Federal Election Commission Main Page
cc: Brad Litchfield
June 19, 1979
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 1979-22
Mr. Evan S. Dobelle, Chairman
Carter/Mondale Presidential Committee, Inc.
P.O. Box 500
Washington, D.C. 20044
Dear Mr. Dobelle:
This is in response to your letter of May 1, 1979,
requesting an advisory opinion on behalf of the Carter/
Mondale Presidential Committee, Inc. ("the Committee")
concerning application of the Federal Election Campaign Act
of 1971, as amended ("the Act"), to certain arrangements it
has made for securing legal services.
You explain in your request that Mr. Timothy G. Smith
is currently serving as Counsel to the Committee and is also
employed as an associate of the law firm of Rogers & Wells
("the firm"). You state that, pursuant to a letter of
understanding dated April 9, 1979, from the firm (a copy of
which you enclosed as part of your request), Mr. Smith
receives one-third of his overall compensation from the
firm, in consideration of which he is required to devote at
least twelve recordable hours per week to firm business.1/
This figure was arrived at by taking one-third of the minimum
number of hours that an associate of the firm would ordinarily
1/The letter of understanding notes that the Committee is not
presently a client of the firm, although the firm would consider
representing the Committee as outside counsel on particular
matters should the need arise in the future. Accordingly, the
twelve hours per week which Mr. Smith devotes to firm business
would not involve additional work for the Committee.
be expected to record per week. The remainder of Mr. Smith's
compensation is paid by the Committee, where his duties
involve primarily "FECA compliance and campaign public
financing matters", although he does perform some "other
legal and political duties" on behalf of the Committee.
You indicate that Mr. Smith has an office and a secretary
at Committee headquarters where he is also assisted by
a full-time legal assistant as well as a group of volunteer
attorneys (Legal Advisory Committee) who provide legal
research and advice to the Committee. You further indicate
that Mr. Smith makes occasional use of firm resources (e.g.
long distance telephone, photocopying, secretarial assistance)
in the course of performing his legal duties for the Committee
and that the Committee reimburses the firm according to a
fixed schedule of charges. Any similar expenses incurred by
the firms of the volunteer attorneys who make up the Legal
Advisory Committee are also reimbursed by the Committee.
The agreed-upon schedule of charges is as follows:
Use of Conference Room$20.00 per meeting
Use of Secretarial Service-Actual cost, i.e. based
regular business hourson each secretary's
and overtime individual rate
Local Fares - taxis, metro,Actual cost
etc.
Messenger (R&W)$3.30 per trip
Messenger (Commercial)Actual cost
Xeroxing $.10 per page
Telephone - long distance Actual cost
calls
PostageActual cost
Also in this regard, the letter of understanding between
Mr. Smith and the firm provides that, in accordance with the
parties' understanding of Commission regulations, such occasional,
isolated, or incidental work for the Committee
performed by Mr. Smith at his office at the firm which does
not involve any increase in the firm's operating or overhead
costs, would not require additional reimbursement of a
portion of such usual overhead costs by the Committee.
Similarly, if Mr. Smith performs firm-related business on
such a basis at his Committee office, the firm would not be
required to reimburse the Committee.
The agreement between Mr. Smith and the firm provides
that all arrangements and procedures will be reviewed
periodically by the parties and, if necessary, adjustments
will be made to reflect any significant variations in the
respective work needs of the firm and the Committee.
You seek an advisory opinion as to whether any contribution,
expenditure, or reporting obligation would arise out
of the above-described arrangement.
With respect to Mr. Smith's services to the Committee
involving "FECA compliance and campaign public financing
matters", 2 U.S.C. Sections 431(e)(4) and (f)(4)(J) exclude
from the definitions of "contribution" and "expenditure" the
costs of legal and accounting services rendered to or on behalf
of a candidate or political committee solely for the
purpose of ensuring compliance with the Act or chapters 95
and 96 of the Internal Revenue Code of 1954. However, the
exemption does not apply if the person paying for such
services is not the candidate, committee, or other regular
employer of the individual rendering the services. (See
also 11 CFR 100.4(b)(12) and 100.7(b)(15)). Accordingly,
amounts paid by the Committee to Mr. Smith, as well as to
his secretary and legal assistant, which are compensation
for services directed solely toward compliance with the Act
and public financing provisions would not be subject to the
expenditure limits set forth in 2 U.S.C. SS 441a(b). However,
all amounts paid by the Committee to Mr. Smith and his
support staff for such legal and accounting services are
reportable in accordance with 2 U.S.C. SS 434(b) and Part 104
of the Commission's regulations. (See SS SS 431(e)(4), (f)(4)(J)
and SS SS 100.4(b)(12), 100.7(b)(15)).
