Policies on Legal Defense Funds Updated

The Office of Government Ethics has clarified its interpretation of how ethics laws and rules apply to federal employees benefitting from a legal defense fund or contributing to such a fund to aid another federal employee, updating policy on an issue it last addressed in 1993.

“Although there is no statutory or regulatory framework providing for the manner in which a legal defense fund may be established for an employee, such a fund must be operated consistent with the ethics rules,” a legal advisory says. This includes rules regarding the acceptance of gifts from outside sources and from other employees; the criminal conflict of interest statutes; public financial disclosure requirements; and the lobbyist gift ban.

OGE said it still considers the conflict of interest law as allowing for contributions to an employee’s legal defense fund if the defense is not part of official duties, since it would not be “compensation for services.”

However, OGE said it no longer urges that the identity of donors should be concealed from the beneficiary of the fund so that the employee will be unable to favor the donors. Such anonymity “may be difficult to enforce in practice,” the new guidance says, and the “concerns about donors currying favors with employees benefiting from the donations are negated by the fact that solicitation and acceptance of contributions from prohibited sources are barred under the gift rules unless an exception applies.”

“Because of these and other ethics considerations, individuals should consult with an agency ethics official or OGE before establishing a legal defense fund,” it added.