Fallout Begins on Criticism of County’s Legal Monitoring

Officials reacted swiftly Thursday to a pointed Orange County Grand Jury report that accused the county counsel of failing to adequately monitor millions of dollars in billings from private attorneys hired to furnish advice or defend the county against lawsuits.

The grand jury’s work was praised by county Supervisor Gaddi H. Vasquez and Supervisor Harriett M. Wieder, who said she was “shocked” by the report’s findings.

“Of all the grand jury reports in recent years, this appears to be one to pay close attention to,” Wieder said. She was so concerned that she called an emergency meeting Thursday afternoon with County Counsel Adrian Kuyper and County Administrative Officer Larry Parrish.

“There seems to be some holes in our management,” Wieder said after the meeting. “I’m concerned that the county counsel’s office is the tip of the iceberg.”

She said she has asked Parrish for a status report on legal operations in all county departments.

Officials in Parrish’s office, meanwhile, announced that they will soon begin a formal study--nearly two years after it was initially requested by Kuyper--to see whether the county is paying too much to private law firms for work that could be performed by staff attorneys.

The grand jury reported Wednesday that the county has paid $4.5 million to private firms so far this fiscal year--more than the $4.1 million budgeted for Kuyper’s entire in-house staff of 39 attorneys and 34 support workers.

The grand jury specifically criticized Parrish’s office for not acting sooner on Kuyper’s request.

Parrish did not return calls Thursday from The Times.

Vasquez said he was “greatly disappointed” that Parrish had not “responded more aggressively” to Kuyper’s request.

“The numbers indicate that perhaps we have reached a threshold where it would be more prudent to hire our own (legal) people,” Vasquez said.

Board of Supervisors Chairman Thomas F. Riley agreed that the grand jury had raised some valid issues, but he was sharply critical of the panel--whose report is strictly advisory--for not interviewing the Board of Supervisors and allowing them to “carefully review” the findings before making them public.

“You would think that maybe somebody on the board might have been interviewed,” Riley said. “After all, in a sense we are the bosses.”

He added, however, that the cost-effectiveness study should be undertaken as quickly as possible.

John W. Sibley, the county’s associate administrator, said the legal expense study will begin in about a month and a half, as soon as his office has completed work on the 1989-90 county budget.

The study was not completed sooner, Sibley said, because of employee turnover and because his staff was “up to its eyebrows” in work on other matters.

‘Some Pretty Obvious Things’

Sibley said the grand jury report “didn’t go very far in actual analysis and just pointed out some pretty obvious things.”

The 26-page report, which was prepared with the help of the accounting firm of Arthur Young, was issued after a four-month review of the county’s in-house legal staff.

David Elbaum, a management consultant for Arthur Young, said Thursday that the single most serious problem in the county is not that too many outside law firms are used but that they are not adequately monitored.

Elbaum said his audit did not turn up any significant cases of the county being improperly billed, but he added that the potential exists.

In one instance, the grand jury reported that a private firm was retained by the county to do work that was estimated to cost about $75,000. Four years later, after several extensions, the contract is still open; the county has so far paid the firm $650,000, according to the report.

Kenneth C. Gibbs, a partner in the law firm involved in that case--Wickwire, Gavin & Gibbs of Century City--defended the firm Thursday, saying the grand jury report left the “impression we were ripping off the county.”

“That’s just not true,” he said.

Gibbs said his firm was hired in February, 1985, to represent the county in a dispute with the J.W. Mitchell Co., which had been awarded two contracts for county work.

‘Hotly Contested Legal Fight’

“It was a very hotly contested legal fight that got very complex,” he said. “In the end we were able to settle with the contractor and eventually recovered many of the county’s legal expenses. The county seemed to be very satisfied with the work.”

Gibbs said the grand jury report “never took into account what we saved the county. It is misleading.”

Similar comments were made by members of other firms among the 26 mentioned in the report.

Lindell L. Marsh of Newport Beach-based Siemon Larsen & Marsh, said his firm prepared 19 development agreements for the county for what he described as a relatively small fee. The county has paid the firm $334,399 so far, according to the grand jury report.

Marsh said if the firm had charged the county on an agreement-by-agreement basis, as it could have, the cost would have been much higher.

He also noted that developers who entered into agreements with the county paid a portion of the legal costs.

Always Carefully Monitored

John C. Funk, an environmental specialist who served as a legal consultant to the county for more than three years, said his work has always been carefully monitored by the county Environmental Management Agency, Kuyper’s office and the office of the county auditor-controller.

“They knew on a monthly basis of what was being spent,” said Funk, who is with the Los Angeles-based firm of Paul, Hastings, Janofsky & Walker.

Funk acknowledged that his firm made a $2,000 campaign contribution to Wieder last June through a political action committee, but he said that had nothing to do with the work he or his firm has done for the county.

“I don’t even know Harriett Wieder,” he said. “I’ve certainly never had a conversation with her.”

Funk said he also had no role in the decision to make the campaign contribution.

Of 11 private law firms that act as consultants to the county, as opposed to defending it in court, seven have made campaign contributions to county supervisors.

Riley, Wieder and Vasquez all said they rarely know who their contributors are and therefore cannot be influenced by them.

Lack of Depth and Expertise

The grand jury report says one reason for the hiring of outside attorneys is a lack of depth and expertise among attorneys in Kuyper’s office.

Experts contacted by The Times Orange County said the practice of governmental bodies turning to private firms for legal assistance is not unique to the county. The problem is especially pronounced in burgeoning suburban counties, said Lee Ruck, general counsel for the National Assn. of Counties, based in Washington.

Ruck said government officials are constantly torn over whether to build a sizeable in-house legal staff or look to the private sector for help.

In an era of complex legal issues requiring greater specialization among lawyers, Ruck said, the decision is often based on the bottom line of county legal costs.

“It’s a tough question,” Ruck said. “Do you hire someone on your staff for $65,000 or $70,000 to handle three or four specialized cases a year, or do you spend $125 or $140 an hour on a private attorney to handle those cases, and then go out and get a (new) law school graduate for $28,000 a year to handle all the little stuff?”

Sometimes More Effective

In matters involving municipal bonds, medical malpractice and police brutality, it is more cost-effective to hire outside counsel, Ruck said.

But in Orange County and others where growth is a dominant issue, he said, it is crucial that lawyers with land-use backgrounds be hired on staff.

In San Diego County in the late 1970s, officials decided to spend money to develop an experienced staff of attorneys rather than rely on outside legal assistance, except in very specialized cases. Though specific figures were not immediately available, officials estimated Thursday that the county has saved millions of dollars in fees to private firms.

“We felt it was important that we defend our own cases as much as possible,” said Tony Albers, deputy county counsel for San Diego County. “I think it has been a major cost savings.”

A Los Angeles TV station last year alleged that private law firms working for Los Angeles County had run up exorbitant bills without supervision from county officials there.