Ex-Mayor Sues Beverly Hills Over Fee Raise for Law Firm

A former Beverly Hills mayor has filed a lawsuit contending that the city violated the California Constitution when it approved a retroactive fee raise for the private law firm that acts as the city’s attorney.

George Slaff contends in the lawsuit that the City Council’s decision on Sept. 6 to raise the law firm’s fee from $725,000 last year to $840,000 this year is illegal because the increase takes effect retroactively on May 1, 1988. The city has been represented by the firm Richards, Watson & Gershon since May 1, 1987.

Gregory Stepanicich, the firm’s chief attorney in Beverly Hills, said the raise was necessary because the firm spent at least $260,000 more than it was paid by the city during the first year of service.

But Slaff charges that the raise violates a 100-year-old provision of the state Constitution that forbids public bodies to “grant extra compensation or extra allowance to a public officer, public employee or contractor after service has been rendered or a contract has been entered into and performed in whole or in part. . . .”

City officials said they waited until after last April’s City Council election to put the fee increase up for a vote because they wanted the new council to have a say in the matter. Because three incumbents did not run for reelection, it was clear that a new majority would be formed after the election, officials said.

Under the terms of the city’s contract with the law firm, the firm’s original retainer was to have been renewed automatically for a second year unless the firm told the city by March 2, 1988, that it wanted to terminate service. Representatives from the city and the law firm agreed it would be in the best interests of both parties if the law firm continued to work for the city until the new council could vote on the fee increase.

Hearing Set Dec. 28

The suit was filed Oct. 21 in Los Angeles County Superior Court. A hearing to determine whether to order the law firm to pay back the excess fees--about $33,000 to date--has been scheduled for Dec. 28, Slaff said. Slaff also wants the city to cut its payments to the firm to the original rate and to pay him for attorney’s fees.

Slaff, who is a lawyer, was a member of the Beverly Hills City Council from 1966 to 1978 and served as mayor from 1968 to 1969 and from 1975 to 1976.

Beverly Hills Mayor Robert Tanenbaum on Tuesday refused to comment on the lawsuit because it is pending in court. During a discussion of the matter at the council’s Sept. 6 meeting, Tanenbaum insisted the fee raise was legal.

“We believe the law is very clear on this subject and the facts are clear,” he said. “We must do away with a presumption of nefariousness.”

Council member Allan Alexander said Tuesday the council voted to approve the fee increase only after another law firm, hired by the city last August to look into the matter, said the increase was legal.

Legal Opinion

“I and the other members of the council relied on legal counsel on that matter, and I don’t think anything unconstitutional was done,” Alexander said. “At this point we’ll have to leave it to the judicial system to see if any impropriety was done.”

The City Council asked for the opinion from the firm Liebert, Cassidy & Frierson after Slaff first objected to the proposed fee increase on Aug. 2. Slaff said the choice of that firm presents a possible conflict of interest because the firm negotiated the original contract between the city and Richards, Watson & Gershon.

The opinion concluded the increase was legal because recent court decisions have upheld similar retroactive payments by government bodies. But Slaff said all the cases cited in the opinion involve payments that had not been fixed. In the Beverly Hills case, however, the city was required to pay the law firm $725,000 for the second year unless the firm asked for a raise by March 2, which it did not.

Recommended Firm

Ironically, it was Slaff who recommended Richards, Watson & Gershon to then-council member Tanenbaum when the city was looking for a private city attorney two years ago. But Slaff said he has changed his opinion of the firm, which is considered among the best municipal law firms in the state.

“They (the law firm) are advising the city to do something (grant the raise) where they have an interest that is contrary to the interests of the city,” Slaff said. “I think it’s an example of very shoddy ethical practice, and I regret it.”

Stepanicich, the firm’s chief attorney in Beverly Hills, denied that the firm pressured the city into making a bad decision.

“It’s unfortunate that he (Slaff) would make that statement,” Stepanicich said. “The agreement was reached to amend the retainer to reflect the level of service we were providing. There was absolutely no question that what was done was legal.”