A ‘legal’ way to rein in spending

LocalSource uses the Open Public Records Act to investigate municipal spending on legal counsel

UNION COUNTY — Union County towns spend a considerable amount of taxpayer dollars on legal representation. In fact, the numbers are staggering in some municipalities, while in others, these costs are tightly controlled.

All municipalities have legal representation that is either salaried or a separate outside contract. These attorneys protect the interests of municipalities while providing routine legal services, including drafting ordinances and resolutions and ensuring that elected officials and employees operate within the letter of the law.

However, while the procurement of these services can be different, so can the contracts they use. That is where towns can either pull the reigns in on legal costs by ensuring contracts with attorneys are not open ended or they could find themselves paying dearly for services outside the contracted amount.

How a town handles their legal representation is critical to controlling the financial impact on the municipal budget and ultimately taxpayers. But while officials dissect many aspects of the municipal budget in order to pare costs, legal representation is usually not one of them.

The New Jersey Office of the Comptroller recognized this and provided guidelines for municipalities to follow. The guidelines, called “Best Practices for Engaging and Managing Legal Counsel,” was specifically targeted at increasing legal transparency, achieving cost savings and improving contract management with legal firms.

Whether towns have applied these practices, which include developing strong policies and procedures, conducting competitive searches for legal representation and using formal detailed contracts, is still in question. Some have, but the majority of towns in Union County have not used measures that protect over billing.

The state comptroller’s office issued a report in June that looked at a number of towns to see what municipal attorneys actually earn, and the results were compelling. Not only were these municipalities not following the state’s best practices guidelines, but in many cases towns were being charged for services they never received or should have been included as part of the legal contracts made with the attorneys representing their interests.

State Comptroller Mathew Boxer said unless towns get a handle on this expenditure, they could end up spending more than they should.
“What we found were repeated failures to review legal bills and manage legal contracts in a way that looks out for taxpayers. Public officials need to scrutinize their legal bills as if they were paying for them out of their own pocket, otherwise taxpayers are going to get ripped off,” he said in the report.

Because Union County was not included in Boxer’s report, LocalSource decided to look into how local towns fared when it came to handling their legal representation.

Using the Open Public Records Act, 13 towns were asked for specific documents, contracts and records involving their legal representation for 2011, 2012 and 2013. This included copies of all bills and vouchers for all three years. Ten towns responded to this request, including Union, Cranford, Hillside, Summit, Roselle, Linden, Rahway, Clark, Springfield and Mountainside. Elizabeth, Roselle Park and Kenilworth never responded, which is a direct violation of the OPRA law.

Several of the 10 towns did not provide all the information requested, maintaining they either did not have documents relative to the request or that they did not have bills or vouchers from their legal representation for those years. These towns included Union, Linden and Roselle. Information for these particular municipalities was difficult to obtain and in the case of Union, no actual documents and no contracts were provided by the township clerk because the township attorney was an employee of the town.
In this case LocalSource relied on an interview with Township Clerk Eileen Birch and Township Administrator Ron Manzella to obtain salary information.
LocalSource found that overall, whether a town hired a salaried employee to handle their legal representation or contracted with an outside firm, the financial prudence of this decision rested with how the contracts were negotiated and drafted with outside legal firms. In some cases, such as in the case of Hillside, Rahway, Cranford and Summit, the services to be performed by the township attorney were clarified in a contract, while in other cases these duties were simply labeled “legal representation.”

To be clear, all towns regardless of whether they had a salaried employee or not, contracted with an outside legal firm either for labor negotiations, bond counsel or tax appeals. Some contracted with outside firms for all these legal services. Several even had outside counsel for litigation cases. Many of these contracts were open-ended, leaving room for billing that was not defined or explained.
The issue of all legal services performed outside of the contracted amount also was completely omitted from contracts in some towns. Many merely referred to the hourly rate that would be received for these services. In most cases this rate ranged from $125 to $155 per hour, but some towns did cap the amount that could be spent in a year.

Only three towns – Union, Linden and Roselle – brought aboard salaried attorneys, several with health benefits, to represent their legal interests.

In Linden, John Hudak has a three-year contract ending in 2014 that pays $77,777 a year, with health benefits. Hudak is also paid $76,500 as township attorney for Roselle, but without health benefits. In Union, Daniel Antonelli is paid $82,447 as township attorney, with health benefits. Antonelli also serves as assistant municipal attorney in Linden, with a cap of $30,000 on his services, if they are needed. Linden refused to produce documentation relating to billing Antonelli submitted for 2011, 2012 and 2013.

