Advisory Opinion No. 1994-3
A Government Relations
Contract Incentive Payment
The lobbying firm has a contract with a client to provide
governmental relations services in support of the client’s efforts to obtain
State Certificate of Need authority, State issued
bonds, and/or Quasi-Public Agency financing in order to develop a Continuing
Care Retirement Community (CCRC) in
The client has now requested that the firm also represent it
on a directly related legislative issue.
Specifically, the client is seeking a change in
Given this set of facts, the firm wishes to know whether, under the Code of Ethics for Lobbyists, Conn. Gen. Stat. Chapter 10, Part II, it can contract with the client to provide, for a monthly fee, the requested legislative representation, while the prior contract concerning government relations services also remains in effect.
Under the provisions of the Lobbyist Code, “No person shall be employed as a lobbyist for compensation which is contingent upon the outcome of any administrative or legislative action.” Conn. Gen. Stat. §1-97(b). In essence, the General Assembly enacted this prohibition to prevent the undue pressure for lobbying success, and consequent pressure to engage in unethical conduct, inherent in a contingent payment arrangement.
The government relations services in question are not being
provided for the purpose of influencing any “Administrative action” or
“Legislative action” as those terms are defined in the
Code. Conn. Gen. Stat.
§1-91(a) and (j). Consequently,
these services do not constitute regulated lobbying. Conn. Gen. Stat. §1-91(k). As a result, at present, the ban on
contingent fee agreements does not apply to the “incentive payment” the firm will
receive if it secures the financing sought by the Client. If, however, the firm undertakes the
requested legislative work, it will, unquestionably, be engaging in
lobbying.
Whether, under these altered circumstances, the prior incentive payment agreement at issue remains permissible is a question of first impression under the Lobbyist Code. The legislative history of §1-97(b) is silent on the specific issue of the legality of such distinct, but related, contractual arrangements. Therefore, under the rules of statutory construction, the Commission must interpret and apply the term “contingent” according to its commonly approved and understood meaning. Conn. Gen. Stat. §1-1(a). “Contingent” is commonly understood to mean “dependent on, associated with, or conditioned by something else…dependent for effect on, or liable to modification by, something that may or may not occur…” Webster’s Third New International Dictionary Volume I at p. 493, Merriam & Webster (1986).
While the sought after legislative amendment may not, according to Mr. McLaughlin, be “absolutely necessary” it will “clearly contribute” to the client obtaining its financing and, consequently, to the firm obtaining its contingent incentive payment. Therefore, the incentive payment can logically be viewed as being, in a very real sense, substantially “dependent” on the legislative outcome in question. And such substantial dependence equates to the generally understood usage of the term “contingent”: i.e., that an outcome is considered to be contingent if it is materially dependent on, although not necessarily totally determined by, the occurrence of a condition precedent. Additionally, although the legislative work is to be performed for a set monthly fee, it will be humanly impossible for the lobbying firm’s personnel to set aside their knowledge that legislative success may very well result in the subsequent receipt of an additional incentive payment; thereby creating the very pressure for results that §1-97(b) was enacted to eliminate.
As a consequence, the State Ethics Commission advises that Mr. McLaughlin’s firm not engage in the proposed lobbying work as long as its prior contract with the client contains the incentive payment provision in question. Alternatively, another lobbyist may perform the requested legislative work, or Mr. McLaughlin’s firm may undertake the work after amending its existing government relations contract to eliminate the contingent payment component.
By order of the Commission,
Christopher T. Donohue
Chairperson