May 5, 2022
Digest: A judge is disqualified from appointing their personal financial manager to a fiduciary position.
Rules: 22 NYCRR 100.0(D)(3); 100.2; 100.2(A); 100.3(E)(1); 100.3(F); Opinions 22-51; 21-85; 19-91; 19-27; 17-03; 16-67; 08-17.
A full-time judge who has authority to make fiduciary appointments asks if it it is ethically permissible to appoint the judge’s personal financial manager (i.e. the company that manages the judge’s personal finances) to serve as a fiduciary in a case pending before the judge. Specifically, the judge would either appoint the company “to manage funds” in a case, or “direct someone to invest the funds with” the company. The judge’s only relationship with the company is as a client, and the judge says the company is “well known to the court system and counts many judges among their clientele.”
A judge must always avoid even the appearance of impropriety and must always act in a manner that promotes public confidence in the judiciary’s integrity and impartiality (see 22 NYCRR 100.2; 100.2[A]). Accordingly, a judge must disqualify in any proceeding in which the judge’s impartiality “might reasonably be questioned” (22 NYCRR 100.3[E]).
At the outset, we decline to analogize the judge’s personal financial manager to a bank in which the judge is a mere depositor and/or accountholder. In this regard, we note that the Rules Governing Judicial Conduct provide that “a deposit in a financial institution ... is not an economic interest in an organization, unless a proceeding pending or impending before the judge could substantially affect the value of the interest” (22 NYCRR 100.0[D]). The rules set forth no equivalent exception for the presumptively closer and more active business relationship of personal financial manager.
We have said that “a judge’s personal accountant, employed on an ongoing basis, should be treated similarly to a lawyer who is ‘counsel’” for the judge (Opinion 08-17). We conclude the same standard should apply to the company that manages the judge’s personal finances on an ongoing basis.
Therefore, we look to our precedents involving the judge’s personal accountants and the judge’s personal attorneys for guidance here. We have said a judge is disqualified, subject to remittal, when the law firm or accounting firm appears as a party or as an expert witness (see e.g. Opinions 19-27; 08-17).1 Moreover, we said a judge may not appoint the judge’s personal attorneys in pending guardianship cases, as “guardianship appointments are in the judge’s discretion and other parties are unable to meaningfully object” (Opinion 19-91).
Here, too, we conclude that the judge is disqualified from appointing the company that manages the judge’s personal finances to a fiduciary position.
If the judge is assigned a case involving this financial management company,2 the judge’s disqualification is subject to remittal “after full disclosure on the record, should the parties and their counsel choose to freely and affirmatively consent to the judge presiding” (Opinion 22-51; 22 NYCRR 100.3[F]). However, remittal requires “on-the-record, individual and specific consent” from “each non-defaulting party” (Opinion 21-85). Thus, for example, when the purpose of the proceeding is to determine if a party has the capacity to make decisions on their own behalf, we have said a judge who has a remittable conflict must disqualify without offering an opportunity for remittal unless the judge determines that the attorney has the legal standing to consent to remittal on behalf of the alleged incapacitated party (id.).
1 We used different language to describe this result in Opinion 08-17, but it is the functional equivalent (cf. Opinions 16-67 fn 4; 17-03 [“In recent years, the Committee has moved away from this standard because it could cause confusion about the proper procedure for remittal of disqualification.”]).
2 This might happen in various circumstances, including if another judge previously appointed the company to a fiduciary position at an earlier stage of the case.