Government Conflicts of Interest

by Matthew Sean Brick on Feb. 06, 2019


Summary: This article and presentation covers common conflicts of interest for municipal officers and employees.

Conflicts of Interest

Matt Brick & Erin Clanton, Shareholders at Brick Gentry, P.C.

Conflicts of Interest

“The clash between public interest and the private pecuniary interest of the individual concerned.” – Black’s Law Dictionary

“A conflict of interest arises when a government fiduciary’s personal or financial interests conflicts or appears to conflict with the official responsibility.” – 18 U.S.C.A. §203

Rules that Apply to Local Officials and Employees

State laws

Federal laws and regulations

Local government ordinances

Case law

Attorney General Opinions

Statutory and Common Law Conflicts of Interest

Section 362.5 states that with certain expectations a city officer or employee shall not have a direct or indirect interest in any contract, job of work or materials or profits of such job, or services to be furnished or performed for the officer’s or employee’s city. A contract entered into in violation of Section 362.5 is void.

Sections 362.5 (A)-(M) constitute 13 exceptions defining interests which are not subject to the broad directive of Section 362.5, including lawful compensation of city officers, contracts awarded by competitive bid, existing contracts, and certain professional services contracts.

Statutory and Common Law Conflicts of Interest

Similarly, Section 362.5, prohibits officials from contracting with corporations in which they hold an interest, exempts from the prohibition contracts with corporations in which an official owns or controls, directly or indirectly, less than five percent (5%) of the outstanding stock.

This indicates a legislative intent to remove from the statute’s purview those interests so remote as to be deemed insignificant.                                                          Helmke v. Board of Adjustment, 418 N.W.2d 346 (Iowa 1988).

Statutory and Common Law Conflicts of Interest

Section 362.6 provides that matters voted on are not invalid by reason of conflict of interest in an officer of a city – unless that vote was decisive to passage.

This section does not resurrect a contract which is void under Section 362.5.

This section also specifies the method of calculating how many votes are required when one or more members of the body are disqualified by reason of conflict of interest.

Statutory and Common Law Conflicts of Interest

Common law conflicts of interest may result from “any actions that are irreconcilable with the public welfare.” – 55 Iowa L. Rev. 450, 451 (1969).

A conflict of interest need not be financial.        Wilson v. Iowa City, 165 N.W.2d 813, 822 (Iowa 1969).

A conflict of interest may arise from the potential conflict between the public duty of a city officer who has a further duty of loyalty to a private employer. James v. City of Hamburg, 174 Iowa 301, 156 N.W. 394 (1916).

How to Advise Potential Conflicts of Interest

The Mayor or Council member should at a minimum declare a conflict and avoid all participation in discussion on the matter.

The Mayor or Council member should not participate in any presentation being made.

Consideration should be given to leaving the room or separating from other members of the Council during presentation, consideration and discussion of the matter.

How to Advise Potential Conflicts of Interest

You do not make the decision as to whether a conflict of interest exists: that decision is made by the person to whom you provide legal advice.

In the end, what we give is legal advice, not legal orders.

Conflicts of Interest

1. A local university has before the city council a measure which will allow the construction of a $20M library. Out of the five council member: one is the Director of Adult Education for the university; one will be teaching a summer class as an adjunct professor; and the spouse of another is the president of the university.

How many council members should vote on this issue?

Conflicts of Interest

2. The city has acquired a number of parcels of land for redevelopment. The mayor is a realtor and had clients interested in the properties before the city acquired them.

Because of his previous relationships with these clients, the mayor has not participated in any city council action relating to acquisition of the parcels.

The city enters into a lease with a developer of one of the parcels for the construction of a hotel. The mayor wants to know if he can purchase 4% of the outstanding stock of developer’s company.

Conflicts of Interest

3. A councilmember is a lawyer. The city council appoints the human rights commission. The city manager appoints the human rights director. The city attorney advises the commission.

Can a member of the councilmember’s law firm defend clients before the commission?

Conflicts of Interest

4. The city regularly retains a local attorney to represent the city in litigation.

Can a member of the attorney’s firm appear before the city council on matters in which the retained attorney is not involved (i.e., zoning matters)?

Conflicts of Interest

5. An assistant city attorney also practices in a law firm.

Can a member of his firm represent clients before the city council?

What if some of the issues before the council likely will lead to litigation?



Matt Brick:


Erin Clanton:


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