P. Legal Expenses

Subject to many restrictions, you may be able to accept contributions to a Legal Expense Fund that the Committee approves or pro bono legal services.[113]

Legal Expense Funds.

You may accept contributions to a legal expense fund that the Committee formally approves as long as those contributions fully comply with the requirements in the Committee’s Legal Expense Fund Regulations.[114]  If you would like to establish a Legal Expense Fund, you must write to the Committee and request formal approval of the trust document and the proposed trustee. Once approved, Legal Expense Funds become public documents.

1. Purposes of a Legal Expense Fund

You may only establish a Legal Expense Fund if the relevant legal expenses arise in connection with

• Your candidacy for, or election to, federal office;
• Your official duties or position in Congress;
  • This purpose includes matters before the Committee and filing an
    amicus brief in a Member’s official capacity.
• A civil action filed in a Member’s official capacity challenging the validity of a federal law or regulation;
• A criminal prosecution against you; or
• A civil matter bearing on your reputation or fitness for office.

You may not establish a Legal Expense Fund for matters that are primarily personal in nature, such as matrimonial actions, personal injury claims, personal contract disputes, or a claim for punitive damages.

2. Independent Trustee.

You must find an independent trustee to manage your Legal Expense Fund. The trustee may not have any family, business, or employment relationship with you for two years before the establishment of your Legal Expense Fund. Additionally, the trustee may not delegate any duties to someone who has any family, business, or employment relationship with you. Additionally, we recommend the trustee not contribute to any of your campaigns while serving as trustee. Although the trustee provides many services to the Legal Expense Fund, you are ultimately responsible for the proper administration of the Legal Expense Fund.

The full list of trustee duties can be found in the Legal Expense Fund Regulations.

Example.  You would like your accountant to be the trustee for your Legal Expense Fund.  Your accountant will not meet the independence requirements because you have a business relationship with that person.

Example.  You would like your Legal Expense Fund’s trustee to be someone employed with a professional trust company with whom you have never had a business relationship.  This person may serve as the trustee if the person and the company meet the other independence requirements and neither the person nor the company is disqualified based on the Committee’s review.

3. Contributions

Your Legal Expense Fund may only accept up to $5,000 in a calendar year from any individual or organization, including corporations, labor unions, and political action committees.[115] Your Legal Expense Fund may not accept any contributions from registered federal lobbyists, foreign agents, or foreign nationals.[116] In-kind contributions, including pro bono legal services and waivers of trustee’s fees, also count towards that $5,000 limit.[117] In-kind contributions must be valued at fair market value. If the organization donating to the Legal Expense Fund is a partnership, limited liability company not taxed as a corporation, or an S-corporation, the contribution is attributed to the organization itself and to each partner, member, or shareholder based on each person’s share of the organization’s profits.

Example. A limited liability company with three equal members would like to donate $3,000 to your Legal Expense Fund. The three members would also like to separately donate $2,000 each to your Legal Expense Fund. In your accounting, the limited liability company will have donated $3,000, and each member will have donated $3,000.

If any Member, officer, or employee of the House other than you would like to help raise funds for your Legal Expense Fund, that person must separately receive approval from the Committee to assist. Any fundraising for your Legal Expense Fund must follow all the guidelines in Member, Officer, and Employee Participation in Fundraising Activities.

4. Use of Funds

You may only use funds in a Legal Expense Fund for the purposes approved by the Committee. You may only use funds for the following purposes.

• Legal expenses;
• Expenses incurred while soliciting for the Legal Expense Fund;
• Expenses for administering the Legal Expense Fund;
• Federal, state, and local taxes; and
• Expenses related to preparing the reports required by the Legal Expense Fund Regulations.

Any other expenses, including legal expenses incurred prior to establishing the Legal Expense Fund, must be approved by the Committee.

5. Beneficiaries

You may use the Legal Expense Fund to pay for your own legal and other expenses, as the trustor and beneficiary of the Legal Expense Fund. You may include present and former House employees as beneficiaries of the Legal Expense Fund. If you would like to make anyone other than you a beneficiary of the Legal Expense Fund, you must receive approval from the Committee.

If you choose to make House employees beneficiaries of your Legal Expense Fund, you must follow certain requirements to ensure the House employees can engage independent and competent legal counsel. Those requirements are listed in the Legal Expense Fund Regulations.

6. Public Disclosure and Reporting

Once the Committee approves your Legal Expense Fund, you must file the trust document and the Committee’s approval letter with the Legislative Resource Center within one week. If you do not file the trust document timely, you must seek re-approval from the Committee before formally establishing the Legal Expense Fund.

