May 30, 2006
Over a four-month period, legal and management firms charged Los Osos taxpayers almost $1 million to fight and settle multiple lawsuits, handle personnel issues and find a way to pay for a sewer project stalled by years of political infighting.
None of the bills, obtained by The Tribune through the California Public Records Act, exceed the terms in the firms' contracts with Los Osos Community Services District.
But administrative costs charged by the district's primary law firm, Burke, Williams & Sorensen, are high enough that one legal expert contacted by The Tribune chided the lawyers for turning their office equipment into what she described as profit centers.
Steven Onstot, an attorney with Burke, Williams & Sorensen, declined to comment for this report.
The district paid its legal and management bills with money from a state loan until April, when a judge blocked it from using those funds.
District officials say they now will have to find a way to continue paying the approximately 23 lawyers, paralegals and engineers from the different firms it employs.
$1 a page, per fax
Between Dec. 1 and April 1, three law firms and one engineering firm charged the Los Osos district nearly $1 million.
About $332,600 of that was from bills submitted by Burke, Williams & Sorensen for work performed by 19 lawyers and paralegals.
While the district blacked-out the exact nature of the work from invoices, the firm's bills were grouped into several categories including board issues, sewage-treatment planning, and the various lawsuits filed against the district since it stopped construction on a long-planned-for sewer project in early October.
That move, which followed a recall election that replaced the majority of the district board, led to the loss of a crucial $135 million low-interest state loan, $6.6 million in fines from regional water quality regulators, and more than 15 lawsuits filed against the district by citizens groups, the contractors hired to build the project and regulatory agencies.
Burke, Williams & Sorensen's contract with the district spells out hourly rates for lawyers and paralegals that range from $105 per hour to $240 per hour, which are not unusual in the industry.
But the contract doesn't specify how much the firm would charge for expenses and administrative costs.
In that four-month period, Burke, Williams & Sorensen billed the district $1 for each page it faxed, and 20 cents for each page it copied - almost three times what copy shops such as FedEx Kinko's charge.
In all, the firm billed the services district a combined total of $942 for copying and faxing. That was one of the highest overhead-related bills.
In comparison, the firm charged $1,233 for driving between its Los Angeles offices and Los Osos, $206 for long distance and cell phone charges, and $39 for parking fees.
'Reprehensible'
"For a law firm to turn the fax machine and the photocopy machine into profit centers is unethical and is an embarrassment to the profession," said Lisa G. Lerman, a professor of law at Catholic University Law School in Washington, D.C., after The Tribune reviewed the firm's overhead costs with her.
Lerman argues that lawyers charge high hourly fees so they can cover staff salaries and overhead and that any additional charges should be billed at cost.
"For a firm to do this in billing a government agency is especially reprehensible," she said.
But other legal experts say a firm cannot perform some tasks at cost because of the additional staff required to complete them.
According to James C. Turner, the executive director of HALT, a legal-reform organization based in Washington, D.C., firms that bill two or three times the market rate for some services are not uncommon.
Turner said it's up to the party that hires the law firm to pay attention to the "frilly stuff around the edges" of the agreement.
"When they go into a situation, they have to be smart about it," he said.
The California State Bar, which would not comment for this report, recommends lawyers consider 11 different points when billing a client.
Those include looking at the amount of the fee compared to the value of the service performed and the time and labor required.
Officials justify costs
Lisa Schicker, the district board's president, said board members recalled in September are to blame for about 80 percent of the district's current legal problems.
The previous board majority took payment of a $6.4 million state loan and began construction on the highly contentious project about one month before the recall, a decision the current board decries because of the uncertain political climate at the time.
"We're all paying now," Schicker said. "This board is mopping up a mess, and it's costing a huge amount of money."
Both Schicker and Interim General Manager Dan Bleskey said they didn't think Burke, Williams & Sorensen's overhead costs were out of line.
Schicker, however, said the district would consider discussing the firm's rates.
"It doesn't sound like it's too different (compared to other firms). But that doesn't make it right," she said.
Schicker said the district will also be looking for ways to continue paying its legal staff as it begins to craft its budget for the next fiscal year, which starts July 1.
How Los Osos bills add up
Bills accrued by the Los Osos Community Services District are from law firms - Burke, Williams & Sorensen, Leibold, McClendon & Mann, and Shipsey & Seitz - and Willdan, the Orange County-based engineering firm that provides the district with staff members, including its $140-an-hour interim general manager, Dan Bleskey.
The total bill includes settlement payments made to Burke Williams and Sorensen after board members, elected in a September recall election, dropped five pre-recall lawsuits initiated by activist groups associated with current board members.
Burke, Williams & Sorensen: $332,614
Leibold, McClendon & Mann: $161,223
Shipsey & Seitz: $70,046
Willdan: $182,184
Settlement payments: $246,000
Total for Dec. 1 to April 1: $992,067
Source: Los Osos Community Services District documents obtained under the California Public Records Act
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