Defender Ass'n of Philadelphia Amendment of Articles of Inc.

Opinion by

Mr. Justice Pomeroy,

We are presented by this appeal with the question whether the work of the Defender Association of Philadelphia in affording legal representation to indigent persons accused of crime will be compromised and rendered constitutionally ineffective by reason of the sub*355stantial representation of the City of Philadelphia in the management of the Association. Specifically, does a potential 50% degree of control of the governing board of the Association by the City serve automatically to deprive the indigent client of competent, disinterested counsel?

The Defender Association, a nonprofit corporation in existence since 1934, applied to the court below in 1969 for approval of certain amendments to its Articles of Incorporation. The Non-Profit Corporation Law1 provides that the court of common pleas shall approve amendments to the charter of such corporations if in the court’s opinion they are “lawful, will be beneficial and not injurious to the community.” Objections interposed by appellants and others were heard and considered, whereupon the court of common pleas entered its order approving the amendments.2 On appeal the Superior Court affirmed, per curiam, without opinion, two judges dissenting.3 Defender Association of Philadelphia Amendments of Articles of Incorporation, 219 Pa. Superior Ct. 309, 279 A. 2d 240 (1971). We granted allocatur because of the importance of the question involved, and now affirm.4

*356The facts as found by Judge McDevitt in his adjudication are not disputed. They may be summarized as follows: From the time of its incorporation in 1934 until the mid-nineteen sixties, the Association had been purely private in character, deriving its fundsi from membership dues and contributions from individuals and charitable organizations such as the Community Chest and the United Fund. Until the revolution in the field, of constitutional law relating to criminal procedure which began in the early part of the last decade, the Association could function adequately with the moneys so received. Commencing with the historic decision of the Supreme Court of the United States in Gideon v. Wainwright, 372 U.S. 335, 9 L. Ed. 2d 799 (1963), however, the scope of judicially mandated representation of the poor increased dramatically.5 The *357Association therefore sought other sources of funding in order to continue to provide quality defense services to the increasing number of indigents entitled to them. Initially the Association was successful in obtaining significant financial assistance through grants from the Ford Foundation, the National Defender Project of the National Legal Aid and Defender Association, the United States Office of Economic Opportunity (OEO) and voluntary contributions of the City of Philadelphia. Thus, by 1967, the combined budget for Association operations, including representation of juveniles, had risen to $600,000; of this amount $152,000 came from the City.

In 1968 the still increasing need for legal defense services and the termination of contributions previously received for limited time periods from the Ford Foundation, OEO and the National Defender Project combined to create a financial crisis for the Association. An effort to obtain additional funds from the City was unsuccessful, and the Association was compelled to plan for a reduction of services. Contemporaneously, in November of 1968, a bill was introduced in City Council proposing the creation of a wholly new public defender program unrelated to that of the Association, the chief administrative officer of which would be appointed by the Mayor of the City of Philadelphia. The bill met immediate opposition from the Association and from many other groups in the community who were satisfied that throughout its existence the Association had provided indigent citizens *358with, independent legal defense services of the highest quality. There followed meetings between representatives of the Association and the City to search for a compromise approach which would enable the Association to continue to provide all of the constitutionally required legal defense services in Philadelphia. These negotiations resulted in a contract between the Association and the City, entered into on January 28, 1969.

The contract was approved by a majority (19 to 16) of the Board of Directors of the Association. It provides that the Association shall provide counsel and necessary investigative and other services to indigents in various areas of representation,6 and that the City shall compensate the Association in amounts to be appropriated by City Council from time to time.7 The Board of Directors of the Association is to be reduced in number from 50 to 30 members, 10 directors to be chosen by the Mayor of the City of Philadelphia with the approval of City Council, ten to be chosen by the members of the Association, and the remaining ten directors (called “community directors”) to be chosen by agreement among a majority of the City Directors and a majority of the Association directors. Under the contract the Board of Directors appoints the Chief Defend*359er and the First Assistant Defender; the Chief Defender appoints such other professional and non-professional staff as may be necessary.8

As a result of the agreement between the City and the Association, the public defender bill then pending in City Council was not acted upon. It was to effectuate the contractual provisions pertaining to changes in its organizational structure that the Association undertook to amend its Articles of Incorporation, for that purpose seeking the necessary approval of the court of common pleas.

There is no dispute that any plan to provide counsel to persons who need representation in criminal proceedings should be designed to provide counsel who is both competent and independent. “The plan and the lawyers serving under it should be free from political interference.” A.B.A. Project on Providing Defense Services §1.4, at 19 (Approved Draft, 1968). The integrity of the relationship between lawyer and client, *360requiring among other things complete fidelity to the client’s interest, should be preserved inviolate. Like any lawyer, a person chosen to represent an accused indigent person may serve but one master—the client. Independence of any plan to provide such services can be assured “if and only if the system is properly insulated from pressures, whether they flow from an excess of benevolence or from less noble motivations.” Id. §1.4, at 20 (Comment) .9 The question presented by the case before us is whether the Association, as it will be reorganized pursuant to the contract with the City, will be able to render defender services which measure up to these standards. We hold that the court of common pleas committed no error of law or abuse of discretion in finding that on this record the question should be answered affirmatively.

