Jury Criticizes County’s Lax Oversight of Legal Costs

The Orange County Grand Jury charged Wednesday that the county counsel’s office has failed to adequately review millions of dollars in billings from private lawyers hired by the county and does not keep track of their hours and caseloads.

The grand jury said the county relies so much on outside legal help that officials are spending more on private attorneys than on the entire county counsel’s office, which has a $4.1-million budget for fiscal 1988-89. So far this fiscal year, which ends June 30, the county has paid $4.5 million in fees to outside lawyers.

In a report issued after a four-month review of the county’s in-house legal department, the grand jury also questioned the use of “open-ended contracts” when hiring outside law firms for county work. In one instance, the grand jury said, a private firm was retained in February, 1985, in a dispute with a contractor; the cost of necessary legal work was estimated at $75,000. The case has yet to be resolved, and the Century City firm of Wickwire, Gavin & Gibbs has been paid more than $650,000 to represent the county.

Although the Board of Supervisors regularly appropriated payments to the firm, the grand jury’s report says the counsel’s office does not have a program for evaluating the “progress and effectiveness” of work by those or any other outside attorneys.

“This signified the need for increased management overview of outside contracts,” says the 26-page report, prepared by the accounting firm of Arthur Young.

“Some activities in that office are little loose,” said Joann Cox, a grand jury member who chaired the review of the county counsel’s office. “It is our conclusion that things need some tightening.”

To that end, the grand jury, among other things, recommended that:

* The county counsel develop an inventory of all outside legal contracts to be monitored and reviewed by the department’s lead attorneys.

* A ban be imposed on all open-ended contracts, which rarely have limitations on total fees or termination dates.

* The Board of Supervisors develop a long-range strategy for strengthening its own legal staff rather than spending more money on outside attorneys.

County Counsel Adrian Kuyper acknowledged some of the criticisms Wednesday and blamed part of the problem on his department’s heavy workload. He said his office must rely on outside legal assistance to cover the myriad complex legal issues confronting the county. Kuyper’s 74-member staff includes 39 attorneys. For his office to closely monitor all private attorneys working for the county, as suggested by the grand jury, would be nearly impossible, Kuyper said.

All monetary claims against the county, including minor personal injury lawsuits, are automatically sent outside, Kuyper said. Kuyper said his staff could handle many of those cases, but they are now sent to the risk management office and never reach the county counsel.

“A great variety of outside counsel is hired to work with various county departments,” Kuyper said. “For someone from my office to attend all the meetings, depositions and hearings just to make sure those attorneys are putting in their time is unrealistic. We do go over the bills as best we can.

“But at some point you have to have a lot of faith and trust that they are doing what they say they are doing,” he said.

The grand jury also found that the county lacks any policy as to how private law firms should be selected.

In some cases, according to the report, county departments have retained outside legal assistance without consulting Kuyper, the chief lawyer for the supervisors and county departments. In other cases, the report says, no one bothered to find out if the counsel’s staff could do the work itself, thereby saving taxpayer money.

Only twice, according to the report, has the Board of Supervisors asked to see a list of firms the county uses before it approved a firm recommended by a department or Kuyper.

Kuyper said Wednesday that his office chooses firms whose work he is familiar with. Other departments make their choices on the same basis, he said.

To reduce dependency on outside attorneys and trim the county’s annual legal bill, the grand jury recommended that the counsel’s office be expanded. It recommended that the county administrative office initiate a study to examine if any savings might result from adding more lawyers to Kuyper’s staff to handle matters now parceled out to private attorneys. Kuyper said he would welcome such a move. “It is definitely worthy of a study to determine whether it is economically sound,” he said.

One reason for the hiring of outside attorneys is a lack of depth and expertise among attorneys in Kuyper’s office, the grand jury report says. Grand juror Cox said the county counsel’s office hires too many attorneys “straight out of law school,” who lack seasoning and experience in dealing with complex issues, such as land-use. Cox said the county should consider an “in-house” training program to help educate and brief its own attorneys on such matters.

A recent case in point involved John C. Funk, a specialist in environmental law. Funk, a private attorney who served as a county legal consultant for nearly three years, was forced to resign earlier this year because he also represented the Irvine Co. Funk, who was paid about $85,000, prepared environmental documents for the county on the proposed Gypsum Canyon jail site, a parcel owned by the Irvine Co. Because of his intimate knowledge of the Gypsum Canyon jail issue and environmental law in general, Funk’s departure was viewed as a significant setback because there was no one on the county counsel’s staff adequately qualified to immediately take over the job.

