One of the big questions that often arises is whether Davis should continue to outsource their City Attorney Services to the law firm of McDonough, Holland & Allen who employ City Attorney Harriet Steiner.
The Vanguard engaged in extensive analysis through a series of public records requests. In the fiscal year of 2004-05 Davis paid its City Attorney and law firm $514,154.10. In 2005-06 it was $535,664.50. In 2006-07 it was $641,025.70. And in 2007-08 it $464,145.50.
The first point of comparison is whether the cities have in-house city attorneys or whether they outsource the service. Of the 85 cities that responded to the Vanguard’s request, 33 of them have in-house city attorneys while 52 had outsourced.
Since some cities at the time may have driven some of that disparity, we also looked at median cost. There the difference remained pretty stark with the in-house costs being vastly greater than out-sourced the outsourced costs of $822K to $373K.
Obviously a raw comparison may omit the fact that some cities simply have a larger budget than others. To control for that, we calculated the percent of the general fund budget the city attorney costs represent. The difference there is 1.54 percent for in-house and 1.31 percent for cities that outsource their city attorney services.
It is difficult to make conclusion from these data. However, what they seem to suggest is that cities with larger city attorney budgets tend to bring those services in-house. It seems likely that cities that do not litigate as much and have less cost for city attorneys are best served by outsourcing those services. However, there comes a point in time when hiring an in-house city attorney is more cost effective. What is not clear is at what point that is.
When we look at where Davis ranks, we find it on the upper side on the middle tier. In terms of absolute spending Davis ranks 37 out of 85. In terms of percent of general fund, Davis ranks 34 out of 85.
Another way to look at things, among those cities that outsource their city attorney services, Davis has the 16th highest budget among the 52 cities. However if they were to in-house their city attorney services, Davis would rank in the bottom third of spending ahead of just 12 and behind a full 21.
From this standpoint it is uncertain what Davis should do. There are clearly other cities that spend much more and still outsource and a few that spend less and use in-house services.
In a similar group of cities that we looked at in the fire cost comparison, Davis is one of just three cities that outsource. Davis also ranks 8th in spending in that group, but sixth in percent of general fund.
In many ways San Luis Obispo is a good comparison to Davis, and San Luis Obispo spends roughly $100,000 less per year, considerably less in terms of percent of general fund budget, and they in-house.
Nevertheless, from this analysis there appears to be no pressing need to change from an outsourced city attorney to an in-house. However, the city’s finance department should take a look at ways in which the city could save money with the city attorney contract.
There are two obvious issues that arise. First, as was noted at the last city council meeting, they have Harriet Steiner sit in for entire meetings on the clock, even though most of the time during those meetings she she is not an active participant.
However, according to billing statements that the Vanguard acquired, meeting expenses are only a small portion of her overall costs.
| Year | Expenditure |
| 2004-05 | $29,391.50 |
| 2005-06 | $29,959.00 |
| 2006-07 | $35,990.00 |
| 2007-08 | $37,260.00 |
One area that might be more fruitful is to look at a potential conflict of interest. Harriet Steiner and her firm serve in most cases as both the advising City Attorney, the person who advises the council on their legal options, and their litigation attorney. That means that advice that Ms. Steiner gives contributes to the decisions that may or may not lead to litigation. That leads to a potential conflict of interest as the advice that Ms. Steiner gives can benefit herself and her firm financially. Thus the city may want to examine how other cities handle it and whether than might be an area of concern.
While the city may want to look at areas to reduce cost, it remains unclear as to whether or not this is an area where the city can save money.
Here is the full list:
—David M. Greenwald reporting
I suggest using the least cost source of legal advice. But, why isn’t the function put up for bidding? Can the City issue a Request for Offers to see whether more money can be saved? Or, perhaps some independent law firm could bid a creative solution of being available but not charging except for a modest retainer until asked to perform some legal analyses?
I suggest using the least cost source of legal advice. But, why isn’t the function put up for bidding? Can the City issue a Request for Offers to see whether more money can be saved? Or, perhaps some independent law firm could bid a creative solution of being available but not charging except for a modest retainer until asked to perform some legal analyses?
Having Harriet sit through meetings while charging by the hour is ridiculous. Also, I suspect another law firm would charge less per hour for a lot of the work she does. And from where I sit, as an attorney, her expertise is less than stellar. I have never gotten the impression she uses her independent judgment when making legal decisions – they seem much more politically motivated. If the city wants to save money, Harriet Steiner would be the first place I would start.
