City Attorney Paul McMurray has been terminated “without cause” by the city, effective May 15.

According to a letter, obtained by a public records request, written by interim City Manager Lee Walton and sent to McMurray on April 20, the city manager said that it was necessary to let McMurray go because he was interested in contracting out legal services to save money.

“After much reflection it is my determination that it may be appropriate to contract for legal services,” Walton wrote. “Accordingly, I am hereby notifying that your employment as the City Attorney with the City of Bainbridge Island is terminated without cause.”

Walton wrote that the decision had nothing to do with McMurray’s performance.

“Please understand that this termination is without cause and does not reflect in any way upon your performance as city attorney to Bainbridge Island,” he wrote. “In fact, I have very much appreciated working with you and have valued the advice and legal services you have provided me, the City Council and the city administration.”

Walton implied earlier this week that McMurray was pursuing “other opportunities.”

“The time came when he felt he had other options,” Walton told the Review. “We’re going to miss him I’m sure.”

In a subsequent interview, Walton confirmed his termination of McMurray.

McMurray did not return phone calls this week requesting comment.

The city will pay McMurray a severance package of six months salary, 4 percent deferred compensation, health, dental and vision benefits for six months and any unused vacation, according to Walton’s letter.

According to the 2009-10 budget, the city attorney position pays between $97,000 and $122,000. City Finance Director Elray Konkel said McMurray’s salary falls in the upper portion of the range.

Walton said the council exerted little influence on McMurray’s departure, but it will be up to the next city manager and the council to decide if they want to contract legal services long-term.

Until then, Walton said, the city will employ the legal firm Inslee-Best, which has a long relationship with the city, to handle its legal matters.

“We think it will prove to be perhaps more cost-effective, but we won’t know until we have more experience,” Walton said.

A member of Inslee-Best’s staff will be at City Hall one day a week, Walton said, and others will be available at all times by phone and email.

Until 2005 the city used outside legal services exclusively, but the decision was made to add a city attorney to stem legal costs.

Since then, the city has been involved in a number of lawsuits that required the efforts of the city attorney and several outside experts. Some councilors felt that with the legal load on the city, it will be necessary to maintain the attorney position.

“As an interim step, I think it’s fine [to use outside representation], but longer term I expect we’re going to need a full-time, on-site attorney,” said Councilor Barry Peters. “We’re a city with a great many legal issues and citizens that aren’t reluctant to sue the city, so long term it’s hard to imagine how we could cope effectively without someone full-time.”

Mayor Bob Scales, who was a member of the council five years ago when McMurray was hired, said the change in structure hasn’t led to savings in legal fees.

“The fact is our litigation costs have continued to climb, and even though we have budget cuts, the litigation costs haven’t fallen,” Scales said. “It’s become a larger and larger portion of the budget, and more and more difficult to pay for.”

While it remains unclear when the council will decide whether or not to retain the position, it will make a call on funding the city attorney position in the next biennial budget.

The city will pay Inslee-Best an hourly rate. According to Inslee-Best attorney Rod Kaseguma, the city will work primarily with senior partners, junior partners and associates. Senior partners run around $210 an hour, while junior partners and associates are about $190 hourly.

The loss of McMurray comes in the midst of a critical period for the city. Not only does it face a litany of litigation and complaints, but labor negotiations are coming up this summer, a process McMurray was heavily involved in last time around.

“Paul has been very instrumental in the negotiation of labor contracts, and he won’t be there [when] we have labor contracts this year,” Konkel said.

McMurray came to Bainbridge Island from Yakima, a city of 80,000 with 700 municipal employees, where he served as senior assistant city attorney. He holds a JD from the University of Oregon Law School, where he served as associate editor of the Oregon Law Review from 1988-90. He earned a bachelor’s degree in history and political science at Oregon State University.