Political Ties Helped Hertzberg as Attorney

In the two years since he left the Legislature, Bob Hertzberg has parlayed his political connections into a lucrative law practice representing public and private entities, including an auto repair chain accused of defrauding thousands of California consumers.

The former Assembly speaker has made as much as $1.1 million a year working for the Los Angeles office of Mayer, Brown, Rowe & Maw, records show -- not by appearing in court but by strategizing behind the scenes.

For the last two months, the Los Angeles Times has repeatedly asked Hertzberg, now a candidate for mayor of Los Angeles, to identify his law clients. Hertzberg initially said the names of his clients were protected by attorney-client privilege. Recently, he changed his rationale and said he could not disclose the identity of his clients because of a confidentiality clause in the law firm’s contracts.

Hertzberg advised his clients in a Feb. 3 letter that the newspaper was seeking their names. “Although transparency has always been a hallmark of my service in government, this request by The Times needs to be balanced against my professional responsibility as an attorney to protect the confidentiality of my clients,” Hertzberg wrote. “I want to be clear that you are under no obligation to let my campaign release your firm’s name to the press.”

Seven of Hertzberg’s 20 clients agreed to be identified. Nine clients refused and four clients did not respond to the letter, said Hertzberg campaign spokesman Matt Szabo.

The clients who agreed to be identified were the Los Angeles Community Redevelopment Agency, the city Department of Water and Power, the Los Angeles County Economic Development Corp., the Metropolitan Water District of Southern California, nationally known builder KB Home, Bay Area-based Western Water Co. and Caliber Collision Centers.

Hertzberg’s 2003 income from Mayer, Brown, Rowe & Maw, one of the world’s largest law firms, was reported as more than $100,000 -- the highest category listed -- on a financial disclosure statement filed last year. The $1.1 million figure came from court filings during a child support dispute with his ex-wife. The details on his clients were drawn from public records, interviews and statements from Hertzberg’s campaign. In the case of private firms, no disclosure is required by the clients and it is unclear how much Hertzberg has been paid or if his employment continues.

One of Hertzberg’s clients, Caliber Collision Centers, hired him when the firm faced a two-track state investigation by the Bureau of Automotive Repair and the attorney general. The Irvine-based firm was accused of defrauding thousands of Californians by charging for auto repairs that were never performed.

Hertzberg spokesman Szabo released a statement saying that Hertzberg was retained by Caliber to “advise and develop a legislative strategy for client regarding enforcement measures of the Bureau of Automotive Repair.” Caliber was engaged in a full-court press to change state laws and regulations to narrow the definition of fraud.

But Hertzberg also intervened during a November 2003 meeting to try to persuade the attorney general’s office and the auto repair bureau not to act against Caliber, sources said. During that meeting, the sources said, Hertzberg mentioned that he was a member of incoming Gov. Arnold Schwarzenegger’s transition team and argued that the agency’s interpretation of what constituted fraud was wrong. The sources refused to speak publicly.

In a telephone interview Saturday, Hertzberg acknowledged that he had participated in meetings with Caliber’s lawyers on the suit filed by the attorney general.

Pressed for details about the November 2003 meeting, Hertzberg abruptly interrupted the interview, saying that he needed permission from the client to talk further. He said he would call back in five minutes, but a half-hour later Szabo called to say that Hertzberg would have no further comment.

Caliber’s effort was not successful: A month later, Atty. Gen. Bill Lockyer filed a $50-million consumer fraud case against Caliber, which operates 38 auto repair shops in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Fresno counties.

“These repair shops have systematically defrauded California motorists, ripped them off and betrayed their trust,” Lockyer said at the time.

As the suit was pending, Schwarzenegger removed Patrick Dorais as chief of the Bureau of Automotive Repair. Consumer advocates saw the move as retaliation for the agency’s vigorous pursuit of Caliber.

Dorais did not respond to requests for an interview. The governor’s press secretary, Margita Thompson, said he was replaced as part of an effort to fill state government positions with Schwarzenegger appointees.

Thompson and Hertzberg spokesman Szabo said Hertzberg did not talk to the governor about removing Dorais.

Last August, without admitting fraud, Caliber agreed to pay $5.8 million to settle both the attorney general’s lawsuit and the enforcement actions brought by the Bureau of Automotive Repair. It was the second largest consumer fraud settlement involving auto repair shops in California history, state officials said.

“Caliber violated the trust of thousands of consumers who came to its shops to get their cars and trucks fixed,” Lockyer said.

At the same time that he was advising Caliber, Hertzberg was working for KB Home, one of the nation’s biggest builders of housing. The company hired Hertzberg in late 2003 to analyze the risk involved in trying to develop property near Lake Piru in Ventura County. He also provided advice about a project in Riverside County.

“Bob was retained as a real estate lawyer with development expertise and very keen instincts” about the risks involved in obtaining development approvals, said Larry Gottlieb, KB Home’s associate general counsel.

Hertzberg also worked as a consultant to the Los Angeles County Economic Development Corp. after he had stepped down last year as the group’s chairman to run for mayor.

“We hired him to think through some financing solutions for transportation projects,” said Lee Harrington, president and chief executive officer. Harrington said Hertzberg also examined ways to move goods from the ports of Los Angeles and Long Beach through the five-county region.

Besides the corporations, Hertzberg’s clients included two Los Angeles city departments -- the Community Redevelopment Agency and the Department of Water and Power.

Hertzberg was recruited by Mayor James K. Hahn -- the man he is seeking to unseat -- to lobby Los Angeles County supervisors to drop their opposition to expansion of a redevelopment zone in downtown Los Angeles. The expansion would have extended the zone’s boundaries to areas on the outskirts of downtown, including around Staples Center, where developers want to build a $1-billion hotel and entertainment complex.

County supervisors had sued to stop the expansion because it could have deprived the county of property taxes. Hahn brought Hertzberg in -- at $400 an hour -- to negotiate a settlement.

“I knew that Bob had a very close relationship with Supervisor Gloria Molina,” Hahn said. “So, I thought he would be able to help, you know, kind of build a bridge to Supervisor Molina based on his skills as a lawyer, as a legislator, and of course because of the longtime personal and political relationship that he had with her. Unfortunately, it didn’t work.”

Hertzberg was unable to broker a deal. In total, the redevelopment agency paid Mayer, Brown $50,985 for Hertzberg’s services from May 2003 through May 2004.

Hertzberg and the firm were also hired by the DWP to address accusations that the nation’s largest municipal utility had sold power during California’s energy crisis at inflated prices like Enron and other generators.

“We were afraid that DWP was going to be lumped in there,” Hahn said. “So we wanted someone who could help with his skills in Sacramento and make sure that people understood what DWP’s true role was.”

State Sen. Joe Dunn (D-Santa Ana) was then holding hearings on the energy crisis -- and the DWP was one of his targets.

“Basically, I provided strategic advice to the city,” Hertzberg said. Eventually, federal energy regulators absolved the DWP of wrongdoing. The agency spent $63,800 for Hertzberg’s services, the city attorney’s office said. (At the same time he was representing the DWP, Hertzberg was a senior consultant to Fleishman-Hillard, which had a public relations contract with the utility.)

Since Jan. 1, Hertzberg has been on a leave of absence from his law firm, although court records show that it continues to pay him $25,000 a month, plus benefits.

Though Hertzberg would not release his client list to The Times on the grounds that doing so would violate confidentiality, he said that if elected he would give that list to the city attorney. To avoid any conflict of interest, he would not meet with any former clients or members of the law firm for one year after taking office, Hertzberg said.