Petaluma’s Outrageous Legal Expenses?

BACKGROUND  

From time to time, charges are made that decisions of the City Council cause the City to incur unnecessary legal expenses. The accusation has come up again in the current “dispute” over the Council’s recent decisions about the organization of the planning function and the make-up of the Planning Commission.

Legal fees are a usual and customary component of any budget, whether corporate or governmental. In the case of Petaluma, the City Attorney’s Office provides the necessary legal services for the City. (1)

Putting aside the question of whether current claims of excessive legal/litigation fees are meritorious, I set out to secure a better understanding of the City Attorney’s Office in terms of its impact on the budget. 

To that end, I submitted a records request and received the following from the City Manager:

1. Expenditure Detail Reports (Legal Fees)

  • 2007—–103 pages 
  • 2008—–125 pages
  • 2009—–130 pages
  • TOTAL—358 pages

2. Hourly rate agreement between the City Of Petaluma and Meyers, Nave. Riback, Silver & Wilson (Petaluma’s City Attorney) 

3. Summaries of legal expenditures by the City of Petaluma for the last three fiscal years.

DOCUMENT SUMMARIES

Fiscal Year Legal Fees 

  • 2006–o7                  $1,238,031 
  • 2007–08                  $1,163,348 
  • 2008–09                  $1,074,309 (through June, 2009)

The hourly rate for legal services is $160 to $225/hour depending on the nature of the work and the legal staff employed.  

 COMMENTS & OBSERVATIONS 

I have no experience in municipal government. However, I did handle a considerable amount of litigation and managed legal budgets in the corporate world.  While I only looked at records covering three years, there was nothing in that sample that jumped out at me as out of the ordinary.

  • The overall legal budget for the three years in question is no more than 1% of the total City budget.  Frankly, I find that number to be rather low. Based on my experience, I would not normally “raise an eyebrow” unless the figure was over 5%. 
  • I next attempted to determine the portion of the legal expenses due to litigation.  Unfortunately, there were no records breaking out this information.  After reviewing the Expenditure Detail  Reports, I did manage to calculate a rough estimate for one year–roughly 12%. Put another way, litigation expenses were only 12% of the overall 1%.

My review by no means constitutes a forensic audit.  Frankly, I am not sure that one is required.

However, I do recommend that the City set up a separate litigation tracking/reporting system to make sure that litigation costs don’t create an unpleasant surprise in the future. There are some potential signs of a litigation cost bubble on the horizon. (2)

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NOTES

 (1)“The City Attorney’s Office provides timely legal staff support and advice to the City Council, City Manager, City Commissions, and City Departments in all legal matters relating to the Community Development Commission. The City Attorney is (also) the chief legal adviser for the City Council, City Commissions, and City staff.  In that role, the City Attorney’s office provides legal advice to enable staff to effectively analyze various available options and the impacts of any management or policy decision. The City Attorney’s Department consists of the City Attorney, one part-time legal assistant who supports the City Attorney’s office in Petaluma and the City Attorney department generally, as well as attorneys and support staff in the City Attorney’s Santa Rosa office, and attorneys from the City Attorney firm’s other offices assigned as needed to support City projects and issues.”  (City of Petaluma Preliminary Budget Fiscal Year 2009-2010)

Services are rendered by a law firm under an employment contract with the City. The current law firm is Meyers, Nave. Riback, Silver & Wilson

(2)  Council Agenda September 14, 2009

CLOSED SESSION 

CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION: Subdivision (a) of California Government Code §54956.9: John W. Rittenhouse, III, Kathleen C. Miller, and Spence F. Burton v. Petaluma City Council, City of Petaluma and Does 1 through 100, inclusive, Sonoma Superior Court No. SCV 245604. 

CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION: Subdivision (a) of California Government Code §54956.9: El Rose/Hayes Lane Coalition v. City of Petaluma, Sonoma Superior Court No. SCV 244939. 

CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION: Subdivision (a) of California Government Code §54956.9: Baywood LLC v. City of Petaluma, Sonoma Superior Court No. SCV 243426.  

CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED LITIGATION: Initiation of litigation pursuant to subdivision (c) of California Government Code Section 54956.9:  1 potential case.