It’s my understanding that the biggest marginal expense with our city attorney — and presumably those in other places — is with litigation matters. If you regularly read the city council agendas, you’ll notice that quite often there is an item listed (in closed session) for a discussion regarding a lawsuit. So if there is (big) money to be saved, it would be in reducing these expenses. In other words, avoiding lawsuits. Can that be done? I don’t know.
I would imagine contracts which have binding arbitration clauses are less likely to be litigated, for example. But a fair question then is, what are the types of lawsuits that the City of Davis is facing? Are they contractual disputes which could be settled without going to court? Or are they matters, like the Buzayan situation, where the City has no choice but to pay attorneys to litigate.
[i]We then looked at cost over a four year period from 2004-05 to 2007-08. In terms of average cost, clearly cities that in-house spent nearly three times more than cities that out-source their city attorneys, with the form spending $1.1 million per year while the latter spent less than half a million.[/i]
David,
I wonder if there is a correlation for the cities on your list between one specific type of legal dispute and attorney expense? The reason for the question is that if litigation is the main driver of cost, then I would think that cities with more of that one type of legal dispute would face more lawsuits.
Looking at your list, it does not appear that police matters are that [i]one type of dispute.[/i] I would expect that a community with more crime would face more lawsuits over things like alleged police harrassment or alleged police misconduct. Yet the cities with the highest attorney costs are not (as far as I know) cities with a lot of crime. Woodland, for one example, has more crime than Davis, yet its attorney expense is lower.
But there may be some other type of legal dispute, maybe a type of land use or taxes or something, which leads to more lawsuits, and those cities with high lawyer costs have more of those. It might even be — and I’m not kidding — that cities which are home to more residents who are lawyers* end up with more litigation? So Davis may spend more on our city attorney than Woodland, because the lawyers who live in Davis file more lawsuits.
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*I have heard anecdotally that there are doctors who won’t treat patients who are lawyers, just for the fact that a lawyer as a patient is something like 10 times as likely to sue for medical malpractice than a non-lawyer patient, all else held equal. A lawyer as a resident citizen might have that proclivity, as well.
Rich:
I don’t have a point of comparison, but the major cost in Davis appears to be land use cases, I see several clearly in my compiled list of costs.
I am the Vice-Mayor od the City of Emeryville, and we are currently deciding what do with out legal services. Our in-house city attorney earns $17,400 per month not including benefits, and one of the biggest problems I have with the in-house attorney is he is too involved in the poltics of running the city. We spent over $3.3 million on outside legal services. We cannot get an objectivce legal opinion becasue it is all filtered through the existing city attorney. When the city manger attempts to carry out policy direction, once the city attorney raises any objection, the matter is stuck until the city attorney gets around to it. The city manager has to decide whether or noit to make an issue out of it, to get the task moving. There is a local ballot initiative pending to force the council to outsource the functions of the city attorney, which would be directed by the city manager. This is an important aspect of city government which the city of Davis should maintain. Our city attorney has a nine months severance pay and other benefits. Did you calculate all of the costs associated with the in-house attorney. The acto fo a professional city attorney is one where all council members are treated the aame, however in reality that doesn’t happen with an in house attorney. could you look at the City of Emeryville and factor the date in your calculations. We are a city with approximately 9,000 residents, but the whole city is a very active redevelopment area.
best
Ken Bukowski
vice-mayor
510-305-0000
If it is land use — and I don’t doubt you’re right — then maybe some cities have figured out statutory and contractual ways to reduced litigation costs with regard to these disputes?
One thing to consider – are you looking at apples to apples comparisons? I can see there is a budget for the City Attorney and I assume that is just for the sustaining legal activity – the amount seems too steady to include outside services. I assume if the city is sued, an outside attorney would be brought in to litigate. My question is where are those costs recorded?
“I assume if the city is sued, an outside attorney would be brought in to litigate.”
My understanding and experience and the records all indicate that Harriet Steiner and her firm represent the city in case of suit.
[i]the amount seems too steady to include outside services[/i]
The difference may not be too radical, but there was a 38% difference ($176,880.20) between last fiscal year and the year prior. I would guess the greater amount in 2006-07 was due to fighting more lawsuits.
