Two Thirds of State Legal Work Goes to Two Firms
Thursday, April 17, 2014
State agencies spent nearly $1.5 million on outside legal counsel last year, but the bulk of the work went to just a handful of law firms, according to state data obtained from the Rhode Island Center for Freedom and Prosperity.
The top billing law firm was Adler Pollock and Sheehan, which was paid $440,332 in fiscal year 2013. A close second was Orson and Brusini, at $426,707. None of the other 58 law firms and individual attorneys came even close, with the third ranking law firm pulling in $71,851. (See below slides for the top 20 highest paid firms.)
“It’s definitely conspicuous that, in a state with so many lawyers, two firms would stand so far ahead of the rest in payments from the state government. This just shows how important it is for the public to have access to this information in a transparent way that can be used easily. It’s impossible to look at the data without finding something that should be investigated,” said Justin Katz, the research director for the Rhode Island Center for Freedom and Prosperity.
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The top two billing law firms have both been involved in some of the most high-profile legal battles on behalf of the state. Adler Pollock and Sheehan is representing the state in its defense of the 2011 pension reform law, which is now headed for a trial in September. The firm was paid about $226,000 by the General Treasurer’s office in 2013. Adler Pollock and Sheehan has also served as legal counsel to the formerly named Economic Development Corporation and is now being sued for malpractice in connection with the failed 38 Studios loan guarantee.
State campaign finance records show that attorneys at Adler Pollock and Sheehan are major contributors in the local fundraising circuit. Overall, firm employees account for a total of $170,520 in local political contributions since January 2010. About $15,000 in contributions went to former House Speaker Gordon Fox, with Gov. Lincoln Chafee and Senate President M. Teresa Paiva Weed each receiving $10,000 during the four-year period.
The other top law firm, Orson and Brusini, is tied to the Central Falls bankruptcy case, serving as legal counsel to the state-appointed receiver for the city. But only half of the firm’s legal bills stemmed from its work in Central Falls in 2013. The remainder, about $211,000, was for the Executive Office of Health and Human Services.
State campaign finance records show that partners at both firms are consistent political donors to local firms. Attorneys at Orson and Brusini have donated $11,350 to local campaigns since January 2010. About a tenth of that went to Chafee.
An attorney at Adler Pollock and Sheehan declined comment yesterday. Ted Orson, the attorney at Orson and Brusini who has done the most state government work, did not respond to a request for comment.
In fiscal year 2012, Orson and Brusini was the top earning law firm, hauling in $767,183 in legal fees from the Department of Revenue, which oversaw the receivership. “The legal bills in DOR are never as high as they were in the years that you’re referencing,” said Rosemary Booth Gallogly, the director of the department. Not only did the state incur costs in federal court, it also had to defend itself against a lawsuit filed by the city council, according to Booth Gallogly.
“That’s definitely a blip on our radar screen,” Gallogly said.
Although the state incurred the costs, the city will have to pay it back, Gallogly added in an e-mail. (She did not specify when that will happen or how much has been remunerated to date.)
Use of outside attorneys questioned
The increased legal costs have come even as Chafee has attempted to tamp down on fees for outside counsel. Soon after taking office, Chafee issued a mandate to have all outside legal counsel for the state to cut their fees by 15 percent, effective March 1, 2011, according to state officials.
State records indicate that that 15-percent limit is still in effect. The rule has made legal costs less than what they otherwise would have been across state government, according to an annual report issued by the Department of Administration. For example, thanks to the 15-percent rule, the Department of Revenue—even as it incurred record high legal fees to deal with the Central Falls bankruptcy case—still spent $123,093 less than what it would have without the rule, according to the report.
Some question why the state has to turn to outside legal counsel, when it has an Attorney General’s office with roughly one hundred attorneys on staff—not to mention the in-house legal counsel that many state agencies have on their payrolls.
“Why when you have numerous lawyers working for the state, in the Attorney General’s office and in other state agencies—why in all but things … that involve the most unique and arcane legal questions do you need to go to outside the state?” said retired state Superior Court Judge Stephen Fortunato, now a law professor at Roger Williams University.
Fortunato asked who decides when outside counsel is need and what criteria are used to determine that in-house counsel should not be used. He wondered if the issue is one of legal expertise or staff resources.
“And if we don’t have the people, then why don’t you hire some more people?” Fortunato added.