In essence, appellants’ objections to the amendments are that the appointment of one-third of the Association’s directors by the Mayor (“City directors”) and the selection by those directors and the “Association directors” of the final one-third of the Board (“community directors”) in effect gives the City 50% representation and thus potentially effective control of the Association. This in turn, it is said, will adversely affect the independence of Association attorneys and thus create an unconstitutional conflict of interest. It therefore follows, so appellants argue, that the amendments are neither “lawful, beneficial or non-injurious to the community” as required by statute. The conflict of interest is found in the fact that the Mayor appoints both the Commissioner of Police and the City Solicitor, *361a prosecuting official,10 whose interests as law enforcement officers are presumed to be antithetical to those of criminal defendants. We are unable to agree.

We are of course well aware of the line of conflict of interest cases to which appellants refer us and which declare that “the potentiality that [actual] harm may result, rather than that such harm did result will require reversal.” Commonwealth ex rel. Whitling v. Russell, 406 Pa. 45, 48, 176 A. 2d 641 (1962) (emphasis in original). See also Commonwealth v. Wilson, 429 Pa. 458, 240 A. 2d 498 (1968); Commonwealth v. Werner, 217 Pa. Superior Ct. 49, 268 A. 2d 195 (1970); Commonwealth v. Bostick, 215 Pa. Superior Ct. 488, 258 A. 2d 872 (1969). These and other similar cases invariably involve direct conflicts that arose in situations in which defense counsel undertook to represent co-defendants with differing interests.11 In the case before us, however, the potentiality of conflict of interest is not direct, but is attenuated and speculative at best, as examination of the proposed new organizational structure shows.

The Mayor appoints one-third of the members of the Association’s Board of Directors. Even should each of these City directors be obliged to follow, for political or other reasons, the dictates of the Mayor in exercising his or her vote as a member of the Board, this would not give the Mayor or the City control of the Associa*362tion.12 It is appellants’ theory, however, that the manner of selecting the community directors envisaged by the charter amendments, viz., by agreement of a majority of the City and Association directors, would effectively raise city representation to 50%. This argument assumes, of course, that the City group and the Association group each will select one-half of the community directors and that each group will automatically accept the nominations of the other. It also assumes that those community directors will themselves be the creatures of the group which nominated them. All this is sheer speculation. We have no reason to believe that the Association directors, at least one of whose votes is necessary for majority action, would be unaware of the obvious harm that would result from the injection of improper influence into the operation of the Association and would accept nominees for community director seats on the Board if there were any indication that such nominee would act merely as a rubber stamp for the Mayor. We think it much more likely that both the Association directors and the City directors would make and approve nominations of persons whose character, background and experience suggest qualification for the task of board membership independent of any political predilections.

Appellants argue that, in the same way that effective control of a business corporation can be had with ownership of less than 50% of the outstanding shares,13 so here it would be possible for the City to control the Association even though the City could dictate the *363votes of something less than 50% of the Board of Directors. The analogy is inapposite here where we are not dealing with a business corporation controlled through stock ownership. The arithmetic of control involved in the present case is simple indeed: In making a decision on behalf of the Association, thirty votes may be cast by the Board of Directors; each member of the Board has one vote; the ten votes of the City directors, assuming they would vote in a bloc, would obviously not constitute a majority and would not constitute control of the Association.14

Furthermore, the bylaws of the Association contain safeguards against the creation of an impermissible conflict of interest. The Board of Directors must select the Chief Defender and the First Assistant Defender by majority vote,15 The Chief Defender, in turn, has the power to appoint the Association’s professional, in*364vestigative, and clerical staff. Unless two-thirds of the Board approve, every Association employee must be full-time.16 No employee of the Association is permitted to be a candidate for public office, a member of any committee of a political party, a member of a committee of a partisan political club, or to take part in the management or affairs of any political party or any political campaign.

In sum, then, the assumed attitude of antagonism to criminal defendants which lies at the base of the conflict of interest charge must be transmitted from the Mayor and City Council to a majority of the Association’s Board of Directors, and thence from the Board to the Chief Defender. According to appellants’ scenario, the Chief Defender, acting for or under the influence of the Mayor and the Board, would make decisions and influence staff attorneys to violate the standards of professional conduct by acting in a manner contrary to the best interests of their clients. As the court of common pleas found, the record is devoid of any concrete facts to support this hypothesis.

