RALEIGH — Department of Public Safety Secretary Kieran Shanahan said Tuesday he will no longer practice law and has taken a leave from his law firm while he is a member of Gov. Pat McCrorys administration.
The announcement came after The News & Observer began asking questions earlier in the day about the connections between the law firm that Shanahan started in 2001 and the lobbying company that he and his wife formed in 2009. On May 11, The N&O reported that Shanahan had been doing legal work for clients at his law firm on a limited basis.
Shanahan said at the time that the law firm had not represented clients before the General Assembly since he took office in January. But the lobbying firm CompassNC, which is closely tied to the law firm, represents about two dozen clients from a variety of interests that involve issues legislators commonly consider, including a multinational agricultural biotechnology company, a national trucking association and North Carolina health-care providers.
One of those clients, Resident Lenders of North Carolina, is pushing a bill that has cleared the Senate this session. The legislation, SB489, would change the states consumer finance laws. It has drawn the opposition of consumer advocates because of the high interest rates that would be paid by those needing fast cash.
The trade association of small- to medium-installment loan companies in North Carolina hired CompassNC in October 2011 because one of its founders, John Cooper, came highly recommended, President Erin Wagner said. Records show the association gave close to $120,000 to various campaigns last year, and spent $102,500 on three lobbying firms, including $60,000 for CompassNC.
Tina Shanahan, Kieran Shanahan's wife, said she is no longer the principal lobbyist for any interests and no longer lobbies at all for Resident Lender.
She said she mostly gives policy and strategic advice to managing member Cooper and associate J. Brad Edwards, and helps with administrative management. She said she gives minimal consultation to two clients, a health-care entity and a horse industry group.
She said she has never been as involved with the firm as its other members because of the increasing demands of her service in the U.S. Naval Reserve, where she is a captain. She is a nurse who used to work for Blue Cross Blue Shield of North Carolina and was president and CEO of Be Active North Carolina, until she was called to active duty in 2007.
Since Kieran has taken his appointment with the administration, service to the people of North Carolina has become our top priority, she said in an email. Therefore, my involvement with CompassNC has become even less frequent. I do not have, nor will I have, any clients with interests before the Department of Public Safety or relative to the department, nor do any of my partners or associates at CompassNC. We are aware of the potential conflict of interests and uphold the highest standards of ethical conduct.
When CompassNC was formed with both Shanahans, Cooper and Edwards, the principles said in a news release that the firm would have ready access to the legal services and expertise of the Shanahan Law Group.
Kieran Shanahan is no longer part of the lobbying firm, but the close relationship has continued. Both firms share the same office suite on Hargett Street in downtown Raleigh, and records filed with the state show that through early May of this year, they shared the same fax number and listed a common administrative employee. Kieran Shanahan reported on the state ethics form he filed in January that he received more than $5,000 in business income from CompassNC in the previous year.
Kieran Shanahans departure from his law firm is meant to settle questions about any suggestions of impropriety. But Bob Hall, executive director of the government watchdog group Democracy North Carolina, called for an investigation of the relationship between the two firms anyway.
Hall said the secretary of state should still look at whether there was a conflict of interest with Shanahan running a state department but having ties to special interests.
Its still relevant to ask these questions and understand the relationship, Hall said. Its a mystery that needs to get cleared up.
Pressure on Shanahan has been building. On Monday, the liberal group Progress N.C. Action called on Republican governor McCrory, who appointed Shanahan, who is also a Republican, to ask Shanahan to disclose his client list.
On Tuesday, the Democratic-leaning Public Policy Polling released a survey showing that 63 percent of the voters queried think that it is inappropriate for Shanahan to continue to work on the side for his private law clients. Only 11 percent disagreed.
The budding controversy follows a report on Monday by The Insider, a government news service owned by The N&O, that Yolanda Stith, wife of McCrory chief of staff Thomas Stith, has a lobbying firm called Capitol Access. A McCrory spokeswoman said the governor knows who Yolanda Stiths clients are and have taken steps to avoid conflicts.
The N&O contacted McCrorys office for a comment about Shanahan, but did not receive a response. About two hours later, Shanahan announced he was leaving the law firm.
That news came from the Shanahan Law Group in a statement emailed to the news media saying that Kieran Shanahan has transitioned out of his practice at the law firm, and would be taking a temporary leave of absence from the firm and from practicing law. Other lawyers in the firm will take on the cases that he had been handling.
I am thankful that my clients and my friends at Shanahan Law Group are providing me the opportunity to serve this great state, Kieran Shanahan said in a statement the law firm released.