Law, ethics and money

“This case is about money, power and influence,” Philadelphia Ethics Board executive director Shane Creamer told me Friday.

He was referring to a ruling against the Ethics Board by the Pennsylvania Supreme Court last week, one in favor of a powerful Philadelphia law firm.

The dispute involves the 2007 mayor’s race and whether the city’s limits on campaign contributions will apply to U.S. Rep. Bob Brady’s campaign fund and a six-figure legal fee it owes the Cozen O’Connor law firm.

I have a special interest in this case.

Back in March, 2007, I scored a scoop when I wrote in the Daily News that Brady had made a mistake in the personal financial statement he filed with the nominating papers that launched his campaign for mayor.

It was exactly the kind of omission that had knocked candidates off the ballot before, and soon Brady was embroiled in a protracted legal battle to stay in the race.The Cozen firm represented Brady in the case and managed to preserve his candidacy.

But I remember thinking that the city’s new campaign finance limits would present an interesting challenge for Brady and the law firm. Contributions couldn’t legally exceed $5,000 from individuals and $20,000 from political committees.

If the firm represented Brady for free, that would be a problem, since it would amount to an in-kind donation to his campaign of what, a couple hundred grand? That’s way over the legal contribution limits.

If the firm billed the campaign for the legal work, Brady would have to pay it with funds raised under the contribution limits.

Problem? Uh, yeah, and there should be.

Campaign donation limits are designed to curb the influence of powerful special interests in elections. Letting a prominent law firm curry favor with a politician by donating a ton of legal work when the pol is in a jam directly contradicts the guiding principle of the law.

Thus after Brady lost in the primary and his campaign reports showed a $448,000 debt to Cozen O’Connor, the Ethics Board told Cozen the Brady campaign was fully bound by the contribution limits as they raised money to pay that bill.

That led to a three-year legal tussle between Cozen and the Ethics Board with every court ruling against Cozen, until last Wednesday.

That’s when the Supreme Court overturned two lower courts and the sent the case back to Commonwealth Court for further litigation.

Cozen is now seeking permission to simply forgive the debt, and the Ethics Board says that  would amount to a massive in-kind contributions clearly prohibited by the city’s campaign finance law.

“This case is about money, power and influence,” Creamer said Friday. “Cozen is trying to make a half a million dollar post-election contribution to Congressman Brady’s mayoral campaign, despite being told that such a contribution would violate the limits. This is precisely what the contribution limits are designed to prevent.”

Here’s one other interesting fact: When the Justice who wrote the opinion, Max Baer, was running for election to the Supreme Court in 2003, the Cozen firm donated $16,000 to his campaign.

This is of course perfectly legal and ordinary in a state that elects judges and has no contributions limits. Still.

Firm chairman Stephen Cozen didn’t return my call Friday. He’s a busy guy no doubt. The firm’s arguments are clearly expressed in their court pleadings, and some of them are worth listening to.

They say legal work on a fight to preserve a candidate’s presence on the ballot is different from a standard campaign contribution.

A ruling against them, they say “will have a chilling effect on the ability of political candidates, especially those of more modest personal means, to retain legal counsel to defend against ballot challenges brought by well-to-do opponents.”

The Ethics Board and City Council recognized that legal challenges can be expensive, so last year the campaign finance law was amended to allow candidates to establish a litigation fund committee. Contributions to the litigation fund are subject to the same contribution limits as regular campaign funds, but well-heeled or deeply-committed donors can contribute to both, making it easier for a candidate to finance a legal defense if necessary.

It’s unfortunate that the Supreme Court ruling means the Ethics Board will have to keep fighting this case, which seemed all but resolved. They have limited staff and budget, and more important things to be doing.

The other curiosity in the case is that Brady’s mayoral committee has raised $135,000 since the beginning of 2008, but hasn’t paid any of the Cozen debt. Given his influence, Brady could probably call on enough generous contributors to retire the Cozen debt in a few years even within the campaign finance limits.

Or, if Cozen really doesn’t need the money back, Brady’s campaign committee could report all or part of the legal bill as an unpaid debt forever.

It wouldn’t be the first time that’s happened.