Federal judge's $216K, contingency-fee separation agreement with county leads to public reprimand

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A federal judge in South Carolina has received a public reprimand after entering into a separation agreement with his former county employer that paid him for future nonlegal advice and a 1.5% contingency fee for work on opioid litigation.

The judicial council of the 4th U.S. Circuit Court of Appeals at Richmond, Virginia, reprimanded U.S. District Judge Joseph Dawson III of the District of South Carolina in a July 29 memorandum and order.

The judicial council concluded that Dawson had engaged in conduct prejudicial to the effective administration of the courts’ business by entering into the agreement and then amending it. The “cumulative impact” of the agreements created an appearance of impropriety in the public’s mind, the order said.

Dawson had worked as a county attorney in Charleston County, South Carolina, under an independent contractor arrangement before his nomination to the federal bench, according to the memorandum and order.

In December 2020, one week before Dawson’s Senate confirmation, he entered into a separation agreement with the county that paid him $216,000 for his “institutional and historical knowledge and insight” and “nonlegal advice” over the next year, the order said.

The county also agreed to pay Dawson a 1.5% contingency fee for his work on then-pending litigation against makers and distributors of opioids.

Federal judicial nominees are required to file financial disclosure reports and to update them in the period no more than five days before Senate confirmation hearings. Dawson’s hearing happened in November 2020, before the separation agreement. Dawson said he intended to report the income on his annual financial disclosure report.

After Fix the Court, a court transparency group, filed an ethics complaint in February 2021, Dawson entered into an addendum to the agreement.

The May 2021 addendum tossed the contingency-fee deal and stated that the $216,000 was for past services rendered, rather than future work.

The Code of Conduct for U.S. Judges bans federal judges from practicing law, while the Ethics Reform Act of 1989 bans federal judges from taking compensation for work involving a fiduciary relationship.

An investigation by a special committee did not uncover evidence that Dawson continued to practice law after taking the bench, the 4th Circuit judicial council said. County officials occasionally contacted Dawson for historical information, but “those exchanges were brief and confined to answering factual questions such as where to locate documentation,” the order said.

The special committee also found that there was no clear and convincing evidence that Dawson’s nomination was factored into the compensation deal. The special committee noted that the county had compensated Dawson for additional projects outside an annual fixed-fee arrangement in the past.

“The special committee did find, however, that the separation agreement created an appearance of impropriety that was not resolved by the subsequent addendum,” the order said. “The addendum recharacterized the county’s payment as being for past, rather than future, services without identifying the specific past services for which Judge Dawson was being compensated. Absent a clear and appropriate justification for the payment, the cumulative impact of the agreements created the appearance in the public’s mind that the judge received a large payment on the eve of taking the bench for no coherent reason, or worse, that the judge agreed to practice law while serving as a judge, thereby undermining public confidence in the integrity and impartiality of the judiciary.”

The special committee noted that Dawson was cooperative and had offered a sincere apology. It recommended a private reprimand.

The 4th Circuit judicial council concluded that a public reprimand was warranted, however.

“Although we find no wrongful intent or pattern of improper activity on the part of Judge Dawson, we agree with the special committee that the misconduct in this case was serious,” the 4th Circuit judicial council said. “We further find that the effect of the misconduct on the judicial system was significant. The terms of the judge’s separation agreement and the resulting payment were topics of public concern in local newspapers and on social media, clearly indicating that the judge’s actions undermined the public’s confidence in the integrity and impartiality of the judiciary. This public concern requires a public response.”

Reuters, Law.com and Bloomberg Law had coverage of the order. How Appealing linked to additional coverage and a copy of the opinion.

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