Opinion 22-24(A)


January 27, 2022


Digest:         On the facts presented, a new full-time judge may continue to negotiate with their former law firm regarding the disposition of a limited liability company in which they both own a 50% interest, as long as negotiations are in good faith by both sides and the judge continues to take no active role in management of the building or operation of the business.


Rules:          22 NYCRR 100.2; 100.2(A); 100.4(D)(1)(a)-(c); 100.4(D)(2)-(4); Opinions 21-22(B); 20-187; 18-118; 12-13; 06-111; 04-137; 04-42; 04-02; 94-09; 90-101; 89-108.


         A new full-time judge was previously a principal in a law firm before assuming judicial office. The judge currently owns, individually, a 50% interest in a limited liability company (LLC) which owns a building that houses the law firm and another tenant. The law firm owns the other 50%. However, the judge and the law firm have not yet been able to come to an agreement on how to dispose of the judge’s interest in the LLC.1 Indeed, it appears that the law firm is aware of the judge’s obligation to divest this particular interest, resulting in an impasse in negotiations pending issuance of our opinion. The judge has not participated in either management of the building or operation of the business since becoming a judge and will continue to refrain from participation until the issue is disposed. The judge inquires if there is a specific period of time in which to dispose of the real property and business.

         A judge must always avoid even the appearance of impropriety (see 22 NYCRR 100.2) and must always act in a manner that promotes public confidence in the judiciary’s integrity and impartiality (see 22 NYCRR 100.2[A]). While judges may “hold and manage investments of the judge and members of the judge’s family, including real estate” (22 NYCRR 100.4[D][2]), they must not engage in financial and business dealings that (a) may reasonably be perceived to exploit their judicial position; (b) involve them with any business, organization or activity that ordinarily will come before them; or (c) involve them in frequent transactions or continuing business relationships with those lawyers or other persons likely to come before the court on which they serve (see 22 NYCRR 100.4[D][1][a]-[c]). Moreover, a full-time judge “shall not serve as an officer, director, manager, general partner, advisor, employee or active participant of any business” (22 NYCRR 100.4[D][3]), subject to limitations inapplicable here. Significantly, a judge must (22 NYCRR 100.4[D][4]):

manage the judge’s investments and other financial interests to minimize the number of cases in which the judge is disqualified. As soon as the judge can do so without serious financial detriment, the judge shall divest himself or herself of investments and other financial interests that might require frequent disqualification.


         In Opinion 94-09, we said a newly elected full-time judge may not continue to retain an interest in a partnership which operates a commercial enterprise and owns the building and land. The judge should terminate the partnership relationship as soon as possible and should not actively participate in partnership business (see Opinion 94-09; see also Opinions 89-108; 90-101). However, here, the law firm and the judge have not been able to reach an agreement regarding disposition of the LLC.

         While the Rules require judges to divest themselves of financial interests that “may require frequent disqualification,” they also provide some flexibility on timing; the divestment must occur “as soon as the judge can do so without serious financial detriment” (22 NYCRR 100.4[D][4] [emphasis added]). Here, by analogy, we conclude it would be inappropriate to force the judge to take an inequitable price for the judge’s interest in the LLC merely because the judge has assumed full-time judicial office. The judge may therefore continue to negotiate with the law firm regarding the sale of the LLC, as long as negotiations are in good faith by both sides (cf. Opinion 04-137 [although full-time judge must not practice law, the judge may keep their law firm open during January and February of the judge’s first year in office to avoid a lapse in health insurance coverage]). As the judge recognizes, the judge must continue to abstain from any active role in management of the building or operation of the business (see 22 NYCRR 100.3[D][3]).

         During this period, and notwithstanding the parties’ consent, the judge is disqualified from presiding in any matter where the judge’s former partners and associates appear (cf. Opinion 04-137). We understand from the inquiry that there may be other factors which will independently continue to require disqualification in all matters involving the judge’s former firm (see e.g. Opinions 18-118 [providing an overview of general principles with respect to a judge’s former law practice]; 04-42 [judge who is receiving a pension from his or her former law firm is disqualified, subject to remittal, in all cases in which the law firm appears]; 12-13 [judge who accepts rent from an attorney is disqualified, subject to remittal, for the duration of the landlord/tenant relationship]; 06-111 [judge is disqualified, subject to remittal, in all matters involving a law firm that employs the judge’s second-degree relative]). The judge may request further guidance on such issues as circumstances change.


1 We understand the judge may be willing to negotiate a sale, dissolution, or other restructuring as permitted by law in order to create a different form of business entity in which the judge may be a purely passive investor as permitted by the Rules Governing Judicial Conduct (see e.g. Opinions 20-187 [limited partner]; 04-02 [mere stockholder]) or else to become the sole owner of the LLC and real property (see e.g. Opinion 21-22[B]).