discourages judges from accepting a position in a law firm. After a recent increase in the absence of such a rule, the Jury Disqualification Act 1983, which disqualified judges from sitting with certain juries , judges have more of an incentive to engage in private practice.
For Chinese legal professionals, the professional practice environment greatly differs from Europe and North America. According to the 2001 Amendment to the Organic Law for People’s Courts, judges are not allowed to engage in business activities of any kind that divert their attention from their judicial duties. However, in practice, this rule is often flouted, as judges work in very heavy caseloads and are thus also compelled to accept private practice and engage in sideline systems that enable legal professionals to work, to some degree, outside their capacity as judges.
Australia takes on a more standardized approach, as Commonwealth judges are prohibited by statute from having a direct or indirect interest in a legal practice. However, the interpretation of "legal practice" varies in state versus territory statutes, and some territories take a more nuanced approach to the issue.
In contrast, the position of Japanese judges is that they are explicitly forbidden from taking outside employment in just about all of its categories of legal professional. Thus, judges are not able to maintain their own law firm or practice law in their personal capacity while on the bench.