New Lodi Unified School District trustee Ruth Davis scoured the district's February bills for anything related to legal counsel. What she found surprised her.
On the March 1 agenda, the school board was asked to sign off on $300,000 for attorneys to help with the pending layoff process. There was another $100,000-plus billed from a separate legal firm.
"This is an enormous amount of money," Davis said of the expenditure. "What's that, five teachers?"
The previous month, outside legal counsel warrants totaled about $120,000. "So we're paying that per month for legal fees?" Davis said.
Because of the substantial costs, board president George Neely appointed himself and fellow new trustee Ron Heberle to a committee exploring the possibility of hiring in-house legal counsel. Since the Jan. 11 decision, the pair has begun to research how legal services are handled in other school districts.
"We're spending a lot of money — and it's a lot of money," Heberle said of the district's annual costs.
Last fiscal year, the district spent $1.9 million for legal counsel, according to a district report. The cost per student for Lodi Unified for legal fees exceeds any other in the area and is almost three times as expensive as legal costs in neighboring Galt Joint Union Elementary School District.
Legal services vary widely district to district. The charges fluctuate depending on union issues and the breadth and type of services provided, such as those for special needs students.
The oversight for legal services varies, too. Some districts prefer to hire their own lawyers to do basic legal chores, though more complex legal work is still farmed out.
Others, such as Lodi Unified, hire only outside counsel and rely on the superintendent to keep tabs on the work and costs.
Lodi Unified Superintendent Cathy Nichols-Washer defends the use of outside legal services, which often deal with specialized areas.
Among them is handling layoff notices and making sure the seniority list is accurate. Other attorneys work on construction and facility oversight, review the legal elements of programs like Individual Education Plans, and sit in during union negotiations.
A representative from a separate firm attended at least two hour-long school board meetings in case questions arose during a discussion to deny a recent charter school petition.
Heberle wonders if some of the legal services and costs can be trimmed.
"It's almost like an endless cycle using legal counsel," Heberle said.
He points to the city of Lodi, whose City Council employs an in-house city attorney and an assistant city attorney.
City Attorney Steve Schwabauer earned $136,230 last year, while Deputy City Attorney Janice Magdich earned $104,05, according to city spokesman Jeff Hood.
The total annual city attorney budget is $468,150 which includes both salaries plus a secretary.
Schwabauer said he has to use outside counsel for specialties like workers' compensation issues.
"We do almost all of our litigation in-house, but we may have a case — PCE, as an example — that is too far outside our expertise to manage," he said in an email. (The PCE case involved litigation over groundwater pollution below Downtown and central Lodi.)
"In police cases, we represent the city in-house but usually have to hire separate counsel for the officer because of the potential for a conflict of interest. But in general, our outside legal expenses are quite low," Schwabauer said.
This fiscal year, $20,000 has been set aside for unreimbursed outside counsel. Last year, the city spent about $3,500 on such costs, according to Schwabauer.
A firm has been used to defend the litigation related to the proposed Walmart Supercenter and other land-use cases, but the city bills the developer for reimbursement.
But stronger accountability might be beneficial, according to Heberle. At the city level, for example, council members oversee legal counsel's performance. In Lodi Unified, outside attorneys typically answer directly to Nichols-Washer.
In fact, Heberle said that lawyers who prepared contracts for both Nichols-Washer and new Chief Financial Officer Tim Hern had those employees' best interests in mind — not the school board's.
"There's no one in-house reviewing contracts," he added. "Schwabauer's job is to keep the city out of trouble."
Currently, the district's attorneys are speaking to lay people like Nichols-Washer, who is not an attorney, while an in-house attorney could communicate more effectively with outside counsel, Heberle said.
Reviewing contracts and joint-use agreements are among the tasks he feels an in-house attorney could handle at a lower cost.
But San Joaquin County superintendent Mick Founts said it would be hard to find one attorney who knows everything.
School districts not only follow education laws, but also civil and penal codes, special education law, workers' compensation regulations and even real estate law related to buying and selling property.
"The one thing we've found over the years is that when you have just one attorney, they don't have the breadth of knowledge needed," Founts said of his 20 years working for the county office of education. "How litigious our world has become, you need a lot of information."
Cost per student
On average, Lodi Unified spends $61.41 per student per year on legal fees. That's compared to $24.26 in the Galt elementary district and $58.84 for Galt's high school district.
In the past three years, attorney costs have gone up, in part because of accelerating personnel costs related to layoffs and negotiations.
Attorneys have also been hired to litigate against contractors for construction-related delays at McNair High School and to review a handful of charter school petitions.
"These costs can be cyclical. In some years several legal issues arise; in others, not as much," said Tim Hern, Chief Financial Officer for Lodi Unified, adding that one would have to review several years to know the true nature of the cost and be able to budget accurately for it. "(It's) the same as an insurance company looks at actuarial of its customers," Hern said.
Last school year, Lodi Unified used eight different law firms for various legal issues. Folsom-based Kingsley, Bogard, Thompson, for example, was billed for general counsel and personnel issues.
In this region, most districts are contracted with outside legal firms and subscribe to a pay-as-you-go method. Most attorneys charge by the hour, and the cost varies from specialization to specialization.
Specific attorney fees paid by Lodi Unified were unavailable.
However, last August, trustees approved a number of attorney contracts for the current school year and addendums for service in 2009-10. Although they do not represent all of the contracts, among them were agreements to provide legal services with:
- Atkinson, Andelson, Loya, Ruud and Romo for $90,000.