One of the items Kuyper said he will be seeking in next year’s budget is funding for an environmental law expert on his staff.

“I have often wondered whether we need to do more in-house work, particularly on land-use matters like development agreements,” Supervisor Don R. Roth said. “It has been my contention that we could do some of it at less cost.”

One of the law firms mentioned in the grand jury report--Los Angeles-based Nossaman, Guthner, Knox & Elliott--has been under scrutiny by the county’s two tollway agencies for racking up more than $1.2 million in legal bills in the last 2 1/2 years.

John Meyer, executive director of the tollway agencies, is considering a proposal to hire a salaried staff attorney to take over some routine legal work now handled by the Nossaman firm.

The same law firm has been the subject of recent controversy for representing several developers potentially affected by county decisions on highway and tollway financing.

Officials of the firm, however, have denied any wrongdoing. A two-man tollway board committee assigned to review the Nossaman firm’s legal work concluded earlier this year that it could find nothing improper about its billings but suggested that some money could be saved by hiring a staff attorney.

The grand jury reviewed county contracts held by 26 firms, according to the report.

Of the 11 names that appear on a list showing firms that merely advise county officials as opposed to representing them in court, seven are contributors to the political campaigns of county supervisors and one--Paul, Hastings, Janofsky & Walker, of which John Funk is a member--operates a political action committee that is a major contributor to Supervisor Harriett M. Wieder.

Of 15 firms that have handled litigation for the county, four have made contributions to supervisors’ campaigns.

Times staff writer Jeffrey A. Perlman contributed to this story.

OUTSIDE LAW FIRMS HIRED BY THE COUNTY The Orange County Grand Jury charges that the county counsel’s office fails to adequately monitor the cost and performance of private lawyers hired to represent the county in special matters. These are among 26 firms mentioned in the grand jury report: Firms (City): Pillsbury Madison & Sutro (Los Angeles) Purpose: Irvine Co. Assessment Appeals Paid to Date: $1,557,302.50 Firms (City): Weissburg & Aronson (Century City) Purpose: Medicare cost and transfer of Medical Center to UCI Paid to Date: $1,252,460.52 Firms (City): Wickwire, Gavin & Gibbs (Century City) Lillick, McHose & Charles (Los Angeles) Purpose: Weir Canyon bridge lawsuit Paid to Date: $652,731.72 /$68,273.53 Firms (City): Ball, Hunt, Hart, Brown & Baerwitz (Santa Ana) Purpose: Challenge to county’s housing plan Paid to Date: $565,512.11 Firms (City): Kadison, Pfaelzer, Woodard, Quinn & Rossi McDermott, Will & Emery (Newport Beach) Paul,Hastings, Janofsky & Walker (Costa Mesa) Purpose: Challenge to development of Katella and Theo Lacy jail sites Paid to Date: $341,983.51 Firms (City): Siemon Larsen & Marsh (Newport Beach) Purpose: Created development agreement format used by county Paid to Date: $334,399.68 Firms (City): Gatzke, Mispagel & Dillon Purpose: Airport advice Paid to Date: $228,136.81 Firms (City): Gatzke, Mispagel & Dillon Siemon Larsen & Marsh (Newport Beach) Purpose: Development agreement and Aliso Viejo tract map Paid to Date: $181,910.47 / $11,277.20 Firms (City): Stradling & Yocca (Newport Beach) Purpose: Airport construction contracts Paid to Date: $160,205.10 Firms (City): Stradling & Yocca (Newport Beach) Purpose: Foothill Corridor Phasing Plan Paid to Date: $127,993.51 Firms (City): Nossaman, Guthner, Knox & Elliott (Costa Mesa) Purpose: Assist Transportation Corridor Agency Paid to Date: $92,675.09 Firms (City): Kadison, Pfaefzer, Woodard, Quinn & Rossi Paul, Hastings, Janofsky & Walker (Costa Mesa) Purpose: Environmental impact reports on three jail sites Paid to Date: $82,302.88 Firms (City): Capretz & Kasdan (Irvine) Purpose: Case challenging conditions at Juvenile Hall Paid to Date: $73,415.07 Firms (City): Rourke & Woodruff (Orange) Purpose: Case on medical benefits for retirees Paid to Date: $25,894.45 Source: Orange County Grand Jury report