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Thursday, January 22, 2015

Sheldon Silver's Warning To The Free Market?:

Behind the dismaying arrest of New York State Assembly Speaker Sheldon Silver on a series of mail fraud, extortion "under color of official right" and honest services fraud criminal charges (here's the
federal indictment against Silver), there could be some subtle and worrisome themes best expressed in three questions:

First: Does the federal government have the right to approve business contracts? This leads to the question of whether the federal (or state) government be able to criminalize any contract of which it does not approve?

And second: Are prosecutors also regulators, that is, able to impose regulations outside the ambit of legislative authority (because prosecutors are part of the executive branch) through their creative use of criminal statutes?

And finally, third: Will business be subject to arbitrary, shifting and perhaps ill-informed standards of care, perhaps set and then measured for compliance by people not necessarily qualified to do either, and of which standards an alleged violation becomes a crime?

These concerns 

(Before I continue: This article explores some troubling nuances in the thought process behind the case, and in no respect is meant to excuse or defend any of the alleged conduct. I have no love lost for Mr. Silver, none at all, but nor do I bear him any animus. Full disclosure: I've beaten his political machine -- that's different from him and I impute nothing to him -- on some election law cases in the past, going up against someone from the big law firm Stroock, Stroock & Lavan. They even sought sanctions against me in a frivolous argument thankfully rejected out of hand.  But I am not sold on the big picture here, which carries the subtle message that the government will use its prosecutorial power to regulate economic activity and businesses with which it simply disapproves or dislikes of an activity, industry or a particular person. None of that should be meant as a defense of Mr. Silver, particularly in some of the other criminal charges that involve none of the issues I discuss below, and which charges are both much more formidable and bolstered apparently with cooperating witnesses.)

Somewhat buried in the Silver criminal complaint are nuggets that very much indicate (and United States Attorney Preet Bharara said as much in his press conference) that the Department of Justice was questioning what Silver did to earn his referral fees from two law firms.

Here's the problem. The evaluation of what he did, whether he was qualified, etc. is an inherently subjective-value driven evaluation.

Should the federal government be able to charge you with a crime because it claims -- for good cause, bad cause or no cause -- you are not qualified to handle certain work and therefore made money by splitting legal fees on work you were not qualified to do and thus were not entitled to receive?  And what standard of qualification is used? Even more importantly, who gets to exercise that standard, and what standards are going to be used to judge whether they are qualified?
We are moving in that direction. We are lurching dangerously in a direction where personal or political animus can be the unstated basis for the prosecution and financial, reputational and personal destruction of people who have merely had the misfortune to achieve, and then to draw the envy and thus the ire of those in power who are envious, ambitious or flatly malicious.
The factual foundation of one charge is a fee-sharing agreement among lawyers, that is, Silver and another law firm, regarding work that Silver is considered unsuited to have performed, and Silver's failure to disclose that source of income.  But lawyers are allowed to refer clients to others who may practice in different fields (or even the same field) and get referral fees.  New York's Disciplinary Rule 2-107(A) -- a rule which is not even a criminal statute -- provides that lawyers can split fees if "each lawyer assumes joint responsibility for the representation" and the client is informed in writing. That rule follows a nearly 50-year old New York appellate case that holds that
“It has long been understood that in disputes among attorneys over the enforcement of fee-sharing agreements the courts will not inquire into the precise worth of the services performed by the parties as long as each party actually contributed to the legal work and there is no claim that either ‘refused to contribute more substantially.’
Sterling v Miller, 2 A.D.2d 900, aff’d 3 N.Y.2d 778 [1956]). (Emphasis added.)
So do we have a criminal charge against Silver that is based, dangerously subjectively, on the premise that in a prosecutor's mind, Silver simply didn't do enough to deserve his fee? (There is an echo here of the federal prosecution of New Jersey State Senator Wayne Bryant for having a "low-show" and also low-paying part time job, by then U.S. Attorney Chris Christie.)
And regarding the alleged crimes comprising several counts, one needs to ask what is "legitimate outside income" for a lawyer? And does this type of case put any part-time legislator at risk of having his or her outside income considered "bogus"? What is the standard? Is it arbitrary?  
Is that really a federal crime -- a crime at all?
In other words, do we have real crimes, or just ambitious second-guessing and smug judgments against a public elected official whom, regardless of whether you like him or his policies, is allowed to have part-time outside income. (Or perhaps, just not too much income.) I wonder if what we have here is a subjective standard that puts certain professionals -- lawyers are a suspect class -- and particularly public officials and elected officials most especially at risk on account of their high profile and thus their ability to "make the career" or "make the name" of an ambitious government prosecutor.
Arguably, the appropriate sanction for such acts, particularly if they are intentional, is not prison. It is disqualification from holding public office and/or public employment. That would be a stiffer, more meaningful and, to be frank, more painful punishment that would also be more effective in achieving deterrence. The goal of deterrence is historically a key element of the Anglo-American tradition of criminal law. (Others include the need to protect the public, and yes, the goal of retribution.
But envy, jealousy and clearing the field to create openings for the ambitious are not proper motives for the criminal law.
And as for elected officials, perhaps they are irretrievably under suspicion, and it is very hard to prove one's innocence in a world of the subjective standard. A solution would seem to lie in the eradication of the part-time legislator, so as to protect elected officials from this subjective standard.

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