- Law Office of David Girard for $101,790.
- Thurbon and McHaney, L.P for $123,057.50.
- Kingsley, Bogard, Thompson LLP for $153,163.
- Kronick, Moskovitz, Tiedemann for $100,000.
It appears the state's largest school districts such as Los Angeles and San Diego Unified employ in-house counsel, although there is no state data or threshold that officially determines which districts do so, according to the state Department of Education.
In his experience working in different California school districts, Hern said, he has only worked in one with an in-house counsel.
Pleasanton Unified used that model for a few years but went back to private firms that charge by the hour, according to Hern.
"My past experience is that legal costs vary from year to year. It can be very light to very heavy, (and is) something that is very difficult to budget for," Hern said.
At the Galt high school level, the district spent about $135,000 in legal services last year, compared to a combined $128,000 the previous year, according to Chief Business Official Audrey Kilpatrick.
The costs cover areas such as negotiations/mediation, special education, litigation, employee personnel matters, facilities/contracts and general counsel advice. They do not include any legal fees paid for worker's compensation settlements handled through the district's insurance, which are paid by that group, Superintendent Daisy Lee said.
At the elementary level, the district also has contracts to provide legal services. Outside legal counsel assists with personnel matters including employee dismissal, collective bargaining matters and meeting legal requirements for employee layoffs, Superintendent Karen Schauer said.
At times, legal counsel also assists with litigation concerning student matters, and last fiscal year the district also paid for a contracted attorney to assist with a formal certificated layoff hearing involving an administrative law judge.
In sum, in 2008-09 legal fees totaled $65,000 and grew to $100,000 in 2009-10 — the increase was likely due to an uptick in the number of layoffs and the legal services connected to them, according to Schauer. So far this school year, $3,000 has been spent in legal fees, she said, but the district has yet to be billed for work with outside counsel to prepare for an upcoming certificated layoff hearing requirement for the reduction in workforce.
Firms have also been called on to prepare documents related to pink-slip notices distributed earlier this month. Districts must ensure that they are following strict guidelines on how the notices are issued and to whom, based on seniority.
Lincoln Unified, in Stockton, also saw a slight increase in legal expenses between 2008-09 and 2009-10. In 2008-09, the neighboring district spent $147,980 on outside legal counsel compared to $156,601 last school year, according to Rebecca Hall, associate superintendent of business services.
Arcohe school district, in the tiny Sacramento County of Herald, spent just over $6,400 on legal services last year, compared to $17,625 the previous year. A representative declined to give a reason for the drastic drop due to confidentiality issues related to lawsuits.
Sacramento City Unified, which serves more students than Lodi, spent slightly less on outside attorneys last fiscal year at $1.8 million. The previous year's records put the expense at $1.5 million for approximately 47,890 students.
Oak View Union School District, in Acampo, spent a mere $657 last year compared to $9,100 the previous year. It has fewer than 500 students.
New Superintendent Beverly Boone chalks up the difference to a learning curve. Former Superintendent Michael Scully sought more legal advice in his first year of tenure (2008-09) than in his second (2009-10).
To date this school year, Boone has expended $7,000.
"I'm new. I've asked a lot of questions of our legal teams. Next year, I'll know the answer and won't have to call them as much," she said.
The school district also contracts its legal services, but belongs to a consortium through the San Joaquin County Office of Education where one legal firm represents 10 small school districts under a single contract.
Oak View can receive nine hours of free legal service per year, through the office of education's agreement with the Pleasanton-based firm of Akinson, Adelson, Loya, Ruud and Romo. Using those attorneys, the county rarely contracts for further services. "We just get a better rate," said Founts, the county superintendent. "It would be difficult to have just one (in-house) attorney. When we have a firm, they can draw from other attorneys' knowledge."
Consortium members jointly pay a $48,000 retainer fee and are billed at a 15-minute rate if they exceed a set number of allotted hours, according to the public contract.
Services requested above those hours are billed at a sliding scale which begins at $150 per hour. The attorneys are available both by phone and hold regular office hours at the Stockton office of education.
Lodi Unified Assistant Superintendent Michael McKilligan has been doing his own research into which districts up and down the state subscribe to in-house legal counsel. He was unavailable for comment.
But Boone doesn't feel one can compare legal fees among districts.
"Schools don't have a choice. They have to go their lawyers to ask questions. We have to use legal services for things like negotiations," she said, adding that this week she had to confer with outside counsel regarding disciplining a special education student.
"We all know attorneys are expensive ... and I don't call them if I don't have to," she said.
Schwabauer, Lodi's city attorney, also said it is hard to make a fair comparison. "For example, it makes strong financial sense for the city to have in-house counsel because we defend a significant amount of small personal injury cases," he said.
If the school district does not have many small personal injury cases, that model may not hold true, Schwabauer added. "If all their cases are the more complicated variety that require outside expertise, they might incur those costs anyway," he said.
In the end, Heberle said he and Neely will continue to meet, although making a board recommendation may be waylaid by other matters he deems "more pressing." The district is dealing with layoffs while taking other recommendations for budget cuts.
"What good is a legal plan if all these suggestions save money but there's no way to implement them?" Heberle said.
"We don't know how this is going to end up. It just started with a question: Gee, that's a lot of money. Could we save some?"
Contact reporter Jennifer Bonnett at email@example.com.