Wednesday, December 17, 2014

Boo hoo for Hogan Lovells

Posted By on Wed, Dec 17, 2014 at 2:57 PM

As we celebrate the holiday season, and the final few months of Mayor Steve Bach's term, let us shed a tear for Hogan Lovells lawfirm, who might see its gravy train end when Bach leaves office in May or June. (The timing depends on whether a runoff in May is needed in the mayoral race.)

It's been a very lucrative ride for the firm, which did no business with the city prior to Bach being elected in 2011. Then, during his campaign, it assisted Bach with campaign legal matters, and voila, pay dirt.

In 2012, it collected $484,727 in fees from the city, which turned out to be a pittance compared to the last two years.

In 2013, the city paid the firm $1.67 million, and this year, through November, nearly $1.4 million. In fact, Hogan Lovells received more than 58 percent of all outside legal fees paid by the city, excluding Springs Utilities, in the last two years. That total is more than $3.5 million.

Hogan Lovells has been hired to do a lot of different kinds of work, from employment law to City for Champions to the federal bankruptcy case involving the Banning Lewis Ranch annexation agreement (which is ongoing) to handling the Memorial Hospital lawsuit with the Public Employees Retirement Association, which ended with the city paying PERA $190 million. Hogan Lovells' tab for the PERA case alone was $2.3 million.

Hogan Lovells did virtually no business with Utilities during that time, and Utilities has actually seen its legal bills gradually diminish over time, from $2.9 million in 2010 to $1.7 million this year, through November. Which is understandable as regulatory and land acquisition issues dissipated with progress on the Southern Delivery System pipeline that will bring water in 2016 from Pueblo Reservoir. Utilities also spends money on bond counsel when issuing bonds or refinancing existing bonds at a lower interest rate.

So to recap, in 2013, the city paid nearly $3.1 million in outside attorney fees, with $1.67 million of that going to Hogan Lovells. This year, the total, through November, is $2.1 million, with Hogan Lovells collecting nearly $1.4 million.

Nice work if you can get it.

But all good things must come to an end, so with the departure of Bach, will Hogan Lovells still be on the receiving end of city taxpayer-funded work?

We asked the four leading candidates for mayor about their philosophy regarding outside legal counsel and whether they had a "favored" firm. They responded via email. 

Attorney General John Suthers:
click to enlarge Suthers
  • Suthers
Given my extensive experience, I will be able to assess, in consultation with the city attorney and council, whether the city needs outside legal counsel in a particular matter. There are certain legal matters requiring expertise the city attorney's office typically doesn't have. For example, using outside water counsel in several matters involving the Southern Delivery System was very prudent. In each such matter where the city needs outside counsel, firms with appropriate expertise should be asked to present proposals and a merit based selection made. My experience will also be of assistance in the screening process.
Former Mayor Mary Lou Makepeace:
click to enlarge Makepeace
  • Makepeace
There are times outside legal counsel is called for when there is special expertise required or timeliness;  i.e. staff is not able to do research in the required timeframe.  I do not have a preferred law firm but would look to engage those who have experience/expertise in the matter at hand.

$24 million [the five-year total spent on outside counsel] is a big number but I would want to review the cases referred before I commented.

My expectation is that the referred cases are not routine legal matters but are of a level of complexity that would reasonably justify the expense.
El Paso County Commissioner Amy Lathen:
click to enlarge Lathen
  • Lathen
Outside legal counsel should be hired only for specialities, which are not represented via in-house counsel. In most cases, this limits excessive costs and keeps the focus on the specific legal issues at hand.

I do not have a "favored" law firm, nor will I as Mayor of Colorado Springs.

If the decision is made that outside counsel is necessary, then speciality legal counsel relevant to the specific issue or the RFP process will be considered.
Former City Councilor Joel Miller:
click to enlarge Miller
  • Miller
In the next couple of weeks, I will be providing action plans on my website for my administration once taking office. I will provide one specifically for the City Attorney's Office. In the meantime it is clear that outside legal counsel certainly has a place in local government, and it is permitted in the Charter. It is especially reasonable if a particular expertise is required that our City Attorney's office does not possess. However, I think we can all agree that Mayor Bach's use of outside counsel was excessive. In my opinion, he used Hogan Lovell for issues for which they did not have particular expertise; he hired the law firm for Information Technology work,
when, surely, an IT firm would have been a better match. Mayor Bach also received work product from outside counsel that would've been beneficial to share with City Council, and he chose not to share that work product, even when Council requested it. Lastly since the authority to hire outside counsel in the Charter rests with City Council, procedures must be put in place to seek approval from and provide expense information to City Council.

Both branches need to work more cohesively with regard to the City Attorney's office and outside counsel. We should all be working for the same client, the people of Colorado Springs.
The following information was provided by the city in response to Colorado Open Records Act requests:

Total legal expense, including enterprises such as Utilities:

2010: $4.86 million
2011: $5.5 million
2012: $5.36 million
2013: $4.7 million
2014: $3.8 million (through November)

Utilities' legal costs:

2010: $2.9 million
2011: $2.7 million
2012: $1.8 million
2013: $1.65 million
2014: $1.7 million

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