[i]One area that might be more fruitful is to look at a potential conflict of interest. Harriet Steiner and her firm serve in most cases as both the advising City Attorney, the person who advises the council on their legal options, and their litigation attorney. That means that advice that Ms. Steiner gives contributes to the decisions that may or may not lead to litigation. That leads to a potential conflict of interest as the advice that Ms. Steiner gives can benefit herself and her firm financially.[/i]
I think this is a very good point. I’m not sure that potential conflict of interest is the major concern — perhaps naively, but I presume Ms. Steiner’s professional ethics preclude her from encouraging litigating when doing so is not in the best interests of the City. However, using a different litigation lawyer might be wise if the [i]expertise[/i] of McDonough, Holland & Allen, that Davis is paying for, is not in litigating, but rather in interpreting state laws and so on. I would not be surprised to know that there are lawyers who specialize in litigation (and resolution without litigation) who can do a job as well as or better than McDonough, Holland & Allen, and do it for less money. If we went that route, we could keep Harriet (McDonough, Holland & Allen), and she could (without conflict) recommend the need for a litigation attorney with whom she has no business interests.
“The difference may not be too radical, but there was a 38% difference ($176,880.20) between last fiscal year and the year prior. I would guess the greater amount in 2006-07 was due to fighting more lawsuits.”
Probably right. I will go back to my earlier comment jut to add to some information. According to the records David got the 2007/2008 bills were $464K. However, if you look at the city spending reports you will see the actual City Attorney dept spending was $341K for 2007/2008 – the difference is buried elsewhere. I see a bucket in HR called Risk Management and I bet some attorney fees go in there.
To answer Another Attorney – I’ve never seen an attorney do anything without charging by the hour. I have a friend that was charged $25 dollars to file a piece of paper in their file folder (roughly 5 minutes). Don’t you think that that attorney would be paid for the hours that they sit at City meetings? An in-house attorney could cost $170,000 plus the cost of benefits. Then add in overhead and support staff. We’re getting close to $250/hour or more. Will the City pay for E/O insurance for the attorney? Payroll taxes and workers comp insurance? How about lifetime retirement benefits, including health insurance for the attorney and the support staff? That drives the cost up even higher – $350 – $400 per hour? You obviously have no idea of how much an attorney needs to make to run a legal services business.
[i]Conference with Legal Counsel – Existing Litigation: Lewis v. Russell, Federal Dis-trict Court Civ.S – 032646 WBSKJM[/i]
I just took a look at Tuesday’s agenda and found it includes this “Lewis v. Russell” item (in closed session). Prior to that, the attorney will be engaged in negotations on behalf of the City for the purchase of the “Miles-Kidwell Farm Easement.”*
Together, the conferences alone will take up an hour of attorney time, and I am quite sure that the attorney is billing a lot more on these matters for all the preparation, filings, trips to the massage parlor, etc.
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*If you read my column, you know that I oppose in the strongest terms buying easements on remote farm land which is zoned for agriculture in order to keep them zoned for agriculture. This one is in Solano County. In Yolo County, where the City of Davis has enriched farmers for millions and millions of dollars over the years buying these worthless pieces of paper, if the “risk” is that the Supervisors might go against the will of the majority of Yolo residents and change the zoning on these remote farms, then we could at no cost pass a countywide measure, a la Measure J, that would require a popular vote to make the change.
I don’t know what Lewis v. Russell is, but it has been billed for since at least 2004-05, and for the four years I looked at, the city paid out $210,000 for it.
“To answer Another Attorney – I’ve never seen an attorney do anything without charging by the hour. I have a friend that was charged $25 dollars to file a piece of paper in their file folder (roughly 5 minutes). Don’t you think that that attorney would be paid for the hours that they sit at City meetings? An in-house attorney could cost $170,000 plus the cost of benefits. Then add in overhead and support staff. We’re getting close to $250/hour or more. Will the City pay for E/O insurance for the attorney? Payroll taxes and workers comp insurance? How about lifetime retirement benefits, including health insurance for the attorney and the support staff? That drives the cost up even higher – $350 – $400 per hour? You obviously have no idea of how much an attorney needs to make to run a legal services business.”
I know an attorney can work from home and cut down on overhead. I know that Harriet is not a particularly good attorney, and the city could most likely get good competent counsel for a lot cheaper.
An Attorney: I’m not convinced that we can save much money no matter what we do. From my examination the expenses were almost entirely driven by the amount of litigation. We might save on the margins, but I don’t see a lot of huge cost savings.
“An Attorney: I’m not convinced that we can save much money no matter what we do. From my examination the expenses were almost entirely driven by the amount of litigation. We might save on the margins, but I don’t see a lot of huge cost savings.”
Perhaps, but the real question is: Was all that litigation necessary. I think not. We are talking about over a half million dollars. If Ms. Steiner and her firm are charging $400 per hour for that work, I can almost guarantee you can get a competent attorney to do the work for a lot less.
“I know an attorney can work from home and cut down on overhead.”
What a ridiculous idea. If the City hires an in-house attorney, it should really provide a place to work and secure storage for sensitive legal documentation other than the attorney’s own home.