You must also file quarterly reports for the Legal Expense Fund with the Committee and the Legislative Resource Center. Legal Expense Funds follow the calendar year, not the legislative year. The reports include disclosure of certain contributions and certain expenditures. Although the trustee may assist you with preparing the quarterly reports, you are responsible for filing the quarterly reports.

You must file quarterly reports until the Legal Expense Fund has terminated or you leave the House. If you leave the House, you must also file a final departing Trustor report.

Contributions to your Legal Expense Fund are gifts to you. If you file Financial Disclosure Statements, you must also report contributions on the Gifts Schedule.

7. Changes to the Legal Expense Fund

If you would like to change the Legal Expense Fund’s purpose, trustee, or beneficiaries, you must receive prior Committee approval.

8. Termination of the Legal Expense Fund

Your trustee may terminate the Legal Expense Fund at the earlier of 1) the end of the time period for which the Legal Expense Fund is established, 2) the fulfillment of the Legal Expense Fund’s purpose, or 3) at the Committee’s direction for non-compliance with the Legal Expense Fund Regulations.

Within 90 days after a Legal Expense Fund’s termination, your trustee must distribute any remaining funds or assets in one of two ways.

• You may distribute the funds and assets to the Legal Expense Fund’s contributors on a pro rata basis as determined by your trustee, or
• You may donate the remaining funds and assets to an organization qualified under Internal Revenue Code § 501(c)(3).

If you would like to donate the remaining funds and assets to a charitable organization, the Committee must approve the benefitting charities. No Legal Expense Fund funds or assets may be donated to a charity that was established or is controlled by you.

Pro Bono Legal Services.

You may accept unsolicited pro bono legal services for the following purposes.[118]

• File an amicus brief in your capacity as a Member;
• Participate in a civil action challenging the validity of any federal law or regulation; or
• Participate in a civil action challenging the lawfulness of an action of a federal agency, or a federal official acting in their official capacity.
  • The civil action must concern a matter of public interest, rather than one that is personal in nature

Pro bono legal services mean the attorney or law firm providing the legal services is not charging for those services. Pro bono legal services do not allow an outside third party to pay for legal expenses that you incur.[119] You may, however, be able to sign on to an amicus brief that is written for an outside third party in your official capacity.

If you are offered pro bono legal services for any other purpose, those legal services must either be allowable contributions to a Legal Expense Fund or separately approved by the Committee through its formal advisory opinion process.

Example (Impermissible). You are the plaintiff in a lawsuit challenging the validity of a federal regulation. A local law firm is representing you in the action but is not charging you for the legal services. Unbeknownst to you, a third party is paying the law firm’s fees. You must repay that third party for the legal fees. Even if you are unaware of a gift that is given on your behalf, you are still ultimately responsible for only accepting permissible gifts.

Example (Impermissible). A law firm offers to prepare an amicus brief for Members. The law firm does not offer its services on a pro bono basis. A third party who will also provide legal services offers to pay the law firm’s expenses. Because the purpose of the legal services is to write an amicus brief for Members, the Members may not accept the third party paying for those legal services. The law firm itself must either offer its services on a pro bono basis, or the Members must pay fair market value for those services.

Example (Additional Action Required). You are a candidate for local elected office. Your opponent challenged your placement on the ballot. When you engaged an attorney to assist with the response, the attorney offered their services on a pro bono basis. Because the purpose for this pro bono representation does not meet one of the purposes listed above, you must receive formal Committee approval to accept the offer.

Example (Permissible). An advocacy group is filing an amicus brief in a case challenging a federal regulation that you and other Members also disagree with. The advocacy group is paying for its own legal services and the amicus brief lays out the advocacy group’s arguments. The advocacy group asks if you would like to also sign on to the amicus brief. Because the amicus brief is written for the advocacy group, who is paying its own legal services, you may sign on to the brief in your official capacity.

A Warning. You are responsible for complying with the Gift Rule and any other authority allowing you to accept gifts. Before entering into any arrangement where you are not paying full fair market value, and especially for expensive arrangements such as legal services, the Committee strongly recommends you have a full understanding of what is being offered and who would be providing the gift. You may not solicit for pro bono legal services. The Committee and the Office of General Counsel are available to review any retainer agreements.

Campaign Funds for Legal Expenses.

You may be able to use campaign funds to pay for certain legal expenses. See Payment of Certain Legal Expenses for the Committee’s guidance on using campaign funds for legal expenses. Please also contact the FEC‘s Office of Congressional Affairs at (202) 694-1006 to discuss additional limits FECA and its regulations place on the use of campaign funds.[120]