Back in February, when we posted on the City Attorney position, an ad hoc “legal services review committee” was interviewing staff and preparing a report on a model of legal services which would best serve the City and the taxpayers in the long run. We stressed the importance of comparing apples and apples-- the City’s total legal costs, not merely the cost of the City Attorney position itself— when Council considered the various models.
In 2004, the City Attorney salary was raised from part time to full time, as were the budget lines for his secretary and his general office expenses. In the previous year, 2003, the City Attorney had been paid a salary of $40,649. With his part time secretary’s salary and their full benefits packages included, the total cost for the office was $63,183. In 2007, the City Attorney’s salary was over $84,000 and the grand total spent on his “department” was $142,374. (See our December post on this for a complete analysis).
One of the rationalizations given to the public for the switch to a full time salary for the City Attorney was that “outside legal bills” would decrease. (Click here to read the official council minutes from that discussion in 2004). That made sense—in theory. Outside legal counsel-- for the City it’s usually the Rochester power house firm, Harris Beach-- comes with a hefty price tag. A full time municipal attorney would be able to handle more legal work and therefore less of it would have to be outsourced. “Outside legal services” would be required only when there was a conflict of interest (for example, if the City Attorney could not represent the City because he was already representing a client dealing with the City) or when there was a highly specialized legal task to be performed that was beyond the expertise of the City Attorney. So, it seemed reasonable to conclude that the total amount that the City would spend for legal services would actually decrease. Let’s test that theory.
The formula for calculating the City’s total legal expenses for any given year is straightforward. Let’s call all costs on the City Attorney budget line “inside costs”; and all billable hours from outside firms, “outside costs”. Here’s the equation:
So, if the inside costs go up, by increasing the City Attorney position to full time, then the outside costs presumably would go down. That’s because more legal work would be handled in-house, and at a much lower rate. Ideally, total legal costs should go down, or certainly they should not increase.
As it happens, in response to our previous post on the topic, concerned citizen Ken Camera informed us that he had actually FOILed all invoices for all of the City’s outside legal expenses for the past six years. Camera received copies of all the invoices for outside legal fees paid out in the few years prior to the City Attorney position becoming full time and for all the years since then.
Here’s what the record shows.
In 2003, when the City Attorney served ‘part time,’ the “inside costs” for legal services were $65,640. That same year, the City paid out $23,969 for work done by other legal firms (“outside costs”). Plugging these numbers into the formula, here’s what you get:
$65,640 + $23,969 = $89,609 Total City Legal Costs
In 2005, the first full year that the City Attorney received a full time salary, the “inside costs” for that year were $141,396 and the “outside costs” were $25,124.
$141,396 + $25,124 = $166,520 Total City Legal Costs
In other words, total legal costs went up.
The next year, 2006, “Inside Costs” were $146,304 and “Outside Costs” were $24,346.
$146,304 + $24,346 = $170,650 Total City Legal Costs
In other words, total legal costs went up again.
For the most recent year, 2007, “outside costs” did dip a bit below the 2002 and 2003 levels, but the total legal costs were still $161,468.
The total legal costs with a full time attorney have been almost double the total legal costs with a part time attorney. So while there may have been other reasons for changing the position in 2004, cost savings was not a realistic one.
Immediately following the change, the former City Manager Rich Rising was quick to point out that the ‘outside legal services’ line in the budget had decreased. This made us believe that the city was actually seeing a cost savings for legal services. But he did not point out that the outside legal fees were being charged to individual departmental budgets, and were therefore contained in several different budget line items. The FOILed records allow a lump sum approach and allow for an ‘apples to apples’ comparison.
As one of his first actions, Mayor Einstein appointed a legal services review committee to re-evaluate the various aspects of the City Attorney arrangement. It made good business sense for him to do so, and we believe this calculation is an important piece of data for the overall analysis. The committee must determine what is needed from both a service- and a cost-perspective, and the City Council should respect those findings. Of course, it is essential that everyone have the full set of data, to determine what the city has paid and might expect to pay in the future.
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