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City spending millions on outside attorneys

March 6, 2012
photo - Memorial Health System Photo by THE GAZETTE FILE
Memorial Health System Photo by THE GAZETTE FILE 

Lawyers from the private sector have billed the city of Colorado Springs more than $7.5 million since 2010, an amount that new City Attorney Chris Melcher hopes to rein in.

In 2010, the city and two of its enterprises, Colorado Springs Utilities and Memorial Health System, spent more than $3.66 million on outside counsel.

The figure grew to $3.92 million last year, according to documents obtained by The Gazette under an open-records request.

The expenses are for a variety of matters, including personnel issues, the city’s governance and ownership review of Memorial and complicated negotiations with the federal government for the $2.3 billion Southern Delivery System water pipeline.

“Outside counsel are retained by the City for a variety of reasons, to include special subject matter expertise, extraordinary skill in complex matters, or to assist in any other matter where the City has insufficient staff attorney resources or would benefit from outside assistance,” city spokesman John Leavitt said in an email.

Melcher, who started working as city attorney in October, said one of his goals this year is to “make a significant reduction in outside counsel fees” by hiring qualified attorneys to handle more of the work. Melcher said he filled one of five openings in the City Attorney’s Office in January and that he’s “actively engaged” in filling the others.

“It’ll be very important for the city and for my office that we can fill those with highly qualified, hard-working individuals so that we continue to bring more of the legal work in-house and continue to reduce outside counsel fees,” Melcher said in an interview.

Melcher said his office is budgeted for 50 people, including 31 attorneys.

“As a comparison, Denver has over 100 attorneys budgeted, so we are staffed very thinly compared to peer cities,” he said. “I’m not asking for more positions. I’m not asking for any more money. I’m just saying that we are very thinly staffed.”

The issue of outside counsel reached a boiling point last month when City Council members said they wanted to hire another lawyer to review a controversial legal opinion from Melcher that some say favored Mayor Steve Bach over the council.

Melcher bristled at the suggestion of council retaining outside counsel, saying the move would create conflict. He said there was a big difference between hiring outside counsel to help his office and hiring another lawyer to review his legal opinion.

“The reason you want to hire another lawyer is because you want to get an opinion you like better,” he told council President Pro Tem Jan Martin, who proposed the idea.

The $7.58 million in outside counsel fees since 2010 includes more than $56,000 the city has paid Kelly, Stacy & Rita LLC, to investigate alleged financial wrongdoings reported by Terri Velasquez, the city’s former chief financial officer, after she was fired. The investigation is nearing completion, Melcher said.

The figure does not include contracts for 2012. Those include:

• The international law firm of Fulbright & Jaworski, LLP, which was hired to help with the negotiations to lease Memorial to University of Colorado Health.

Melcher said the law firm and the city have agreed to a $395-an-hour “blended rate,” which means that a senior attorney who would typically charge up to $700 an hour and a more junior attorney with an hourly rate of about $250 will both be paid $395 an hour.

Melcher said the city is discussing the amount of the contract but that UCH is expected to pick up the bill as part of its bid.

“We don’t anticipate that the outside counsel for Memorial should cost the city any money at all,” he said.

• The city retained Howard Boigon, a partner at Hogan Lovells, to assist the new Oil and Gas Committee as well as the City Attorney’s Office in its litigation and negotiation with Ultra Resources, which wants to drill on the Banning Lewis Ranch.

The contract with Boigon and another lawyer from Hogan Lovells is for a blended rate of $395 an hour and is not to exceed $100,000, Melcher said. Melcher said his office also agreed to hire a paralegal for 20 hours a week to help the committee.

• Melcher is deciding between two law firms to investigate allegations that the city failed to provide proper oversight of a grant that El Pomar Foundation provided to help retain the U.S. Olympic Committee in Colorado Springs.

• The city also retained Hogan Lovells to inspect the financial records of the Colorado Springs Urban Renewal Authority. Melcher said he still hasn’t formed a budget for that project.

Bach has ties to the Hogan Lovells law firm.

During the mayoral campaign, Bach hired a managing partner of the law firm’s Colorado Springs office to help clarify questions about corporate campaign contributions.

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