State of Alaska

Department of Administration

Alaska Public Offices Commission

Alaska Department of Administration, Alaska Public Offices Commission

AO97-10-CD

Number: AO97-10-CD

Requested by: Ken Jacobus, Attorney

On Behalf of: The Republican Party of Alaska

Prepared by: Jenifer Kohout, Assistant Director

Date issued: June 3, 1997

Subject: Reporting of legal services to a party

This letter responds to your request for an advisory opinion regarding the application of the Alaska Campaign Disclosure Act to your services as the Republican Party Legal Counsel.

Summary

The provision of professional services is a contribution unless those services are related to the preparation of the reports and statements required by the campaign disclosure law. To the extent you provide professional legal services unrelated to report preparation, the value of those services is a contribution. Acting in your personal capacity, you are free to contribute up to $5,000 to the Republican Party of Alaska (the Party). As a professional corporation, however, you are prohibited from making any campaign contributions. As a result, you must bill the Party for all legal services you or your secretary provide which are not related to compliance with the reporting requirements of the campaign disclosure law.

The costs of transportation, meals and lodging you pay to attend the Party State Central Committee meeting in Juneau are not contributions if the payments are made by you as an individual; are voluntary; and are made with no expectation that you will be directly or indirectly repaid.

The Law

Definition of Contribution

AS 15.13.400(3) "[C]ontribution" (A) means a purchase, payment, promise or obligation to pay, loan or loan guarantee, deposit or gift of money, goods, or services for which charge is ordinarily made and that is made for the purpose of influencing the nomination or election of a candidate . . . including the payment by a person other than a candidate or political party, or compensation for the personal services of another person, that are rendered to the candidate or political party;

(B) does not include

(i) services provided without compensation by individuals volunteering a portion or all of their time on behalf of a candidate or ballot proposition or question, but it does include professional services volunteered by individuals for which they ordinarily would be paid a fee or wage;

(ii) services provided by an accountant or other person to prepare reports and statements required by this chapter; . . .

2 AAC 50.313. Definition of Contribution. (g) The payment by a person of compensation for the personal services of another person to a group or candidate for any purpose, except for legal and accounting services necessary to complete reports, is a contribution.

(l) In 2 AAC 50.310 - 2 AAC 50.405, "contribution" does not include the following payments, services, or other things of value: . . . (3) a payment made by any individual for his or her own travel expenses, if such payments are voluntary and are made without any understanding that they will be directly or indirectly repaid; . . .

Prohibited Contributions

AS 15.13.074. (a) A person or group may not make a contribution if the making of the contribution would violate this chapter. . . .

(f) A corporation, company, partnership, firm, association, organization, business trust or surety, labor union, or publicly funded entity that does not satisfy the definition of group in AS 15.13.400 may not make a contribution to a candidate or group.

Analysis

Provision of Legal Services

The new campaign finance law prohibits most business contributions to candidates and groups. The breadth of entities described in AS 15.13.074(f)—corporations, companies, partnerships, firms, associations, organizations, business trusts or sureties, labor unions, or publicly funded entities—indicates that the legislature intended to include professional corporations in the prohibition. Because your law office is a "solely-owned professional corporation," you are prohibited from making a contribution from your business.

With limited exception, the provision of legal services to a party is a contribution. According to the statutory definition, a contribution is a gift of services "for which charge is ordinarily made." The definition adds that the gift must be "made for the purpose of influencing the nomination or election of a candidate." The Commission has previously determined that all actions by political parties are inherently tied to the nomination and election of candidates. This understanding is supported by the remainder of AS 15.13.400(3)(A) which specifically identifies as a contribution, the "compensation for the personal services of another person, that are rendered to the candidate or political party." The sentence confirms that a payment of goods or services to a party is analogous to a payment to a candidate—both constitute a contribution because they are intended to influence the nomination or election of a candidate.

While the statute makes an exception for volunteer services, that exception does not include professional legal services. According to AS 15.13.400(3)(B)(i), services provided by volunteers are not a contribution. The subparagraph adds, however, that the exception does not include "professional services volunteered by individuals for which they ordinarily would be paid a fee or wage."

Whether certain professional services would "ordinarily" be compensated by "fee or wage" is an objective, not subjective, determination. You ask whether your work for the Republican Party would qualify for the exception because you have not been paid by the Party in the past and do not expect to be paid in the future. As you acknowledge, however, "attorneys are ordinarily paid for representing clients on advice and litigation matters." This is true and the Commission presumes that you are paid to represent your non-Party clients. As a result, the exception does not apply to your legal services.

