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Published: Sunday, October 24, 2010, 7:30 AM
Jefferson County has paid more than three times as much in outside legal fees in the past four fiscal years as it did in the previous 10 years, according to county records and attorneys.
Since Oct. 1, 2006, the county has paid nearly $20 million in fees to law firms and individuals for a range of legal work. More than two-thirds of the money has gone to five firms.
"In the past we didn't have to hire many outside lawyers for anything except as bond counsel," said Charlie Wagner, assistant county attorney since 1980. "Of course, the big case now is the sewer debt crisis. .¤.¤. This has generated the need for outside counsel which is unprecedented."
The five Birmingham-based firms that collected the bulk of the outside legal fees since October 2006, according to records, are:
*Bradley Arant Boult Cummings, $5,569,102.
*Balch & Bingham, $3,160,531.
*Waldrep Stewart & Kendrick, $1,963,996.
*Maynard Cooper & Gale, $1,685,105.
*Haskell Slaughter Young & Rediker, $1,353,198.
Since the start of fiscal 2007, the county has paid a total of $19,916,257 to 44 law firms and individuals for work. That's in contrast to nearly $6 million spent in the 10 years from fiscal 1997 through fiscal 2006.
At least $8.8 million has been spent in an attempt to find a solution to the county's sewer debt crisis and other sewer department-related legal work. Another $8.5 million went to law firms representing the Jefferson County Personnel Board and the sheriff's office, which are funded by the county but hire their own outside lawyers.
Wagner said taxpayers have seen a benefit from the outside law firms. As a result of work by Bradley Arant and Balch & Bingham, he said, the county obtained a $50 million penalty payment in 2009 from JPMorgan Chase & Co. under a U.S. Securities and Exchange Commission settlement; an additional $25 million placed in a fund for residents, and a $647 million forfeiture in swap termination fees by JPMorgan.
The outside legal fees for the County Commission began to skyrocket, county officials say, when the nationwide credit crisis hit in early 2008, sending the county's borrowing costs soaring and triggering a blizzard of lawsuits from Birmingham to New York after the county disputed accelerated payments on the sewer debt.
"When you're sued and you're in that arena in New York and Washington and Alabama, you have to have representation," Wagner said. "When you go into the market like that, you have to pay the rates that these outside firms charge."
The firms' hourly rates range from $225 to $450, but most firms give the county a government discount of 5 percent to 20 percent off those regular rates, Wagner said. Even with that, "it's still very expensive to hire outside lawyers," he said.
The outside legal fees have attracted the attention of candidates running for the Jefferson County Commission in the Nov. 2 general election, who say the cash-strapped county should reduce legal costs.
Commissioner George Bowman, who has a Republican opponent in his District 1 race, said the legal fees are "a staggering amount. I would be the first to say we need to address this and try and get it into some kind of order so that we don't continue to pay these kinds of numbers."
Bowman said the commission should consider expanding the number of in-house attorneys to reduce the outside work. The county has five attorneys on staff.
Joe Knight, a Republican seeking the District 4 seat, said the county may need to cap outside legal fees.
"I think the outside attorneys' fees speak for themselves," said Knight, a lawyer. "They can get costly unless we say, 'We pay $175 an hour for outside attorneys. Whoever wants it (can apply).'"
Current commissioners, who saw the legal expenses soar on their watch, had mixed opinions on the payments.
Commission President Bettye Fine Collins and Commissioner Jim Carns said the county has no choice but to defend itself. In the past few years, that defense has included a series of unsuccessful appeals of a lawsuit challenging the county's occupational tax.
Commissioner Shelia Smoot said more smaller firms and minorities needed to be included. Commissioner Bobby Humphryes said the county attorney's office should be expanded to bring more of the work in house. Collins, Carns, Smoot and Humphryes will leave the commission after the November election.
William Stewart, retired political science professor at the University of Alabama, said taxpayers expect results when law firms get millions of dollars in legal fees.
"When you hire expensive law firms where the attorneys charge hundreds of dollars per hour for their work and the people get no benefit from it that they see, in terms of tangible benefits, I think it creates a real problem," Stewart said. "I hate to see money needlessly going to the law firm when it can go to the people in need for public services."
Some of the legal payments are out of the commission's hands.
The Jefferson County Personnel Board and the sheriff's office are funded by the commission but hire their own lawyers. The county has no say in how those agencies spend their money. Those agencies must spend within their budges.
For example, the sheriff's office spent $1.9 million with Waldrep Stewart & Kendrick between fiscal 2007 and 2009, and $1.3 million with the Riley & Jackson law firm in fiscal 2009 and 2010, according to records.
Some of those fees went to pay for lawsuits against the County Commission. In other words, the commission paid the sheriff's legal bills to sue the commission.
Jefferson County Chief Deputy Randy Christian said the sheriff's office has to have its own representation separate from the county attorney "because we are a state office and only funded by the County Commission, which produces a conflict. That aside, the volume of work generated would overwhelm the county attorney resources and they would simply contract out the litigation to other firms."
The sheriff's office handles between 25 and 50 active cases at a time, he said.
"Attorneys are much like an insurance policy," Christian said. "We all hate to pay the premiums but realize it is necessary."
The Personnel Board has hired Balch & Bingham for most of its work, and the firm has handled a number of "complicated issues" since fiscal 2007, said Lorren Oliver, the board's director.
This includes investigation, administrative hearings and appeals relating to a cheating scandal on a fire promotional test; preparation, briefing and argument of the board's successful motion for termination of its federal court consent decree; and responding to multiple court challenges relating to legislation, Oliver said.
Michael Floyd, Samford University law professor, said the County Commission, Personnel Board, sheriff's office and all governmental agencies are wise to get the best legal advice they can afford.
"It is expensive to get good legal advice," he said, "but it is even more expensive to get bad legal advice."
News staff writer Jeff Hansen contributed to this report.
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