In contrast, there is ample evidence in the record to sustain the lower court’s conclusion that the Defender’s office under the new structure will not be infected ab initio with a built-in conflict of interest.17 It was found as a fact that in recent years a number of public *365defender systems have been established in which management was placed in a board of directors containing, as here, substantial representation from both the public and private sector.18 Such “public-private’’ defender systems have been able to maintain their independence. Within the classification of public defender systems are also included several other organizational forms. Among these are the assigned counsel system,19 where generally counsel is appointed by the courts, a strictly public program headed by a public official and supported by public funds,20 and private defenders who are financed only by private donations. We recognize that a conflict of interest may conceivably arise in any of these programs. It is impossible to insure in advance against all form of influence which might bear adversely on the quality and the independence of the defender services.

We believe that the lower court did not abuse its discretion in holding that the organizational structure of the Philadelphia Association provides adequate safeguards to protect its independence. By today’s affirmance we do not suggest that this structure thus approved is necessarily the form of organization that will best withstand improper pressure; we hold merely that there is sufficient evidence in the record to sustain the lower court’s finding that the articles of incorporation, *366as amended, comport with the requirements of the NonProfit Corporation Law.21

Order affirmed.

Act of April 29, 1874, P. L. 73, §42, as amended, 15 P.S. §7707.

Appellants Segal and Schwartz are both members of the appellee Association who voiced their opposition to the proposed amendments at the appropriate meetings of the Association. Mr. Schwartz had been also a director of the Association, but resigned from that position because of the matters here in controversy. In the hearings below the appellants represented themselves and certain other objectors to the proposed amendments.

Judge Spaulding filed a dissenting opinion, in which Judge Hoffman joined.

Appellate scope of review in an appeal from an order approving articles of amendment of a nonprofit corporation is properly limited to whether or not the lower court committed an error of law or a serious abuse of discretion. See Nottingham, Fire Co. Charter Case, 394 Pa. 631, 632, 149 A. 2d 119 (1959); In re Elkland Leather Workers’ Association, Inc., 330 Pa. 78, 198 A. 13 (1938).

Other decisions of the Supreme Court extending the rights to counsel include Argersinger v. Hamlin, 407 U.S. 25, 32 L. Ed. 2d 530 (1972) (extending the Sixth Amendment right to counsel to defendants in any criminal case where imprisonment for any term could be imposed); Coleman v. Alabama, 399 U.S. 1, 26 L. Ed. 2d 387 (1970) (defendants entitled to counsel at preliminary hearings); Mempa v. Rhay, 389 U.S. 128, 19 L. Ed. 2d 336 (1969) (holding revocation of probation and imposition of sentence to be a critical stage requiring assistance of counsel); In re Gault, 387 U.S. 1, 18 L. Ed. 2d 527 (1967) (juveniles in delinquency proceedings held constitutionally entitled to representation of counsel); Douglas v. California, 372 U.S. 353, 9 L. Ed. 2d 811 (1963) (counsel must be provided for any indigent defendant on the first appeal from a conviction allowed as a matter of right). Cf. United States v. Wade, 388 U.S. 218, 18 L. Ed. 2d 1149 (1967); Gilbert v. California, 388 U.S. 263, 18 L. Ed. 2d 1178 (1967); Miranda v. Arizona, 384 U.S. 436, 16 L. Ed. 2d 694 (1966); Escobedo v. Illinois, 378 U.S. 478, 12 L. Ed. 2d 977 (1964).

Our own Court has been diligent to protect the right to counsel at various stages of the criminal process. See, e.g., Commonwealth ex rel. Rambeau v. Rundle, 455 Pa. 8, 314 A. 2d 842 (1973); Commonwealth v. Sheehan, 446 Pa. 35, 285 A. 2d 465 (1971); Commonwealth v. Tinson, 433 Pa. 328, 249 A. 2d 549 (1969); Commonwealth ex rel. Firmstone v. Myers, 431 Pa. 628, 246 *357A. 2d 371 (1968); Commonwealth v. Silva, 415 Pa. 537, 204 A. 2d 455 (1964); Commonwealth ex rel. Remeriez v. Maroney, 415 Pa. 534, 204 A. 2d 450 (1964): Commonwealth ex rel. O’Lock v. Rundle, 415 Pa. 515, 204 A. 2d 439 (1964). A review of federal and state decisions following Gideon is contained in Comment, Right to Counsel ; Impact of Gideon v. Wainwright in the Fifty States, 3 Creighton L. Rev. 103 (1970).

The contract identified the following types of proceedings wherein the Association’s services would be supplied:

(1) Juvenile delinquency;
(2) Any indictable offense at any stage of the prosecution;
(3) Any offense cognizable before the Municipal Court;
(4) Post-conviction proceedings;
(5) Habeas corpus proceedings;
(6) Extradition proceedings;
(7) Probation and parole proceedings; and
(8) Appeals.