The fact that some attorneys provide legal services for other towns is not unusual in Union County. For instance, Daniel McCarthy of the firm Rogut and McCarthy is the contracted municipal attorney in Cranford, where he is paid $145 per hour for his services, with a cap not to exceed $100,000. He does not receive health benefits. McCarthy’s firm also provides legal services involving redevelopment issues in Hillside, but this is capped at $50,000 a year. He also serves as bond council for Hillside with a cap at $15,000.

In addition, McCarthy is one of three assistant municipal attorneys in Linden, but Linden refused to provide information regarding his contracted salary or if there was a cap on the amount he could earn in a year. Rogut and McCarthy also serves as public defender in Rahway, but the amount the city pays for this position was not able to be obtained by press time.

Hillside, which had the most comprehensive, detailed legal contracts with all outside firms, not only clearly defined what legal services were involved, placing caps on the yearly amount to be spent, but also required attorneys to submit vouchers with detailed information. Hillside also put in their contract that all legal firms had to notify the township when charges reached 70 percent of the contracted amount.

In many of the towns there was no clear indication what services would be performed contractually or what the charges were for those performed outside the contracted area.

For example, in Clark, after soliciting proposals from law firms, the township contracted with the firm of Triarsi, Betancourt & Wukovits for township attorney services. However, the contract only states that legal services will be provided and the firm would be paid $60,000 annually for this representation. There was no mention of how much the firm would be paid hourly for work performed outside this area even though bills were submitted above and beyond the contracted amount in 2011, 2012 and 2013.

According to records provided by Clark, the firm went over the $60,000 cap in 2011 by $46,885.60 and $62,349.94 in 2012, but this was explained only as “misc. legal services.” The state comptroller indicated in his report that municipalities had to be wary of receiving bills from legal firms that did not clearly indicate what the charges encompassed.

Boxer said “block billing,” or grouping together multiple legal services under one entry, was not clear enough for towns to determine if the charges were accurate or not. The state’s best practices checklist pointed out that a detailed description of charges, exact time spent and individuals involved was critical for a municipality to determine if the charges were reasonable. Anything less, he said, could hinder transparency, and result in a town paying more for legal services than they should.

Boxer said that even though many legal firms contend that non-descriptive billing is used to ensure that litigation strategy is not revealed or also, to keep the public from knowing closed session information involving personnel or other legal issues. This leaves towns wide open to problems. In Hillside, billing for legal services above the capped amount came to a head in July 2012 when Mayor Joseph Menza was sued by two of the outside contracted legal firms representing the municipality.

The firms, Kologi Simitz and Bauch Zucker Hatfield filed jointly in state superior court to stop the mayor from interfering in the internal payment process of the township, but Menza stood his ground. These outstanding legal bills were close to $50,000, which the mayor said were not approved by the governing body nor adopted by resolution for payment. Menza defended his stance, maintaining taxpayers had to foot the bill for this excess and he had the right to deny the expenditure.

Kologi & Simitz, who handle legal services and litigation for Hillside, were paid $37,040 in 2011, $41,041 in 2012 and $5,749 so far this year. Christine Burgess, the attorney contracted to provide routine township attorney duties for the township, is paid $125 per hour for these services. The amount she can charge annually is capped at $25,000, but she went over that amount the last several years.

For instance, in 2011, Burgess billed the township $29,722 in 2011, $34,662 in 2012 and $27,525 as of May this year. All of these charges were detailed in her billing, which detailed the issues involved and the amount of time spent to resolve the matter.
Other municipalities, such as Linden and Roselle, have thinly veiled contracts that only state that Hudak was appointed municipal attorney. There is no definitive language outlining his duties in either town nor clarifying what outside legal representation would be used if he was not available.

Linden does have three assistant municipal attorneys, including Daniel McCarthy, whose salary is unknown, Nicholas Scutari, who also serves as public defender at a salary unknown, and Daniel Antonelli, whose charges cannot exceed $30,000 a year. As previously noted, Antonelli is also the township attorney in Union, while McCarthy serves as township attorney for Cranford. Because this municipality did not provide the documents requested, there was no way to determine how much these assistant municipal attorneys made for 2011, 2012 or 2013.

NEXT WEEK: A look at how Cranford, Springfield, Rahway, Union, Summit and Mountainside handle their legal representation.

2 Responses to "A ‘legal’ way to rein in spending"

  1. Patrick Moschetti   October 2, 2013 at 10:33 pm

    Will there be any information provided about New Providence?