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Opinion No. 5489

May 11, 1979


Conflict of interest


Art 4, Sec. 10 (conflict of interest)


Partner of a law firm doing business with state university serving as member of governing board


Partner of a law firm doing business with state university serving as member of governing board


Partner of a law firm doing business with state university serving as member of governing board

The conflict of interest statute which implements Const 1963, art 4, Sec. 10 prohibits any new contracts or amendments to existing contracts between a state university and a law firm where a partner in the law firm serves as a member of the governing board of the university.

Dr. Martin Barr

Vice President and Secretary of the Board of Governors

Wayne State University

Detroit, Michigan 48202

You have requested my opinion on the following question:

'Is it a conflict of interest for a law firm to continue to provide legal services to Wayne State University after a partner in the firm has been appointed to the Board of Governors of the University?

Const 1963, art 4, Sec. 10 provides:

'No member of the legislature nor any state officer shall be interested directly or indirectly in any contract with the state or any political subdivision thereof which shall cause a substantial conflict of interest. The legislature shall further implement this provision by appropriate legislation.'

The Legislature further implemented this provision by the enactment of 1968 PA 318, MCLA 15.301 et seq; MSA 4.1700(21) et seq. (1)

1968 PA 318, supra, Sec. 4 provides in pertinent part:

'. . . In the following cases, there shall be deemed to be no conflict of interest which is substantial:

'(b) In respect to a contract between the state or any political subdivision thereof and:

'(ii) a firm, meaning a copartnership or other unincorporated association, in which a legislator or state officer is a partner, member or employee;

'(iv) . . . if the . . . state officer does not solicit the contract, takes no part in the negotiations for or in the approval of the contract or any amendment thereto, and does not in any way represent either party in the transaction and if the contract is not with or authorized by the department or agency of the state or a political subdivision thereof with which the state officer is connected.' [Emphasis added]

OAG, 1973-1974, No 4799, p 116 (February 1, 1974), held that the definition of a substantial conflict of interest as set forth by the Legislature in 1968 PA 318, Sec. 4, supra, is consistent with the terms of Const 1963, art 4, Sec. 10.

Addressing the issue of conflict of interest with respect to private corporations contracting with the State, OAG 4799, supra, stated at page 120:

'We read the use of the conjunctive in subparagraph (iv), quoted above, to indicate that all of the four qualifications set out must be present in a case where the state makes a contract with a corporation in which a state officer is a major stockholder, director or officer in order for such contract to be considered free of any 'substantial' conflict of interest. The obvious policy of the statute is to provide an exception in instances where an officer has in fact been so far removed from both sides of the bargaining table that what might otherwise seem to be a conflict of interest can safely be said not to be 'substantial.' Thus, it is provided that if the state officer has had no part in the negotiations with the state for the contract and if the contract is with an agency of state government other than the one with which the state officer is connected, no substantial conflict of interest will be held to exist.

'These are the principles which must be adhered to by any state officer contemplating doing business with the state. In the case of small corporations, which normally are not able to compartmentalize their operations, these provisions may make it impractical to conduct any business with a state agency. In answer to such an objection, it can only be said that such is exactly the intention of the legislation and of the constitution. It is entirely reasonable for the legislature to suppose that a state officer is less likely to feel the influence of a conflict if he is entirely removed from the contract making function in both his private and public roles.'

It is, therefore, my opinion that 1968 PA 318, supra, bars any new contracts for legal services, or amendments to existing contracts from the time that a partner of the law firm assumes the office of member of Board of Governors of Wayne State University. As to the performance of provisions of the contract entered into before the assumption of the position as member of the governing board, there is no objection to another member of the law firm handling the matter.

Frank J. Kelley

Attorney General

(1) This act was repealed by 1975 PA 227, Sec. 191. However, the repealing act was declared unconstitutional in Advisory Opinion on Constitutionality of 1975 PA 227, 396 Mich 123; 240 NW2d 193 (1976), and therefore continued in effect without interruption.