For the fiscal year 1969-70 the Association budgeted $1,263,595 to provide the representation called for by the contract, of which amount it was agreed that the City would provide $1,160,095 (about 92% of the budget).

The agreement also contains the following additional provisions :

(1) The Chief Defender shall be a lawyer in active practice before the courts of record of the County of Philadelphia with at least five (o) years’ experience in the active practice of law.

(2) All employees shall be full-time except with the approval of two-thirds of all members of the Board.

(3) The term of the contract shall be perpetual; provided, however, that either party may terminate it on June 30th of any calendar year provided not less than ninety days written notice of such termination is given. In addition, the Association is authorized to terminate the agreement upon thirty days written notice “[i]n the event that the Association shall determine that any such appropriation by the City [to compensate the Association for its services under the agreement] is insufficient.”

(4) The City shall have the right to audit the books and records of the Association. For this purpose such books and records shall bo made available to representatives of the Finance Director of the City and the City Controller at such reasonable times as are required by any such representative.

See also Equal Justice for tlie Accused 61, 71, 74-76 (Report of a Special Committee of the Association of the Bar of the City of New York and The National Legal Aid and Defender Association, 1959).

The City Solicitor acts as a prosecutor in cases involving violations of some criminal ordinances (e.g., anti-weapon ordinances) and also in cases of violation of mayoralty proclamations.

See A.B.A. Special Committee on Evaluation of Ethical Standards, Code of Professional Responsibility, Disciplinary Rules 5-105, 5-107(A), (B) (Final Draft, 1969); A.B.A. Project on Standards for Criminal Justice, Standards Relating to the Defense Function §3.5(b) (Tent. Draft, 1970).

Wliile appellants assume that the City directors would act in concert on all matters, there is no evidence whatever in the record that this would necessarily he so.

See generally L. Loss, Securities Regulation 770 (2d ed. 1961) ; Berle, “Control” in Corporate Law, 58 Col. L. Rev. 1212 (1958).

Cf. United States v. Union Pacific R.R. Co., 226 U.S. 61, 95, 96 (1912), wherein the Court recognizes that although a large corporation with many shareholders can effectively be controlled through united ownership of less than 50% of the stock, a small corporation cannot normally be controlled through ownership of less than a majority of outstanding stock. See also H. deck, NonProfit Corporations, Organizations, and Associations (2d ed. 1965) (“In a non-profit corporation Ta control] agreement is rather futile . . . since each member ordinarily has only one vote, an agreement of this kind would have no real effectiveness unless it included a majority of the members.” See generally, Hornstein, Stockholders’ Agreements in The Closely Held Corporation, 59 Yale L.J. 1040 (1950) ; F. H. O’Neal, Close Corporations (1970).

Judge McDevitt, in his thorough and careful adjudication, stated that it was his belief “that the Chief Defender and his assistants should have the protection of ‘tenure’ in office . . . Anything less will be a clear indication that the defender organization is suspect. The Association must offer lawyers career service opportunity.” We agree. Later in his discussion, the hearing judge observed that “[f]or the first time the Association will be in a position to offer prospective members of the defender staff a competitive and adequate salary or rate of compensation and hopefully a career.”

The “full-time” employment requirement for Association staff is an obvious recognition of tbe necessity for employee independence. The City’s acceptance of this arrangement would seem to be an indication of its good faith.

we note in passing that the record reveals that the amended articles of incorporation met with the approval of both the United Fund of Philadelphia, a large contributor to the Association, and the Board of Governors of the Philadelphia Bar Association. Bach organization indicated that it believed that the amendments would be beneficial and would not adversely affect the independence of the Association.

Seo generally Equal Justice for the Accused (Report of a Special Committee of the Association of the Bar of the City of New York and The National Legal Aid and Defender Association, 1959) ; A.B.A. Project on Standards for Criminal Justice, Standards Relating to Providing Defense Services (Approved Draft, 1968) ; Silverstein, Defense of the Poor in Criminal Cases in American State Courts (1965) ; National Defender Project, Handbook, How to Organize a Defender Office (1967).

See, e.g., Alaska Rules Grim. Prae. 39; Ky. Rev. Stat. Ann. §453.190 (1963) ; W. Va. Code 62-3-l(a) (1966).

See, e.g., Conn. Gen. Stat. Ann. §§54-81a, 54-80 (Supp. 1965) ; Minn. Stat. Ann. §611.12 (1964).

Our holding in no way precludes the possibility of judicial relief in future if the occasion should arise. As only one example, should it appear that pressure has been brought to bear on Association attorneys to persuade their clients to forego jury trials or appeals in order to avoid the cost to the City that they entail, a clear case of unconstitutional conflict of interest would be made out, not to speak of violations of the standards of professional responsibility. Evidence of improper influence or pressure, whether overt or covert, will trigger an appropriate judicial response.