Money a county paid its solicitor for acting as interest arbitrator in a labor dispute will have to be repaid to the county, despite a resolution the county adopted agreeing to pay the attorney for the work, the Commonwealth Court has ruled.

On July 16, a split en banc panel of the court held in County of Beaver v. Sainovich that because Myron R. Sainovich was furthering Beaver County’s objectives as both the county solicitor and as the interest arbitrator, the work constituted professional acts incident to his position as county solicitor. The 5-2 decision affirmed the trial court, which had held that the approximately $44,000 payment Sainovich and his firm received for his work on the arbitration panel violated the county code.

Writing for the majority, Judge Renee Cohn Jubelirer said the record indicated Sainovich had a muddied role when it came to his duties as an interest arbitrator versus the county solicitor.

“The description of the work performed in the July 25, 2006, itemized bill, combined with [Clark Hill attorney Joseph] Friedman’s testimony, shows that Sainovich was utilizing his legal skills and training to achieve, through either the interest arbitration or outsourcing/privatization, substantial monetary savings for the county,” Jubelirer said. “In other words, Sainovich was acting in the capacity of ‘professional legal counsel’ when he was representing the county’s interest during the interest arbitration.”

Friedman had provided legal advice during the arbitration, in which the county sought to outsource some of the operations at the county’s jail.

In his dissent, Judge Bernard L. McGinley said he felt that Beaver County’s claims were barred under the statute of limitations under 42 Pa.C.S. Section 5525(8), as the county initially sought to recover the money approximately five years after the full amount was paid. McGinley further disagreed that the roles of arbitrator and solicitor were blurred.

“I believe that while Sainovich’s position as county solicitor helped him obtain the position of interest arbitrator, he was not serving in his capacity of county solicitor when he acted as arbitrator,” McGinley said.

Attorney Daniel J. Siegel, who writes a column for the Law Weekly and is a commissioner for Haverford Township, Pa., said it is not unusual for attorneys to serve multiple roles at the county or municipal level. The decision, he said, highlights the conflicts that can arise, particularly regarding confusion about compensation.

“It doesn’t matter if he was an interest arbitrator or a solicitor; he was an attorney representing the interest of the same client, and therefore his client’s interest doesn’t change regardless of the role,” said Siegel, who was not involved with the Beaver County case. “If you have one master and you are performing a dual role, you must clearly specify how compensation is going to be made or it may be disallowed.”

According to Jubelirer, in January 2006, Sainovich was appointed county solicitor and paid a fixed salary. The county later appointed him as interest arbitrator in connection with the union dispute. The July 13, 2006, resolution appointing him referenced a fee agreement. When the stint as arbitrator was over, Sainovich billed the county at a $250 hourly rate, and the county paid him $44,050.

In March 2011, the county comptroller questioned the payment, and, after seeking legal advice, the county began arguing that Sainovich violated the County Code, which held that appointed county officers be paid a fixed, specific salary. The county maintained that Sainovich had been appointed as “professional legal counsel” in connection with the interest arbitrator, and therefore the duties were incidental.

Sainovich argued that because working as an interest arbitrator did not constitute the practice of law or require any special legal skills, the activities were separate and did not violate the law.

The trial court held that Sainovich was “wearing his ‘legal hat’” when he was working as interest arbitrator, and granted summary judgment for the county, Jubelirer said.

On appeal, Sainovich argued that the county’s claim was premised on the idea that his work constituted the practice of law. He noted that Friedman had been hired as special counsel to handle the arbitration, and argued this indicated he had been relieved of his solicitor duties. Sainovich further argued that while he may have made suggestions to Friedman regarding legal strategy regarding the arbitration, the activities did not constitute legal instruction or advice.

Jubelirer, however, said the issue was not whether the work was legal work, but whether the activities were incident to the position as solicitor.

Jubelirer noted that Friedman’s testimony indicated Sainovich helped prepare and strategize for the arbitration and that Friedman did not think Sainovich had a conflict of interest in serving both positions.

The Commonwealth Court’s 1981 decision in Weaver v. Tracy and its 1978 decision in Snyder v. Naef were also persuasive, Jubelirer said.

According to Jubelirer, in Weaver, the court held that paying by the hour and without limitation is not the provision of a fixed salary, and in Snyder the court said “leg work” a solicitor performed on bond issues could not be characterized as being other than professional acts incident to the office.

“Notwithstanding that the July 13, 2006, resolution was adopted by the county commissioners, characterizing the work Sainovich performed as the interest arbitrator as simply an increase in his responsibilities as the county’s solicitor for which he deserved extra compensation, pursuant to Weaver, is not applicable because hourly payments without limitation are not permissible and, consistent with Snyder, he could not retain payments over and above his fixed and specific salary for professional acts incident to his office as a county solicitor,” Jubelirer said.

Sainovich was represented by Charles W. Garbett of Luxenberg, Garbett, Kelly & George. Joseph A. Askar represented Beaver County. Neither attorney returned a call for comment.

Max Mitchell can be contacted at 215-557-2354 or mmitchell@alm.com. Follow him on Twitter @MMitchellTLI.

(Copies of the 27-page opinion in County of Beaver v. Sainovich, PICS No. 14-1123, are available from Pennsylvania Law Weekly. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information. Account holders can order via our online form.) •