             THE      AITORN,EY               GENERAL
                            OF    -XAS
                       A~~~N.T~AN             7t37ll




                              April 2, 1974


The Honorable Ron Clower                   Opinion No. H- 269
State Senator                              Rc:~ Filing requirements of              1
Texas State Senate                         Section 4 of Article 6252-9b
Auetin, Texas                              Vernon’s Tews Civil Statutes

The Honorable Mark W. White, .Jr.                                                   I
Secretary of State
Capitol Buil’ding
Austin, Texas 78711

Dear Secretary   White~ind Senator Glower:

      Article 6252=9b, Vernon!8 Texas Civil Statutes, the 1973 Ethics Act,
requires the filfigcb sfinancial statement by certain state officiafr. designated
                                                                                    !
in Sec. 3. Section 4 (a) provides that it ib to include:

                    ‘1.’ . . the account of the financial activity
              of the perron required to file the otatement by
              this Act and the financial activity ‘of his spouse
              and dependent children over which he had actual
              control for the prec~eding calendar year as herein-
              after provided. ”

       Secretary White has asked whether a husband, who is required to
file a financial statement, must report the financial activities of his wife’s
separate property over which he had no actual control during the preceding
calendar year.
   ‘,
      Senator Glower has requested our interpretation of Sec. 4 (c) (1) of
the Act which requires the report to indude:




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        The Honorable Ron Clower
        The Honorable Mark W. White, Jr.        page 2   (H-269)



                                         .
                           ‘1.   . Identification of any person, business
                                     .
                       entity, or othc- organization from whom the perron
                       or a busine,ss in which he has a substantial interest
                       received a fee an a ~retainer for a claim on future
                       services in case bf need-(id opposed to.a fer:for
                   .   services on a matter specified at the time of
                       contracting for or receiving the fee), whenever
                       professional or occupational services Were not
                       actually performed during the reporting period.
                       commensurate to or in excess of the amount of
                       the retainer, and the category of the amount of
                       the fee;”

               Article 6252-9b.  V. T. C. S. , was enacted as House Bill 1 of the
        63rd Legislature (Acts 1973, 63rd Leg.,     ch. 421, p,. 1086) and was the.
        first of ten bills comprising .the reform.package offered by the leadership
        of the House of Representatives.

               Section 1 of the Act, declaring the policy of the State, rtater that
        no state officer or employee shali,have any financial interest or engage
        in any busmese transaction or professional activity “which is in substantial
        conflict” with the dincharge of his duties.   The Act, then, requires dir-
        closure of financial affairs by some state officers (Sec. 3) and a disclosure
        of interests in regulated businesses by thore’not required to file the financial’
        statement (Sec. 5); it requirea disclosure by a board or commission member
        of private interests in matters before his board or. commission (Sec. 6);
        it prohibits certain acts by members of the Legislature (Sec. 7);,and it
        provides standards of conduct~for state officers and employees (Sec. 8).

              The Act was +ntended and designed to be c,omprehensive in its
        requirement that any private interests of decision maker.8 be disclomed
    2   and made public to lessen the temptation to place personal gain over
        public duty.

              Section 4 specifies the information to be included in, the financial
        statement.   Section 4 (a) could be read to require’ inclusion of financial




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         w




             The Honorable Mark W. White,      Jr.
             The Honorable Ron Clower                       Page 3   (H-269)


             acttvity.of the official’s spouse and dependent’children over whom he had
             actual control or, alternatively,   to require disclosure only whane      had
             actwl control over the, financial activity itsdf.     In the former interpret%tio.:
             there might be many situations in’which the official would have none of the
             required information and no ready means to acquire it. Our laws incraasingly
             recognize the right of each spoure to have the “sole management, control,
             and disposition of his or her separate property. ” Section 5.21. Vernon’s
             Texas Family Code; If “actual control” refers to the spouse (a doubtful
             situation,~ at best) or to the dependent children, the section would requires
             the reporting of facts which well might+      considered “no ~buriness” of
             the official.  On the other hand, if “actual control” refers to the financial
             activity (grammatically    more correct than the firrt alternativeJ;then    the
             registrant has, only ‘to report on financial activities over which he has
             control and of which he haa knowledge, ‘a fat more r~easonable interpretation.

                   We are of the opinion, therefore, that Section 4 requtrem a rogirtrant
             to report’on his.own financtal activities atid on those activities of his voam      .’
             or children over which activitier he exercises or has, the right to exercise
             control.

                   Parenthetically,    weirdo not interpret the Act to require “exclusive”
             control - it is rufficient that the registrant exercises any .degree of control,
             legal or factual.

                   Section 4 (c) (1) requires a listing of1all source8 of 0,ccupational income
             including retainers “for a claim on future services in case of need’! when
             such services have not been perform&during         the reporting period.

                    Retainers pa’id’as a claim on,future services,   for which no servicer
             are actually performed concurreqtly, are keither’unconjtion nor unethical
             per Be. See 1 Speiser., .Attorneys’ Fees, (1973). Chapter 1; “Retainer
             Contracts”; MacKinnon, Contingent Fees for Legal Services, ‘(1964)’
             pp. 20-21.   So Long,as the retainer is paid in good faith.for,.service’s to be
             rendered~or, at leaat, for’s holding ready to .rqnder.such servic.ea, .suah a
             fee iok well recog&ed      mz&ir   of employing l&gal counsel. ..On thi other
             hand, if them is,rio bona fide Anticipation of the rendition of s,ervicer and
             the fee ispaid to purchase influence it ‘may constitute ,a’violation .of Chapter
             36 of the .Penal Code.            .’
                                                                     ,.


                                                            ,’




     r




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                         .,.
The Honorable Mark W. White,      Jr.
The Honorable Ron Clower                          page 4   (H-269)


      We construe Sec. 4 (c) (1) to require disclosure of retainer feei paid
to the registrant or any other business entity in which he has a substantial.
business interest where, at the time of payment of the fee, servicer
commensurate with the fe,e had not been rendered.

                                 SUMMARY

                  The financial statement required by Sec. 3 of Article
              6252-9b,    V. T. C. S. , should include a statement of financial
              activItie.s in property of the r’egistrant’s spouse and
              children where the registrant exerciees actual control
             ‘:bver ouch activities.     lt should alro include, as a source
              of occupational income, a statement of any retainer fee
              received by the registrant or a business entity in which
              he has a substantial interest and for which no servicer
              have been rendered.

                                 Very truly yours,




                                         u    JOHN ,L. HILL
                                              Attorney General of Texas




Opinion Committee



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