Advisory Opinion No. 1994-3
A Government Relations
Contract Incentive Payment
The lobbying firm has a contract with a client to provide
governmental relations services in support of the clients efforts to obtain
State Certificate of Need authority, State issued
bonds, and/or Quasi-Public Agency financing in order to develop a Continuing
Care Retirement Community (CCRC) in The client has now requested that the firm also represent it
on a directly related legislative issue.
Specifically, the client is seeking a change in Given this set of facts, the firm wishes to know whether,
under the Code of Ethics for Lobbyists, Conn. Gen. Stat. Chapter 10, Part II,
it can contract with the client to provide, for a monthly fee, the requested
legislative representation, while the prior contract concerning government
relations services also remains in effect. Under the provisions of the Lobbyist Code, No person shall
be employed as a lobbyist for compensation which is contingent upon the outcome
of any administrative or legislative action.
Conn. Gen. Stat. §1-97(b). In essence, the General Assembly enacted this
prohibition to prevent the undue pressure for lobbying success, and consequent
pressure to engage in unethical conduct, inherent in a contingent payment
arrangement. The government relations services in question are not being
provided for the purpose of influencing any Administrative action or
Legislative action as those terms are defined in the
Code. Conn. Gen. Stat.
§1-91(a) and (j). Consequently,
these services do not constitute regulated lobbying. Conn. Gen. Stat. §1-91(k). As a result, at present, the ban on
contingent fee agreements does not apply to the incentive payment the firm will
receive if it secures the financing sought by the Client. If, however, the firm undertakes the
requested legislative work, it will, unquestionably, be engaging in
lobbying. Whether, under these altered circumstances, the prior
incentive payment agreement at issue remains permissible is a question of first
impression under the Lobbyist Code. The
legislative history of §1-97(b) is silent on the specific issue of the legality
of such distinct, but related, contractual arrangements. Therefore, under the rules of statutory
construction, the Commission must interpret and apply the term contingent
according to its commonly approved and understood meaning. Conn. Gen. Stat. §1-1(a). Contingent is commonly understood to mean
dependent on, associated with, or conditioned by something else
dependent for
effect on, or liable to modification by, something that may or may not
occur
Websters
Third New International Dictionary Volume I at p. 493, Merriam &
Webster (1986). While the sought after legislative amendment may not,
according to Mr. McLaughlin, be absolutely necessary it will clearly
contribute to the client obtaining its financing and, consequently, to the
firm obtaining its contingent incentive payment. Therefore, the incentive payment can
logically be viewed as being, in a very real sense, substantially dependent
on the legislative outcome in question.
And such substantial dependence equates to the generally understood
usage of the term contingent: i.e.,
that an outcome is considered to be contingent if it is materially dependent
on, although not necessarily totally determined by, the occurrence of a
condition precedent. Additionally,
although the legislative work is to be performed for a set monthly fee, it will
be humanly impossible for the lobbying firms personnel to set aside their
knowledge that legislative success may very well result in the subsequent
receipt of an additional incentive payment; thereby creating the very pressure
for results that §1-97(b) was enacted to eliminate. As a consequence, the State Ethics Commission advises that Mr.
McLaughlins firm not engage in the proposed lobbying work as long as its prior
contract with the client contains the incentive payment provision in
question. Alternatively, another lobbyist
may perform the requested legislative work, or Mr. McLaughlins firm may
undertake the work after amending its existing government relations contract to
eliminate the contingent payment component. By order of the Commission, Christopher T. Donohue
Chairperson