Monday, September 12, 2011

Outside attorneys cost state millions in 5 years

Lawyers will get up to $275 per hour in a case involving unemployment office closings

Iowa's state government has spent almost $6 million during the past five years to pay for work by attorneys not on the state's payroll.

The majority of expenses come from lawyers charging $200 or more an hour, which is at least 2? times the state's intended rate, a Des Moines Register review of public records shows.

"I am concerned," said Kelli Soyer, executive director of the Iowa chapter of the National Association of Social Workers. "They continue to say we don't have money for essential services for families in need, but we have money for outside legal fees?"

The issue surfaced last week when Republican Gov. Terry Branstad successfully urged the state's Executive Committee to hire outside attorneys to represent him in a case challenging the constitutionality of his line-item budget veto and consequent closure of 36 unemployment offices. He said the lawyers' expertise is crucial to provide him adequate counsel in the case.

Officials from the Iowa Attorney General's Office ultimately recommended the Executive Council agree to Branstad's request. But they acknowledged they could have handled the case with attorneys already on staff. Instead, the state hired individual lawyers from the Nyemaster Law Firm that will cost taxpayers up to $275 an hour. The firm has Republican ties.

Iowa Treasurer Michael Fitzgerald, a Democrat, voted against hiring outside counsel and publicly complained about the rates. But Branstad's staff later noted that Fitzgerald executed a $440-an-hour work order earlier this year to hire attorneys from the Dorsey and Whitney law firm, which has Democratic ties.

Fitzgerald insisted a key difference in the cases is that the Attorney General's Office said it did not have staff on hand with the expertise to handle Fitzgerald's bond-related legal matters, which public records confirm.

Both sides, nonetheless, agree they're concerned about the costs of outside counsel.

"From our perspective, it seems rather high," Tim Albrecht, a Branstad spokesman, said about the five-year total.

But Albrecht also said that in some cases such expenses are necessary.

"When our office is sued and challenged on the constitutional powers of the office of the governor, we have no choice but to vigorously defend not just ourselves, but the office of the Iowa governor as a whole in order to preserve these powers for future governors," Albrecht said.

The Executive Council has a general cap of $80 an hour for outside attorneys but routinely approves higher fees when deemed necessary. The council waived the cap at least 18 instances in the past five years. In 14 of those, firms were paid $200 or more an hour, ultimately costing almost $4.8 million.

Leaders in other states and cities also have wrestled with outside attorney costs recently. In Rhode Island this year, the state cut the wages paid to private lawyers doing contract work by 15 percent, saving the state an estimated $445,000 a year.

City officials in Glendale, Ariz., were left to defend spending $23.3 million in legal fees in the past five years, including $10.5 million in outside costs.

Eric Tabor, chief of staff to Iowa Attorney General Tom Miller, noted that the case generating the highest outside attorney fees, roughly $1.7 million, involved the battle with tobacco manufacturers. That case helped Iowa collect hundreds of millions of dollars in settlements for harm tobacco products did to Iowans, he noted.

The second most expensive case, costing the state almost $1.2 million for outside attorneys, involved a lawsuit regarding Medicaid payments. The state won the case and expects to claim a significant amount of the attorney costs from the plaintiffs, Tabor said.

The Iowa Attorney General's office handles the majority of cases for the state. However, sometimes outside counsel is needed because of either a conflict of interest or lack of staff with expertise in certain areas of law, such as the tobacco case, Tabor said.

The Attorney General's Office gets almost $7.8 million of its funding from the general fund, the state's chief operating account. If the tobacco and Medicaid lawsuits were excluded, the average annual cost to the state for outside attorneys is around $600,000 a year, which Tabor described as reasonable.

"It certainly is a lot of money, but when you look at the kinds of things the state is involved with, that seems fairly reasonable," Tabor said.

By Jason Clayworth


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