Council approves audit in Lodi pollution suit

Lodi City Council members approved signing a contract with Barger and Wolen, a San Francisco law firm, to audit outside billings in the city's ongoing contamination litigation.

The audit, which came on a 4-1 vote at a special public meeting Tuesday morning, will include a thorough review of all invoices submitted to the city by Envision Law Group and an analysis of the city's financial agreement with that law firm.

To date, the city has spent some $25 million on pre-trial litigation. The trial, in the federal district court in Sacramento, is scheduled to begin next month.

In 2000, the city sued 15 businesses, including the News-Sentinel, and insurance companies with hopes they would pay to clean up groundwater contamination. Envision is the city's co-counsel in the suit.

On Tuesday, Envision attorney John Meyer attended the meeting to outline what he called potential conflicts of interest involving Barger & Wolen. Meyer said that Barger & Wolen had at one time represented an insurance company involved in the ongoing litigation. He also submitted a 13-page letter addressing the same issue which was filed with the City Clerk's Office on Tuesday.

The decision to seek an audit is based on issues raised by council members, the media and citizens concerning the financing of the litigation, its cost to the city and probable duration, Mayor Larry Hansen said.

"I don't see a light at the end of the tunnel when it comes to spending (on the lawsuit)," Councilwoman Susan Hitchcock said Tuesday.

Hansen has met with the firm's attorneys on several occasions. Both he and Hitchcock have checked references supplied by Barger & Wolen.

On Tuesday, Hitchcock said the references she contacted described attorneys with the San Francisco law firm as being both thorough and ethical.

Hansen said one client told him that the firm has a very open agenda.

When it comes to Lodi, the attorneys plan to do a line-by-line audit, but are not sure how much they can finish before the Jan. 13 trial date. It will take "three months, at least," attorney David McMahon told the council Tuesday.

They will search for trends and add up figures to see if they can be reconciled with work actually done on the case.

An outside consulting firm may be obtained to electronically scan each invoice, and attorneys hope to work with attorneys from the city's insurance firm to get further reports with hopes it will save the city additional money.

"It's hard too say if 20 hours or 100 hours was appropriate without actually seeing the work product," McMahon said in references to Envision's billing methods.

Robert Levy, also an attorney with Barger & Wolen, said, "It's like building a $20,000 house or building a $20 million house. They could both be legitimate, it's just what's behind that house."

Once the audit begins, the attorneys plan to apprise the City Council of findings on probably a monthly basis, McMahon said.

The firm is also being asked to review the financial agreement with Lehman Brothers, a Wall Street firm that has helped fund the litigation.

Although he said it is not always the case, Levy told City Council members on Tuesday that he believes there is insurance money available to pay for the contamination.

"It has been clear in our work that (insurance companies) will be called upon to fund clean up. I say this as a generality."

The firm has worked with a number of insurance companies, some of which are involved in the city's litigation. In its disclosure of potential conflicts of interest, however, McMahon wrote that the firm will terminate its representation of a company whose case has been stayed by a judge.

But Meyer said Barger & Wolen could use information it found during the audit for a client at a later date.

"Mr. Meyer raises a very valid point, except that it's not applicable here," Levy said, adding that the firm is not being chosen to represent the city.

Hitchcock said there must be a reason why Envision is protesting so much.

"When I get a 13-page rebuttal on conflicts, it's just indicative of the responses we get from Envision."

In the end, at the urging of Councilman Keith Land, the council decided to have Hansen call the State Bar ethics hotline to confirm there is no conflict of interest.

Councilwoman Emily Howard, however, voted against the contract, instead suggesting the council look for another firm with no conflicts.

But Hansen replied that this is the right firm and the fact that it has experience with the billing practices of Michael Donovan, Envision's lead attorney, is an advantage.

"They know what they're looking for," Hansen said.

The council voted on Nov. 19 to retain Barger & Wolen and finalized the hiring Tuesday morning. Although they approved a $50,000 initial retainer at that time, on Tuesday the amount discussed was only $10,000.

But Hansen said at the meeting it could go higher.

"It could end up costing us $100,000 or more," he said.

Barger & Wolen was founded in 1976. Since then, it has grown from nine lawyers in one office in Los Angeles to more than 70, with offices in Los Angeles, San Francisco, Newport Beach and New York, the firm's Web site says.

The firm has established itself as a commercial law firm whose clients range from Fortune 500 companies to relatively small concerns, both domestic and international.

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Council approves audit in Lodi pollution suit

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