Watchdog Report: Too Much?

When he was appointed last February as Hanford's legal counsel, attorney Robert Dowd swore he wouldn't bill the city more than $250,000 a year -- no matter how busy he might get.

Dowd, a personal injury and business litigation lawyer, went so far as to say that if he reached that cap in a month, he wouldn't get paid a penny for the rest of the year.

This was the sales pitch he made when he stood before an audience of residents on March 29, 2007, explaining how his contract could be a money-saving proposal for taxpayers because of the limit.

And the people nodded, including the city council members who had hired him on that condition.

One year has since passed.

It turns out Dowd's law firm, Griswold, LaSalle, Cobb, Dowd & Gin of Hanford, has billed the city more than it originally said it would bill.

In fact, the numbers have gone far beyond.

During the contract period between Feb. 21, 2007, and Feb. 21, 2008, the firm has billed -- and the city has paid -- a total of $381,328 in legal fees for 2,342 hours of work claimed, city records show.

That's a figure more than twice the amount billed during the last three years that Kahn, Soares & Conway of Hanford was the city's legal counsel. The number of lawyer and paralegal hours claimed in a year also nearly tripled since Dowd's firm took over the job last February, city records show.

In fact, the amount is higher than the city has ever paid before.

'Everybody walked away from the table happy.'

The attorneys at Dowd's law firm's charge an hourly rate ranging from $115 to $215, with Dowd charging the highest. When his firm took over last year, Dowd called his $215-an-hour fee a "gift" to the city.

But city documents show Hanford's legal representation cost skyrocketed when Dowd's law firm took over.

Hanford was previously represented by attorney Michael Noland with Kahn, Soares & Conway for 18 years until the fall of 2006.

According to the city, a retainer agreement with Noland paid his firm $6,000 a month for routine legal matters and $165 an hour for special matters, such as litigation and real estate matters.

Between 2003-2006, the city spent an average of $159,304 a year for legal representation by Noland.

Dowd's law firm is far more expensive.

Over the past year, Dowd's law firm charged the city an average of $31,865 a month, while Noland charged the city $13,274 a month during the last three years of his city representation.

Dowd's law firm billed the city of Hanford for 2,342 hours in lawyer and paralegal services between February 2007 and February 2008. That represents 2.6 times the hours seen in a typical work year when Noland was the city attorney, billing records turned over by the city show.

The figures came to light as the result of California Public Records Act requests The Sentinel filed late February through March, and inspection of the records with a certified public accountant.

Dowd justified the bill, saying it's a cost associated with the unexpected amount of litigation and doing the job the right way.

"There have been no expenses incurred by us but for that which was either required of us or expected of us by our client," Dowd said.

The city council members maintained that it's money well spent because various lawsuits were nipped in the bud through Dowd's representation.

"I will say that our last negotiation he did was done quickly," said City Councilwoman Marcie Buford. "It was a first-class job. Everybody walked away from the table happy."

Buford said Dowd has proved over the year that his work is worth the money.

"It's money well spent. I wasn't a believer at first," she said. "I wasn't convinced of the kind of expertise we were getting for the amount of money he was asking for. Now I am."

But the way Dowd's law firm has been compensated, and the way the city council allowed it, is criticized by at least a couple of legal experts who questioned the mid-year contract change that allowed Dowd's firm to get paid more for less work. Both called it unethical, and one went as far as to call it a "rip-off of taxpayers."

Meanwhile, an elusive question remains: What did the $250,000 spending cap ever mean to people? The answer to the question is woven amidst the tangled web of contract legalese, fine print and a behind-the-scenes tacit agreement among officials that $250,000 wasn't at all the final number.

Yet the money spent to pay for the city's heavy legal bills comes from local coffers and local taxpayers.

So why not recruit a pool of law firms with reasonable experience in municipal government law with a reasonable price, and hire one that offers the biggest bang for the buck?

The city council did actually conduct a "request for proposal"-based search after Noland resigned.

As a result, 11 firms submitted proposals in December 2006.

But familiarity, rather than cost and experience, seemed to be the city council's utmost priority.

Council members ended up hiring Dowd, who had successfully bailed them out of the open meeting law violations earlier in the year.

It was then revealed that his law firm was under criminal investigation during the recruitment process for alleged fraud committed by one of its paralegals, and that Dowd's wife had made a campaign contribution to Mayor Joaquin Gonzales, who sat on the subcommittee that recommended Dowd's hiring, an obvious conflict of interest issue.

Also it came to light that the city's own documents indicated that Dowd's law firm was in fact the most expensive yet least experienced in city representation among those who applied for the job.

Amid public scrutiny, Dowd emphasized, on more than one occasion, that his proposal offered a unique bargain to city taxpayers with the $250,000 annual fee limit he set for himself.

Dowd has, however, reversed his position.

Contrary to what he said a year ago, Dowd now says he doesn't believe in that cap amount and, in fact, he never has.

'It's illegal. It's fraudulent.'

"I was not trying to mislead people. Was I trying to say where we're going to be 12 months from now given the best estimate? Yes," Dowd said during a recent interview. "If you ask me today where we're going to be on our billings to the city on April of 2009, I won't be able to tell you with specificity. But I'm comfortable saying it won't be $250,000. Could it be $400,000? Yes."

Dowd has also said other firms vying for the job were less than honest about what they would charge.

"I thought it would be a disservice to the community to say we'll do it for (a set) amount because if you read those proposals from other people, it was very limited what was going to fall within that set amount," Dowd said.

"I think the better proposal would to be honest and say, 'Here's what my hourly rate is and we'll all agree what work's going to be done and we'll shoot for a certain target.' And that was $250,000, which is not the number I said it should be."

