From the bleak day in December 1994 that Orange County declared bankruptcy, the meter has been running. When lawyers and financial consultants enter the meeting rooms, each tick of the clock means more dollars spent. The county has to work harder to keep costs down.
Last month the Board of Supervisors approved a change in policy and agreed to pay fees to two or three “top attorneys” at meetings about bankruptcy-related lawsuits. The old policy was to pay just one top attorney’s fees. The old rule was better.
Why not pay one attorney and let that person relay information to the other one or two? It might be nice to have flocks of lawyers in a room, hashing out a case, but not when Orange County is being billed $300 to $395 per hour per attorney. Worse, the change in policy was made retroactive, so that more than a dozen meetings for which the county paid only one lawyer will now be rebilled, with extra attorneys covered.
So far the county’s bills for legal and financial help from outside firms have run to $42 million. That does not include millions more earned by some financial firms early in the bankruptcy. Nor does it include $50 million set aside just for lawsuits, especially the one against the Merrill Lynch securities firm, which sold the county many of the investments that went bad.
The supervisors certainly should not forget that three lawyers from the same firm once billed the county more than $1,100 for talking to each other, although they could not agree on how long they had talked.
There remains a valid question whether the county should have declared bankruptcy at all, despite the loss of $1.64 billion in its investment fund. Once the bankruptcy path was chosen, big bills were inevitable. Still, that should not mean the sky’s the limit.