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In-house law: savings for the city?

(Third of three parts)

With legal fees for civil work exceeding $250,000 in seven of the last 10 years, reaching $555,000 in 2002, the question arises of whether the city could save money by hiring a full-time, on-staff attorney – what’s known in the trade as “in-house” counsel.

The question has been asked before, most recently in 1997, in the wake of a consultant study of city management.

“We talked about it then, but never got into a detailed analysis,” said Andy Maron, an attorney who served on the council at that time. “We couldn’t see much advantage in terms of costs.”

But costs have almost doubled since 1997, from $284,000 to $555,000, a number that Maron said might warrant another look at the issue.

On a purely financial level, the question is straightforward.

Outside attorneys charge what may look like nosebleed hourly rates – Kaseguma bills the city $165 per hour – but that pays for all the overhead costs of secretaries, office space and law libraries. And when the city doesn’t have any legal needs, it isn’t paying anything.

Last year, the city paid Kaseguma’s firm $266,484 for general counseling – answering questions from city officials and attending most council meetings. Assuming that work was split evenly between Kaseguma and two of his partners, who bill at a slightly lower rate, the city still bought only 1,700 hours worth of lawyer time for the money – less time than a single full-time equivalent.

As both Maron and Bremerton City Attorney Roger Lubovich stress, an in-house law department requires more than a single attorney.

At the very least, an attorney would need some secretarial help, and would likely need a combination secretary and paralegal.

And both Maron and Lubovich note a single attorney could not do all of Bainbridge’s legal work – particularly all litigation, which is time-intensive. Outside attorneys would have to be brought in on at least some lawsuits, and to consult on particularly technical matters.

“In some specialty areas, it makes more sense for me to hire somebody who is already up to speed than to get up to speed myself,” said Lubovich, who has a $5,000 per month budget to engage outside counsel.

Where there is enough work to keep in-house counsel busy, though, the economics become compelling. Bremerton has budgeted $435,000 in 2003 for its civil legal work by Lubovich, two other civil attorneys on staff and an additional one in the budget, and a secretary assistant.

“Among the three of us, we do almost all of the litigation,” Lubovich said.

Mercer Island has a three-person office – two attorneys and an assistant – but one of the attorneys concentrates on misdemeanor criminal prosecution, which Bainbridge contracts out. Costs for that office in 2001 – the last year for which figures were available – was $357,000, including $30,000 for outside services.

Bainbridge’s same-year costs for both civil and criminal work were $492,000.

At one point recently, Bremerton’s in-house attorneys all left, and weren’t replaced, letting the office become vacant. Island resident Lubovich was hired to rebuild the office.

“Doing it with outside attorneys just gets too expensive,” he said.

What would an in-house capacity cost? If Bainbridge adopted the Mercer Island model, but continued to contract out its criminal prosecutions, one attorney and one non-lawyer assistant would be involved.

Lubovich said the “going rate” for an experienced in-house attorney is roughly $100,000, and a top-flight assistant can cost almost half that much. Adding 26 percent in benefits, and the package could come to almost $200,000.

That’s not all. No provision was made for an in-house attorney in the new city hall, Maron said, so nearby office space might be needed. And some legal-research capability is necessary – some combination of a law library and a computerized legal-research service, items on which Mercer Island spends between $10,000 and $15,000 per year.

Better service?

Where the real benefits can come in, Lubovich said, is in the costs avoided by integrating an attorney into the city’s decision-making process, and in the higher level of service that can be offered to city officials and the citizenry.

“When I was outside, I was always reacting,” he said. “Here, I can be proactive. All contracts and ordinances come through our office. Police officers in the field can give us a call if they need help.

“We can meet with applicants at the planning counter – we’re right there to help them, dealing with things before they become issues.”

While calling the in-house decision a policy matter for the city, Kaseguma warns of potential pitfalls.

“Sometimes things can get past us,” he said, “but if you had only one attorney in-house running to court and depositions, that person would have less time than we do.

“By having three or four attorneys available here at any one time, we can get to emergency matters much faster.”

Another potential area of cost savings is in what might be called “shifted costs” – legal work that non-lawyer city staffers do on Bainbridge.

“We are in the process of completely revising our code, and that’s all being done in this office,” Lubovich said.

By contrast, Bainbridge has a senior planner assigned to a similar project.

While litigation is the driver of Bainbridge’s civil-law costs, accounting for more than half the money paid out in 2002, Lubovich said an in-house presence can reduce those costs in three ways.

Working with outside counsel can help control and manage costs, in part by doing shouldering some of the work, he said.

Early legal involvement can prompt decision-makers to take a less-risky approach to achieving their objectives.

“We can offer some insights. People come into this office with one program, and walk out with a whole different approach to the same problem.”

Third, up-front, proactive management may be able to head off litigation. Bremerton, Lubovich said, is party to very few lawsuits, “and we don’t end up paying much.”

“I can’t tell you what claims we might have had if we weren’t here,” he said, “but in the long run, in-house attorneys save a lot of money. You just get more bang for your buck that way.”

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Under both city ordinances and state law governing cities like Bainbridge Island, a city attorney must be appointed by the mayor and confirmed by the city council.

Mayor Darlene Kordonowy recently expressed an interest in having legal consultation more readily available.

“I’m actively exploring the possibility of having one of the attorneys (from the Bellevue law firm with which the city contracts) attend department-head meetings, and be in our offices one day a week,” she said, a move she described as a possible first step towards an in-house city attorney.

City Administrator Lynn Nordby said he thinks an in-house attorney is be worth considering, but would bring practical difficulties.

“That wasn’t part of the program for city hall,” he said, “so we would need to find space for an attorney, whatever secretarial help they would need and space for files. It’s not an insoluble problem, but it would take some thought.”

He said the question of in-house or retained counsel is “almost routine” among city administrators, and he frequently receives surveys asking about satisfaction with the city’s arrangement.

He said that the tendency of most cities is to change from retained counsel to in-house, particularly as a city gets larger. Going from in-house to retained, he said, seems to happen only where the city is unhappy with its attorney, or when there are too few qualified municipal attorneys to fill the available jobs.

Bremerton City Attorney Roger Lubovich, a Bainbridge resident, says part of his job is to conduct informal mediations, such as talking with both a planner and an applicant when a dispute arises.

Planning director Stephanie Warren, whose department is the heaviest user of the Inslee, Best attorneys, and whose field – land use – is the subject of much of the litigation involving the city, said the outside attorneys are “very responsive,” and that she did not believe their location compromised the level of service they could provide.

City council member Michael Pollock said he can’t see any advantage to in-house legal services.

“Since I call on the telephone, it doesn’t matter what the number is,” Pollock said. “With the Internet, email and the ability to transfer files, the issue is the quality of legal services, not where the attorney is located.”

Sam Granato, the former mayor who hired Kaseguma in the first place, strongly supports continuing the city’s relationship with Kaseguma and his firm.

“A person on the staff is subject to all kinds of influences,” he said. “Rod Kaseguma has been with the city for a long time, and has a tremendous record of being very fair and handling his duties well.

“Unless there is some real dissatisfaction with the services being rendered, and I haven’t heard of any, I would strongly support continuing the relationship.”

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