June 14, 1982
It is not unethical for a newly elected judge, who with his spouse co-owns an office building, to lease space to former members of the firm of which the judge was associated prior to election of appointment to the bench, under circumstances where the judge's former partners and/or associates are not likely to appear in a representative capacity before that judge.
A judge should report the source and amount of rental income received from lawyers.
References: MCJC 5(C), 6(C); GCR 912.2(4).
Prior to election as judge, the inquirer maintained a law office in which two other lawyers were associated. The judge owns the premises at which the law office is located and asks if it is ethically proper to rent the office to the former associates, and, if so, whether the judge is required to report rents received from the lawyers.
MCJC 5C of MCJC states in pertinent part:
"C. Financial Activities:
"(1) A judge should refrain from financial and business dealings that tend to reflect adversely on his impartiality or his judicial office, . . ., or involve him in frequent transactions with lawyers or persons likely to come before the Court on which he serves.
"(2) Subject to the requirements of subsection (1), a judge may hold and manage investments, including real estate, and engage in other remunerative activity, but should not serve as director, officer, manager, advisor or employee of any business . . . .
"(3) A judge should manage his investments and other financial interests to minimize the number of cases in which he is disqualified. As soon as he can do so without serious financial detriment, he should divest himself of investment and other financial interests that require frequent disqualification."
The facts do not explain the duration of the lease arrangement with lawyers "B" and "C," nor do they set forth the nature of the associates' law practice, Nevertheless, several conclusions are evident from MCJC 5(C). First, a judge may hold and manage investments, including real estate. Second, a judge should refrain from business dealings which involve the judge in frequent transactions with lawyers or persons likely to come before the court on which the judge serves. Third, the judge should manage investments and other financial interests to minimize the number of cases in which the judge is disqualified.
GCR 912.2 states in part:
""A judge is disqualified when he cannot impartially hear a case, including a proceeding where the judge:
". . .
"(4) was a partner of a party, attorney for a party, or a member of a law firm representing a party within the preceding 2 years; . . . ."
GCR 912.2(4) suggests that the judge would not preside over cases of the associate lawyers for two years following investiture. Given this premise, there does not seem to be an ethical prohibition against continuing the business relationship for a period of two years. If the associate lawyers are likely to appear in the judge's court in a representative capacity, the judge should seriously consider terminating the landlord/tenant relationship since a continuation of this business may call into question the judge's impartiality and/or require frequent disqualification.
MCJC 6 is the provision of the MCJC requiring financial reporting of extra-judicial activities to the Supreme Court Administrator, and states:
"A judge should report the date, place and nature of any services for which he received compensation and the amount of remuneration received and complete detailed information of all contribution of money or of a tangible thing of value by any person, party, committee, organization, firm, group or entity to any person, party, committee, organization, firm, group or entity, directly or indirectly, to or for the judge's benefit for any purpose whatever, including, but not limited to, contribution for a judicial campaign or otherwise and of all disbursements or use of contributions, all on forms to be prescribed by the Supreme Court Administrator. His report should be made at least annually and shall be filed as a public document in the office of the Supreme Court Administrator."
MCJC 6C obligates a judge to report information with respect to "services" for which the judge is compensated, and complete detailed information of all "contributions" for "any purpose whatever." This language is significantly broad, and while the committee cannot say that the drafters contemplated reporting receipt of rental income from lawyers, it is recommended that the judge disclose the nature, source and amount of the rentals received to avoid the possibility that judicial integrity may later be called into question as a result of non-disclosure.