With regard to Mr. Smith's performance of "other legal
and political duties" on behalf of the Committee, the
Commission concludes that the compensation schedule arrived
at between Mr. Smith, the Committee and Rogers & Wells would
not result in any in-kind contribution to the Committee as
long as the schedule continues to accurately reflect the
relative amounts of time that Mr. Smith devotes to his
duties on behalf of the respective parties. This conclusion
is based in part upon the understanding between Mr. Smith
and the firm that the work/ compensation arrangement will be
re-evaluated periodically to ensure that it conforms to any
significant variations in the needs of the Committee or the
firm. Moreover, any amounts paid by the Committee to Mr.
Smith, or his support staff, which are compensation for such
"other legal and political duties" not rendered for compliance
purposes are reportable "expenditures" under the Act, subject
to the Committee's overall SS 441a(b) expenditure limitations.
The reimbursement schedule to be followed with regard
to the occasional use of firm resources by Mr. Smith in the
course of performing his Committee duties appears to be
reasonable. The Commission concludes, therefore, that
adherence to the schedule would not result in the making of
in-kind contributions by the partners in the firm to the
Committee. (See 11 CFR 110.1(e)). As you are aware, the
Commission's regulations define "contribution" as including
goods, facilities, personnel or services which are provided
without charge or at a charge which is below the usual and
normal charge for the items. (See 11 CFR 100.4(a)(1)(iii)).
The Commission assumes without deciding that the rates set
forth in your request represent the usual and normal charges
for the items listed - that is, the amounts that the Committee
would pay for such items in the market from which
they ordinarily would be purchased (See 11 CFR 100.4(a)(1)
(iii)(B). This means, for example, that $20 for the use of
a firm conference room for a meeting would be adjusted
upward should the conference room be used for longer than
would reasonably be expected for any other firm meeting, or
that the "actual cost" to be paid for secretarial service
would include not only the secretary's individual salary
rate but also a reasonable portion of any amounts paid by
the firm for "fringe benefits", or that the $3.30 per trip
to be paid for the use of a firm messenger represents the
salary cost of the messenger for brief, local trips and
would be adjusted for any costs incurred for taxis, metro,
etc. The Commission agrees with the understanding between
Mr. Smith and the firm that the occasional, isolated, or
incidental use of firm resources which does not involve any
increase in the firm's usual overhead costs would not require
additional reimbursement by the Committee of any portion of
such overhead expenses.2/ Amounts paid by the Committee as
reimbursement for the occasional use of firm resources
would, in general, be reportable "expenditure" subject to
2/Although Rogers and Wells is not an incorporated entity,
SS 114.9 of the Commission's regulation, which deals with the
use of corporate facilities, would appear to be applicable
by analogy since it seems clear from the reimbursement
schedule set forth in your request and the attached letter
of understanding between Mr. Smith and the firm that the
use of firm facilities is not intended to result in any
in-kind contribution from any of the firm's partners to
the Committee. (See also 11 CFR 110.1(e)).
the Committee's SS 441a(b) overall expenditure limitations.
However, if such use was incidental to Mr. Smith's services
rendered solely for the purpose of ensuring compliance with
the Act or public financing provisions, the amounts paid
would not be subject to limit under SS 441a(b) but would still
be reportable pursuant to SS 434(b) and Part 104 of the Commission's
regulations.
This response constitutes an advisory opinion concerning
the application of a general rule of law stated in the Act,
or prescribed as a Commission regulation, to the specific
factual situation set forth in your request. See 2 U.S.C.
SS 437f.