Opinion 04-02

January 29, 2004

Digest:         A newly-elected full-time judge(1) may continue to hold stock in a closely held corporation, but may not remain as an officer, or be a director, manager, general partner, advisor, or employee of the business; nor may the judge participate in any active management or operation of the corporation or its businesses (2) may represent himself and handle legal matters that are strictly personal to the judge concerning the corporation, but the judge may not represent the corporation or provide legal service.

Rules:          22 NYCRR 100.4(D)(2); 100.4(D)(3)(b); 100.4(G); Opinions 90-50 (Vol. V); 99-12 (Vol. XVIII); 99-73 (Vol. XVIII); 99-84(Vol. XVIII).

Opinion:

         A recently elected full-time judge owns a 50% share interest in and serves as the vice president and treasurer of a closely held corporation which leases a building and operates a car wash. Other shareholders include individuals who are not members of the judge’s family. The judge asks to what extent may he/she continue to participate in the management of the business and represent the corporation and his personal business interests in the corporation?

         The Rules Governing Judicial Conduct prohibit a judge from serving as an officer, director, manager, general partner, advisor, employee or other active participant of any business, with few stated exceptions. 22 NYCRR 100.4(D)(3). The Rules do allow a judge to hold, manage and participate in a business entity engaged solely in the investment of financial resources of the judge or the judge’s family, including real estate. 22 NYCRR 100.4(D)(2); 100.4(D)(3)(b); Opinions 99-12 (Vol. XVII); 99-73 (Vol. XVIII); 99-84(Vol. XVIII). However, the corporation as described in the instant inquiry is not a family owned corporation and the corporation also owns and manages a car-washing enterprise. In light of all the circumstances described and the rules and opinions cited, the judge may continue to hold stock in the closely held corporation, but may not remain as an officer of the corporation or serve as a director, manager, general partner, advisor, employee of the corporation; nor may the judge participate in any active management or operation of the corporation or its businesses. Opinion 90-50 (Vol. V).

         The judge may represent himself /herself should he/she be named as a party in a lawsuit involving the corporation and could handle legal matters that are solely and exclusively personal to the judge that might also involve the corporation. 22 NYCRR 100.4(G). However, the judge may not represent the corporation or render legal advice to it, for to do so would be a violation of the prohibition against the practice of law by full-time judges. 22 NYCRR100.4(G). The inquiring judge’s suggestion that the consent of the shareholders may be acquired after the disclosure to the shareholders may be acquired after disclosure to the shareholders that they have a right to seek separate counsel, would not supersede the prohibition against the practice of law by full-time judges stated in the rule.