Are Members Allowed to Use Campaign Funds for Legal Fees?

Posted July 18, 2008 at 1:56pm

Q:
As the treasurer of the campaign committee of a current House Member, I oversee all of the campaign’s finances. One of the recurring issues I face is distinguishing between campaign expenses, for which we may use campaign funds, and the Member’s personal expenses, for which we may not. I heard recently that Sen. David Vitter (R-La.) has sought permission from the Federal Election Commission to use campaign funds for legal fees related to the “D.C. Madam” legal proceedings. I presume that the FEC will refuse Vitter’s request, as these appear to be personal expenses. Or, are we permitted to use campaign funds for Members’ legal fees?

A: While Vitter is in the Senate, your Member is in the House, so the House rules apply. The House rules and the Federal Election Campaign Act both contain restrictions upon the use of campaign funds. Thus, the House Ethics Manual states that a “Member’s use of campaign funds … is permissible only if it complies with the provisions of both the House Rules and the FECA.”

[IMGCAP(1)]Let’s start with the House rules. House Rule 23 provides that a Member may spend campaign funds for “bona fide campaign or political purposes” but “may not convert campaign funds to personal use.” The Ethics Manual specifically addresses legal fees and states that a Member should consult with the ethics committee before using campaign funds for such fees. In general, “campaign funds may not be used when the action is primarily personal in nature, such as a matrimonial action.” However, while the ethics committee has jurisdiction over violations of Rule 23, it is likely to defer to any FEC conclusions regarding the use of campaign funds for legal fees.

Historically, the FEC has stated that Members have wide discretion in the use of campaign funds. Like the House rules, however, FEC rules prohibit the conversion of campaign funds to personal use, which is use “to fulfill a commitment, obligation, or expense of any person that would exist irrespective of the candidate’s campaign or duties as a Federal officeholder.” The regulations specify certain uses that are per se personal use, including a Member’s household food items and clothing. The regulations also provide that the FEC shall consider other uses, including legal fees, on a case-by-case basis.

In promulgating the regulations, the FEC explained that their use for legal fees will not be considered appropriate “merely because the underlying legal proceedings have some impact on the campaign or [Member’s] status.” In the time since the regulations were promulgated, the FEC has issued several advisory opinions regarding specific requests to use campaign funds for legal fees, granting them in some cases, but denying them where it regarded the fees as purely personal in nature.

In Vitter’s case, Vitter’s attorney sent a letter to the FEC requesting permission to use campaign funds for roughly $200,000 in legal fees related to the trial of Deborah Jeane Palfrey, who subpoenaed Vitter to testify in her criminal trial. Specifically, the legal fees related to: (1) efforts to quash Palfrey’s subpoenas of Vitter; (2) consultations among Vitter, his attorneys and other advisers regarding the legal proceedings and their impact on the Senate Ethics Committee’s inquiry of Vitter; and (3) monitoring of the Palfrey legal proceedings. According to the letter, FEC regulations and precedent establish a “but-for” test: “Legal expenses that would not have been incurred but for an individual’s status as a candidate or officeholder may be paid with campaign funds.”

The letter argued that Palfrey pursued a strategy of targeting high-profile witnesses, specifically picking Vitter because he is a Senator, and that he was forced to hire legal counsel to defend against the strategy. The letter noted that, while approximately 15,000 phone numbers appeared in Palfrey’s records, Vitter was one of the few who was actually subpoenaed to testify. The letter even noted that a Google search for “David Vitter Deborah Palfrey” produced more than 70,000 hits — far more than any other Palfrey client or witness. Thus, the letter concluded, if Vitter were not a Senator, he would never have incurred the legal fees.

This echoed an argument made by then-Sen. Bob Kerrey (D-Neb.) in 2001, when he sought to use campaign funds for media consulting expenses incurred as a result of inquiries pertaining to Kerrey’s involvement in a 1969 military operation in Vietnam resulting in the deaths of civilians. Although Kerrey was no longer a Senator at the time, and although the media inquiries concerned conduct that had occurred long before Kerrey joined the Senate, Kerrey sought permission to use campaign funds for the media consulting expenses. The FEC granted Kerrey’s request, basing its decision on the premise that the media inquiries “would not have occurred if Mr. Kerrey had not been a prominent Senator and prominent Federal candidate.”

Whether the FEC would apply this reasoning to legal fees remains to be seen. There is some evidence that it would. For example, in 1998 Rep. Earl Hilliard (D-Ala.) sought permission to use campaign funds for certain legal fees. The FEC issued an advisory opinion stating: “The use of campaign funds to pay legal expenses that would not exist absent … Federal officeholder status would be permissible.” However, the FEC ultimately concluded that while for some categories of legal fees Hilliard could use campaign funds to cover the fees in their entirety, for other categories he could use campaign funds for only 50 percent of the fees.

Whatever the FEC decides regarding Vitter’s request, the answer to your question is that the FEC assesses the use of campaign funds for legal fees on a case-by-case basis. Therefore, if you are considering using your committee’s funds for your Member’s legal fees, in the absence of a clear precedent, I would never assume that it’s appropriate to do so. But, on the other hand, I would never assume that it’s not, either. Ask the FEC. The worst thing that can happen is that they say no.

C. Simon Davidson is a partner with the law firm McGuireWoods LLP. Click here to submit questions. Readers should not treat his column as legal advice. Questions do not create an attorney-client relationship.