Vernon’s problems lead to huge legal fees
Vernon has long spared no expense when it comes to hiring attorneys.
But this year, as officials fought back an effort to disband their municipal government, the scandal-tainted city turned to lawyers like never before.
The blue-chip law firm that helped coordinate Vernon’s political battle, Latham & Watkins LLP, was paid nearly $7 million this year, according to records reviewed by The Times. Over $2 million more went to other lawyers and lobbyists working to defend the city.
Now, some of the city councilmen who approved the legal expenses say that lawyers have taken control of Vernon and are leaving it with a mountain of bills it cannot continue to pay.
“The law firm is running the city,” said Councilman Daniel D. Newmire. “That’s the way I smell it.”
Newmire and other city leaders agreed to speak with The Times because they said that neither Latham & Watkins nor city administrators would provide them detailed legal billings or answer other questions about the services for which the firm is charging.
The councilmen’s outspoken criticism of Vernon’s staff is extremely unusual, if not unprecedented, in a city that has been known in the past for its insularity and lack of open debate. Only about 100 people actually live in the industrial city, where three top officials have been charged with public corruption in recent years.
The councilmen also expressed alarm about Vernon’s financial condition, given the high legal fees as well as a $60-million contribution the city has agreed to make over the next decade to support community projects in surrounding cities.
“My concern constantly is the solvency of the city in the future,” Councilman Richard J. Maisano said. “Who is going to end up paying for this?”
Some in the city have questioned the councilmen’s motives, given that they have disagreed with some of the government reforms Vernon initiated in response to the disincorporation bill, AB 46. The councilmen, once among the highest paid elected officials in Los Angeles County, recently had their salaries cut by more than 60% to $25,000 a year, and term limits have been imposed.
But concerns about Latham & Watkins’ billings go well beyond the councilmen.
John Van de Kamp, the former state attorney general who is Vernon’s ethics advisor, said he also believes the firm’s rates are too high. He praised Latham & Watkins’ performance but said the hefty legal fees underscore a larger problem Vernon has in paying attorneys far too much.
“If you look at the history of Vernon in the last 10 years and the amount of money law firms have taken out before, it’s much too high and there’s no question about it,” Van de Kamp said. (He charges the city $550 an hour, which he described as a discounted rate.)
Between 2005 and 2010, Vernon spent more than $40 million on outside law firms, The Times reported earlier this year. During the same period the city awarded annual compensation of more than $500,000 to three different staff attorneys, including Eric T. Fresch, a city attorney and administrator who made as much as $1.6 million in 2008.
State Sen. Kevin De Leon (D-Los Angeles), who helped kill the disincorporation bill in the Legislature this summer, has also said that he is concerned about the rates that attorneys have charged Vernon.
Before he came out against disincorporation, De Leon’s office reached an agreement with Vernon on a lengthy reform plan aimed at improving its government and making it more open. In addition to the $60-million contribution to the community benefit fund, the agreement calls for Vernon to create an open bidding process for all service contracts and to post details about each contract online.
The deal was negotiated by De Leon’s chief of staff and George Mihlsten, an attorney at Latham & Watkins who helped manage Vernon’s campaign against AB 46.
Beginning late last year, Mihlsten and others from the law firm began to help Vernon assemble a team of powerful lobbyists and advisors to fight disincorporation. The group included media consultant Fred MacFarlane as well as political strategist Chris Lehane. Latham & Watkins also arranged the hiring of Van de Kamp as Vernon’s ethics advisor and oversaw the city’s handling of media inquiries and public records requests.
More than 160 different lawyers from Latham & Watkins have worked for Vernon since 2005, charging rates as high as $975 an hour, the city said in a letter to The Times earlier this year. Much of the previous work pertained to various litigation and matters related to land-use and energy finance, city officials said.
Attorneys from Latham & Watkins did not respond to several requests for comment for this story, and City Administrator Mark Whitworth declined to be interviewed.
In a statement issued through the city’s media consultant, Whitworth said the disincorporation battle required “an extraordinarily talented, skilled and experienced team of legal professionals to counsel city leaders.”
“Despite what anyone inside or outside of the City of Vernon might say, the changes enacted over the past 12 months … have made Vernon a stronger city,” said Whitworth, who is also Vernon’s fire chief.
Newmire, Maisano and former Mayor Hilario Gonzales criticized Whitworth, saying that he had left the council out of the loop on many key decisions and relied too heavily on outside attorneys.
Gonzales, who had held office since 1974, conceded that the council for many years took a passive role in the city’s government and deferred to the positions of top staff members.
The councilmen said that earlier this year they believed that their only option was to support the decisions made by the city’s lawyers. If they didn’t, they feared that the disincorporation bill would succeed and that their city would be eliminated.
Until this month, the councilmen had repeatedly refused requests by The Times for comment on various stories about the city’s government. Newmire alleged that city staff specifically instructed councilmen not to speak publicly. The staffers went so far as to tell them to leave meetings through a back exit of City Hall to bypass reporters, he said.
“They don’t want us talking to [the media] because they don’t want us saying anything that exposes them,” he said.
In October, after AB 46 was defeated in the state Senate, the councilmen said they tried to rein in the expenses by promoting a new city attorney to review all outside legal fees. But the motion was not listed on the meeting agenda, and it drew a reprimand from Van de Kamp and De Leon, who said such a decision needed to be made in a more transparent way.
Gonzales, who is 82, announced his retirement after the flap. Newmire said the council is now split, 2 to 2, which could limit his ability to further curb the legal expenses.
Newmire said he was particularly interested in finding out more about hundreds of thousands of dollars of payments to Latham & Watkins marked “administrative matters” on city warrant registers. But he has been unable to get answers from the city administrator, finance director or city clerk on what specific services the payments covered, he said.
De Leon was skeptical of the claims. He said in a statement that the councilmen’s complaints sounded like “sour grapes and a side of buyer’s remorse.”
“They made their bed,” said De Leon’s spokesman, Greg Hayes. “Now they have to deal with the consequences.”
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