Tiny Vernon spends big on lawyers
The city of Vernon has spent more than $54 million on lawyers in the last five years, according to records reviewed by The Times, amassing billings that surpass those of much larger cities.
The high level of spending has allowed Vernon to gather an army of legal talent that city officials deploy to protect their unusual municipality — a largely industrial city south of downtown Los Angeles with fewer than 100 residents. Officials are counting on that legal acumen to help defeat a bill in the state Legislature that would disincorporate Vernon, putting its territory under the jurisdiction of Los Angeles County.
But now, the legal bills are threatening to become a liability. Critics, including Assembly Speaker John Pérez, argue that because the handful of people allowed to live in the city are beholden to city government, it cannot have proper checks and balances. They say Vernon is essentially run for the benefit of its officials and their allies. Large sums paid to the city’s lawyers have been among the evidence critics cite.
The state attorney general’s office launched an investigation of the city in September after The Times revealed the hefty compensation paid to top Vernon officials, including former City Atty. Eric T. Fresch, who made $1.65 million in 2008. Fresch is now a legal consultant for the city, earning $525 an hour.
Vernon officials strongly defended their legal costs, saying they are necessary because of the complexity of the city’s municipal business. The city owns a power plant as well as a natural gas distribution system and has an annual budget of about $300 million, many times larger than surrounding cities.
In a statement, City Administrator Mark Whitworth said Vernon’s business “requires top legal expertise that can only be found at high-ranking and highly experienced firms.”
“The city’s top priority in selecting its legal representatives is achieving a high degree of success,” he said, adding that it is routine for public entities to “pay what is necessary to protect themselves.”
Nonetheless, the city’s total legal expenditures are close to those of Long Beach, a city of nearly 500,000 that operates one of the world’s largest ports and has an annual budget of $2.5 billion.
Vernon spent far more on attorneys over the last five years than Pasadena or Glendale, two bigger cities that, like Vernon, also run their own power departments. Indeed, city records show that since 2005, Vernon has had more private law firms working for it (34) than households (26).
Vernon’s billing records were obtained by The Times through the California Public Records Act. The documents indicate that of the city’s total legal bills since 2005, about $42 million went to private firms, while the rest went to the city’s in-house legal department. The records do not break down what specific legal services the attorneys provided. By comparison, Long Beach spent $27 million on outside firms during that period.
Some who have faced Vernon in court noted the city’s reputation for aggressive legal representation. Vernon has a tax base of about 1,800 businesses, but unlike in most cities, its budget is not burdened by public parks, libraries or other social services because so few people live there.
L.A. County Deputy Dist. Atty. Max Huntsman, who helped prosecute Vernon’s longtime mayor and city administrator on public corruption charges four years ago, said Vernon’s private attorneys battled to prevent prosecutors from seizing public records. After a year of wrangling, a judge finally ordered the city to release the documents.
“A city like Long Beach has real things to spend money on. They have a port, they have a large citizenry,” Huntsman said. “Vernon’s population is effectively zero. They have a massive surplus. Why not put it into lawyers to keep things going?”
Hector De La Torre, a former state assemblyman from nearby South Gate and a prominent critic of Vernon officials, said the city would “throw its weight around” in legal matters when going up against environmental groups, as well as government agencies such as the Central Basin Water District and Los Angeles Unified School District.
He pointed to Vernon’s recent but failed campaign to build a 943-megawatt, $450-million power plant for which the city assembled a team of consultants and lawyers as well as some of the region’s biggest political heavyweights. Former state Sen. Martha Escutia, former Assemblyman Tom Calderon, former L.A. Councilman Richard Alatorre and former Assemblyman Mike Roos were all enlisted to lobby neighboring cities and Sacramento officials on Vernon’s behalf.
“It’s part and parcel of a corporate mentality that they have,” De La Torre said of Vernon’s spending on lawyers and lobbyists. “They throw money at their problems; that’s what they do. They don’t have the normal concerns of a public entity.”
Even within the city, the size of the legal bills became a point of debate. Last month, the Vernon City Council, which rarely opposes city policy at public meetings, raised concerns over surging legal costs.
Mayor Hilario “Larry” Gonzales questioned why the city was “adding another big firm to our legal department.”
“It’s not like a Latham-type firm,” City Atty. Willard Yamaguchi interjected, referring to Latham & Watkins, one of the country’s largest firms, which has billed Vernon more than $14 million since 2005.
“Still, adding another one, a big one,” Gonzales continued. “You know, we have just a lot of lawyers in our organization right now.”
The council voted 4 to 1 not to hire the firm. But two weeks later the council reversed course, hiring a separate firm to take on the same case. Gonzales, like the rest of the council, has declined interview requests.
Vernon’s records show that the city has used smaller, local firms to handle some legal work. But the vast majority of its legal tab has been for large, prestigious firms that tend to do work for companies rather than small municipalities.
In addition to Latham & Watkins, the city has used K&L Gates, Loeb & Loeb and Morgan, Lewis & Bockius. Those three firms in the last five years were paid $7.6 million, $2 million and $1.6 million, respectively.
Vernon has again turned to Latham & Watkins in recent months as it has faced growing scrutiny and investigations from both the state attorney general and the district attorney’s office, which brought public corruption charges against Vernon’s former city administrator this fall.
In October, an internal e-mail sent by one of City Administrator Whitworth’s deputies instructed Vernon employees to refrain from discussing the city publicly and said attorneys from Latham & Watkins would be “handling all subpoenas and overseeing all current media requests.”
Since then, the city has added yet another prominent firm to its list, signing a contract last week with Akin Gump Strauss Hauer & Feld to work with Latham & Watkins to challenge the disincorporation bill. The agreement allows the Akin Gump attorneys to charge up to $875 an hour.
Michael Colantuono, a veteran municipal lawyer and former president of the League of California Cities’ city attorney department, said it was unusual for so many major firms to work for a city or other public entity.
“Sometimes a city will choose a very high-profile firm in order to send a political message,” Colantuono said. “But it’s very rare for that to be a routine habit for a city. Most couldn’t afford it.”
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