State needs ‘World Series’ litigators
Outside attorneys indeed do bring much-needed expertise, according to state Rep. Bob Craven, a former state prosecutor for the Attorney General. He said most in-house attorneys are not litigators, requiring state officials to turn to a firm like Adler Pollock and Sheehan if it is going to defend the pension reform law in court.
“You don’t send an inexperienced baseball player in the World Series in the ninth inning,” Craven said.
Another type of expertise provided by outside counsel is bond work, which can only be performed by attorneys who have been industry certified, said Craven, a Narragansett Democrat who remains a practicing attorney.
Craven said he was not surprised by the amounts charged by firms like Adler Pollock and Sheehan, which he said has an hourly billing rate as high as $475 an hour. “So it’s not hard to get to $400,000 if you’re billing at that amount per hour,” Craven said.
The real issue may not be the cost of outside legal counsel—but rather the very notion of having public work performed by private attorneys, according to Keven McKenna, a local attorney who ran as an independent candidate for Attorney General in 2010. When he worked in the Attorney General’s office in the mid-1970s, McKenna said the practice was discouraged. “The notion that private entities can represent state employees or state entities we thought was a conflict of interest,” McKenna said.
McKenna said private attorneys may not have the same commitment to the public interest as state-employed attorneys.
Fortunato disagreed that could become an issue. He said attorneys—no matter their employment circumstances—have a professional obligation to always serve their client’s best interest.
“They strap on their sword and get on their horse and charge,” Fortunato said.
But McKenna points to the 38 Studios debacle as an example of why public agencies should not hire private attorneys. He noted that Adler Pollock and Sheehan is now being sued by the state over its work on the failed loan guarantee deal. “38 Studios is the absolute proof in the pudding,” McKenna said.
Other surprises in the top 20 list
Beyond the top two billing law firms, the data turned up some surprises. For example, Kevin McHugh, listed as providing $15,000 in legal services to the General Assembly in fiscal year 2013—the same year that he is also listed as the full-time senior assistant city solicitor for the City of Providence, earning a base salary of $87,352.
McHugh was the 14th highest billing individual or law firm for the state.
Also, a former top aide to Providence Mayor Angel Taveras, Matt Jerzyk, ranks 20th on the list. Jerzyk has since left city employ, but at the time he was working for the state legislature he was still the deputy city solicitor for Providence.
Attorneys for the city law department are implicitly permitted to do outside work according to the provisions of the city’s charter, which only bars the city solicitor himself from receiving “any salary from any source other than provided for the office of city solicitor.” The charter specifically prohibits the solicitor from conducting “any private practice while serving in said office.”
Fortunato said he did not see any problems with city attorneys—other than the solicitor—doing private practice on the side. “Working for two different sovereigns may be different,” he added, noting that an attorney working for the both the city and the state would have to be “scrupulous” to avoid any conflicts of interest.
Judiciary racks up legal bills too
The available data reflected legal fees for two branches of state government—the executive and the legislative. But other documents obtained by GoLocalProv indicate that the state Judiciary has also racked up major bills with outside legal counsel.
One local attorney, Marc DeSisto, has billed state judicial authorities at least $59,177 in roughly the first four months of 2013, according to copies of invoices submitted to the state court administrator.
McKenna said DeSisto has been hired to handle just one case of alleged attorney misconduct—involving himself. Such cases are normally handled by staff attorneys for the Disciplinary Counsel for the state Judiciary, but McKenna says the state Supreme Court is expending extra resources to find evidence of his own misconduct. He says the high court is retaliating against him for challenging what he says is former state Supreme Court Chief Justice Frank Williams’ violation of separation of powers.
A spokesman for the state Judiciary confirmed that outside counsel had been hired in McKenna’s case, but he was unable to confirm the name of the attorney or the amount spent to date. He also did not comment on why outside counsel had been sought in the first place.
“They have him chasing me around federal court, workers comp court, looking for something I did wrong,” McKenna said.
Stephen Beale can be reached at [email protected]. Follow him on Twitter @bealenews
Related Slideshow: 2013 RI State Legal Vendor Payments
The below slides list the top 20 law firms that received the most work from the state government in fiscal year 2013, based on state data obtained from the Rhode Island Center for Freedom and Prosperity. For each firm, the departments that hired it and the type of work it did are also listed.
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