Dowd says $250,000 was an "artificial number" imposed by the city council for the sake of budgeting.

However, Councilwoman Marcie Buford says it was a mutually agreed upon number.

"We discussed it and came to an agreement," Buford said. "Since it was discussed in an executive session, that's all I can say."

Buford did say that Dowd has voiced his opinion to the council about how much more he should get paid. And there was an understanding that the compensation would be renegotiated somewhere down the road, she said.

Dowd said he was asking for $350,000-$700,000 a year -- 1/2 to 1 percent of the entire city budget. That's a reasonable cost estimate for "proper" representation, he said.

"It isn't a $250,000 piece of work. That's the fundamental disagreement."

Yet Dowd signed the contract, based on a figure that, in his own words, he never thought was valid.

What was implicit then, Dowd says, was that he and the city council would revisit the number at another day.

That's a major foul, especially because Dowd was picked after a bid process, said Bakersfield attorney Dennis Beaver, who also is a columnist for The Sentinel.

"If he is saying he agreed to figures he never believed to be valid, if that's what he's saying, the entire bid process should be redone," Beaver said. "It's unfair competition. It's illegal. It's fraudulent.

"If the council said it wouldn't be a binding number, they are in serious violation of their own bid process."

City Manager Gary Misenhimer said it was more of an "informal" bid process.

It was a request for proposals process as opposed to a bid process, which Misenhimer said are different.

"You don't have to go through a bid process for this kind of services anyway," Misenhimer said. "It's entirely within the city council's discretion to hire whom they believe to be best qualified for the job."

That's hogwash, according to Beaver.

"If they accept bids, they are by definition engaged in a bid process," he said. "Yes, there is some fine-tuning involved. But in this case, they picked the most expensive and least experienced firm. They are ripping off the citizens of Hanford."

Another legal expert also questioned the motive behind the bid process.

"Why are you going through a bid process if they bid half the price and you don't choose them?" said Robert Fellmeth, former prosecutor and professor of the University of San Diego School of Law.

City Councilman Dan Chin explained it was to be fair.

"I can't speak for the entire council, but my reasoning was that it was a matter of fairness," Chin said. "I wanted to look for the best candidates possible."

Then there were changes to the contract adopted mid-year into Dowd's city attorney contract -- which city officials call a "clarification."

The amendment, adopted late last September and retroactive to July 1, shifted the contract period, essentially resetting the clock on the $250,000-maximum yearly contract.

Misenhimer said the purpose of the change was to match the contract period to the budget cycle.

"The original contract was from February to February. But our budget cycle runs from July to June," Misenhimer said. "It's easier for us to have all the contracts aligned with our budget cycle."

It was carried out in September because that's when the city council adopts any adjustments to the budget, Misenhimer said.

But the contract period for the city manager -- the only other city employee who works at the will of the city council -- does not begin July 1, and the city has no trouble budgeting his salary.

As a result, the $116,000 paid out to the law firm between last February and June was longer accounted for in the legal limit set forth by the original contract.

'We just clarified the language.'

A closer look into the September contract with Dowd reveals that it did more than just shift the contract period.

Verbage in the compensation paragraph also was changed so that the payment was no longer "limited" at $250,000 but merely "budgeted" at that amount.

"If we do exceed the $250,000, I want the opportunity to go argue why I still need to get paid," Dowd said.

But City Manager Misenhimer says the language doesn't change the intent of the $250,000 limit.

The amendment also allowed Dowd to bill separately for environmental litigation over private developments. The work was not specifically excluded by the original contract.

Dowd says the scope of work was revised because of the unforeseen needs since he took over.

No one could have predicted the amount of time consumed by the city on prosecution of former city managers and lawsuits brought by environmental interest groups, Dowd said.

"No one has the ability to predict what lawsuits are going to happen tomorrow. But it's a reality," he said.

It is true that new legal issues arose with resignation of former city manager Alan Christensen and his subsequent criminal prosecution, a lawsuit challenging Lowe's shopping center, and another suit challenging the city's water rate increase.

But it's also true that Dowd's bill was already near the limit in September at about $220,000, with five months still left in the contract period. Meanwhile, Dowd's firm had already billed the city nearly $30,000 for handling environmental litigation when the contract amendment was adopted in September.

Fellmeth, the professor of the University of San Diego School of Law, has a problem with that.

"Attorneys have a fiduciary duty to their client, that means you keep your word. But it's also true that legal representation is sometimes too hard to predict," Fellmeth said. "The right thing to do is to go back to (the client) before you incur the cost, not after. It's a cliche to say 'Don't ask in advance. Do it first and ask for forgiveness.' Attorneys should not be doing that."

But such a practice isn't uncommon, Fellmeth says.

"The fact is, if you are an attorney and if you are in the middle of 10 cases, you're very hard to replace," he said. "Theoretically, attorneys should not be taking advantage of their position to leverage more money from their client."

That's not how it happened, according to Councilman Chin.

Chin said that litigation arising from environmental challenges was never part of the scope of service for Dowd.

"We just clarified the language," Chin said. "The council had already known. We just clarified it for everybody. It was not a change."

Beaver opined that the contract amendment was a ploy that allows Dowd's firm to "get paid more for less work."

"He's basically saying, 'I want to get paid more because I'm doing more work than what I thought I would be doing,'" Beaver said. "He didn't mean what he said when he first agreed to that cap. Dowd needs to pay back to the city any excess compensation he was paid because of the second contract."

This contract amendment is the second major foul for the city council, Beaver said.

"If they pay him, then other law firms, which were competing for the job, are in the position of suing the city because they were rejected partly on the basis of this cap. They were denied their chance to work with the city because of unfair competition and dishonest bidding."

The reporter can be reached at 583-2429.

(May 4, 2008)