Under the statute, the only professional services which are not contributions are those "provided by an accountant or other person to prepare reports and statements" required by the campaign disclosure law. Commission regulations interpret that provision to also apply to legal services: "[t]he payment by a person of compensation for the personal services of another person to a group . . . for any purpose, except for legal and accounting services necessary to complete reports, is a contribution." 2 AAC 50.313(g).

The exception is fairly narrow. The legal services you provide the party are considered a contribution unless they are necessary to the accurate completion of Party reports. The Commission acknowledges that the legal services you provide in the course of assisting the Party prepare campaign disclosure reports and statements may extend beyond time spent actually filling out the reports. Those services would include assisting the Party comply with the reporting requirements of AS 15.13. They would also include defending the Party from charges of substantial noncompliance and civil penalty assessments related to reporting matters. (See enclosed, "Contributed Legal Services," Nov. 18, 1982). Consequently, you or the Party would not be required to disclose the time you spent on these matters; nor would you be subject to contribution prohibitions.

It is unlikely that litigation assistance you provide the Party would qualify under the exception, unless that litigation was related to the completion of Party campaign disclosure reports.

To the extent the legal services you provide to the Party—either in the form of advice or litigation expertise--extend beyond the preparation of campaign disclosure reports and statements, that portion of your services would be considered a contribution to the Party. However, corporations are prohibited from contributing to parties. Because "you perform legal services under [your] business name of Kenneth P. Jacobus, P.C., which is a solely-owned professional corporation," you are prohibited from providing those services without charge. Instead, you must bill the Party for all legal services you provide which are unrelated to the preparation of campaign disclosure reports. Your billing procedures must be consistent with the business practices you would employ for a non-political client.

You ask if the time you spend at the State Central Committee meeting discussing legal matters and presenting the legal counsel report to the Committee must be treated and reported as a contribution to the Party. The fact that you serve as the Party legal counsel does not exempt you from the prohibition on corporate contributions of professional services. As described above, the portion of time you spend on matters necessary to the completion of campaign disclosure reports and statements is not a contribution and need not be reported. If, however, you provide legal expertise which extends beyond those necessary to the completion of reports, you must bill the Party for your time.

Both you and the other attorneys who serve as State Chairman, Republican National Committeeman, and district chairperson are free to volunteer your assistance on Party matters as long as your participation does not involve the provision of legal services for which you would ordinarily be paid. For example, you and the other officials who are attorneys may contribute your time organizing a fund-raiser or discussing general Party election strategy. If, however, you or these other officials provide professional legal services to the Party a contribution results unless the services provided are necessary to the completion of campaign disclosure reports and statements.

Secretarial Time

You ask about application of the campaign disclosure law to secretarial services—specifically, the work of your secretary which facilitates your legal services to the Party. You state that your secretary is an employee of your corporation. You add that, in your normal course of business, secretarial time is not billed to clients but is covered in your hourly rate.

Because the secretarial service you describe is linked to your work for the Party and included in your hourly rate, it is indistinguishable from your legal services and is treated in the manner described above. If a given project involves services related to the preparation of reports and statements required by the campaign disclosure law, there is no contribution and the time need not be reported or billed. If, however, those services are not related to report preparation, a contribution results. Because the services of your legal secretary are associated with your business, however, neither you nor she may contribute them to the Party. As a result, her work must be billed to the Party as it would be billed to any non-Party client.

Personal Travel

According to Commission regulations, no contribution results from "a payment made by any individual for his or her own travel expenses, if such payments are voluntary and are made without any understanding that they will be directly or indirectly repaid." Thus, if you purchase an airline ticket on your "personal VISA," as you indicate, you are not required to treat and report the cost of the ticket as a contribution to the Republican Party if you satisfy the other criteria.

Likewise, the cost of your other travel expenses, meals and lodging while in Juneau for the State Central Committee meeting would not be considered a contribution to the Party as long as you use personal funds; the payments are voluntary; and you have no understanding that you will be directly or indirectly repaid.

Conclusion

You may continue to donate legal services to the Party only if those services are related to the Party’s compliance with its campaign disclosure reporting obligations. To avoid making a prohibited contribution, the Party must pay you for all legal services you provide which are not related to the preparation of reports and statements required by the campaign disclosure law.

The Commission approved this advisory opinion on June 19, 1997. The advice in this opinion applies only to the specific activity for which the advice was requested.

A copy of the original letter requesting the above advisory opinion is available upon request at the Alaska Public Offices Commission. (907) 276-4176.