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FEC Record: Advisory Opinions

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AO 2012-16 Federal Contractor May Provide Legal Compliance to Senate Campaign

A law firm partnership that is also a federal contractor may provide pro bono legal services to a federal campaign committee pertaining to compliance with the Federal Election Campaign Act (the Act) and Commission regulations without making a contribution. The firm’s partners, associates and other employees may also individually volunteer their time to the campaign, in accordance with a proposed letter of agreement between the campaign and the firm.

Background

Angus King for U.S. Senate Campaign (the Committee) is the authorized campaign committee of Angus King, a Senate candidate from Maine. Pierce Atwood LLP (the firm) is a limited liability partnership that has a contract to provide legal services to the Millennium Challenge Corporation, a special purpose “federal corporation.” The firm is paid for these legal services by funds appropriated from Congress, and it intends to bid on and perform legal services with other federal agencies. The firm and the Committee have drafted a letter of agreement that lays out terms for the firm’s proposed provision of pro bono legal services to the Committee and the provision of volunteer time and payment of expenses by firm partners, associates and other volunteers.

The letter states the firm would provide pro bono legal services only for the purpose of ensuring the Committee’s compliance with the Act and Commission regulations, consistent with the provisions of  2 U.S.C. §431(8)(B)(viii)(II) and 2 U.S.C. §431(9)(B)(vii)(II). The firm would track the time spent on these legal services and provide the Committee with a monthly record of the time and value of the services based on the firm’s normal and usual rates, which the Committee would use to report the value of those services. The letter of agreement provides that the firm will charge the Committee the normal and usual rates for any services not involving compliance with the Act or Commission regulations.

The letter of agreement also details how the firm’s partners, associates and other employees, individually and independently, may volunteer their time to the Committee. The letter of agreement provides that partners and employees must meet their anticipated work hours or targeted productivity levels within a reasonable period of time, notwithstanding any volunteer time for the Committee; otherwise, they must report volunteered time as earned vacation or leave time. While undertaking this work, volunteers may make limited use of some of the firm’s facilities and resources. The individual volunteer would reimburse the firm for any increased operating costs and report the reimbursed amounts as in-kind contributions from the individual to the Committee.

The Committee and firm ask the Commission whether Pierce Atwood LLP, as a government contractor, can provide such pro bono services and allow its partners and employees to volunteer their personal time under the Act.

Analysis

The Act and Commission regulations define “contribution” to include the “payment by any person of compensation for the personal services of another person if those services are rendered without charge to a political committee for any purpose.” The provision of services at less than the usual and normal charge is also a contribution. 11 CFR 100.52(d). However, the Act and Commission regulations contain a specific exemption for the provision of certain legal services solely to ensure compliance with the Act. This exemption states that the provision of legal services to a candidate committee or any other political committee for the sole purpose of ensuring compliance with the Act is not a contribution as long as the person paying for those services is the regular employer of the employee providing the services. See 11 CFR 100.86; AO 2006-22 (Wallace).

Federal contractors, such as the firm, are generally prohibited from making contributions to federal candidates. However, the prohibition on federal contractor contributions is limited by the definition of “contribution,” and providing legal services to a candidate committee for the sole purpose of ensuring compliance with the Act is not a contribution as long as the person paying for those services is the regular employer of the employee providing the services. For purposes of this exception to the definition of “contribution,” a partnership is deemed the regular employer of a partner. 11 CFR 100.86. Partnerships generally may pay their partners, associates and other employees to provide authorized committees pro bono legal services pertaining to compliance with the Act, without these payments being deemed contributions. See Wagner v. FEC, 11-1841 (JEB), 2012 WL 1255145 at *9 (D.D.C. Apr. 16, 2012) (concluding the prohibition on contributions by Federal contractors in 2 U.S.C. §441c does not prohibit Federal contractors from volunteering for campaigns). Therefore, the Firm may pay its partners, associates and other regular employees to provide the Committee pro bono legal services pertaining to compliance with the Act. However, the amounts paid by the firm for the services of its employees, including partners, must be reported to the Committee in accordance with 11 CFR 104.3(h).

Pierce Atwood LLP’s partners, associates and other employees may also volunteer their personal time in the form of legal or other services to the Committee in accordance with the letter of agreement without the firm inadvertently providing the Committee a prohibited in-kind contribution. The Act and Commission regulations specifically exempt certain uncompensated volunteer activities by individuals from constituting “contributions.” The definition of contribution “does not include the value of services provided without compensation by any individual who volunteers on behalf of a candidate or political committee.” 2 U.S.C. §431(8)(B)(i); 11 CFR 100.74.

The letter of agreement includes provisions regarding a firm partner or employee who, because of his or her volunteer activity providing services on behalf of the Committee, does not anticipate meeting his or her arranged work hours or targeted productivity levels. Such firm personnel must report volunteered time as earned vacation or leave time and notify a managing partner so the volunteers’ employment arrangement and compensation can be modified in accordance with the firm’s usual and normal treatment of reduced productivity. The individual volunteer’s time and services will therefore not be “compensated” by the firm and will not constitute a contribution from the firm to the Committee. See AO 2006-13 (Spivak).

Under the letter of agreement, an individual volunteer would not have to reimburse the firm for occasional, isolated or incidental use of the firm’s facilities if the use does not result in any increase in the firm’s operating or overhead costs. As proposed, individual firm volunteers who make more than occasional, isolated or incidental use of the firm’s resources, or whose use increases the firm’s overhead costs, would reimburse the firm according to the usual and normal fees for such use and report the reimbursed amounts as in-kind contributions from the individual to the Committee. The proposal tracks Commission regulations governing the use of corporate facilities for individual volunteer activity by the corporation’s employees and stockholders, which require a volunteer employee to reimburse the corporation for “occasional, isolated, or incidental use only to the extent that the corporation or labor organization incurs expenses above its normal operating costs as a result of such [volunteer] activity,” and for any use of the facilities exceeding occasional, isolated or incidental use. See 11 CFR 114.9.

Date Issued: May 10, 2012; 6 pages.

(Posted 5/18/12: By: Isaac Baker)

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The FEC Record is produced by the Information Division, Office of Communications. Toll free 800-424-9530; Local 202-694-1100; E-mail info@fec.gov. Greg Scott, Director; Alex Knott, Senior Writer/Editor; Myles Martin, Editor