A matter of legal costs by Walter Lewis A number of years ago I asked the chief executive officer of a corporation that was involved in extensive litigations about their costs. He told me that in his company all operations
A matter of legal costs
by Walter Lewis
A number of years ago I asked the chief executive officer of a corporation that was involved in extensive litigations about their costs. He told me that in his company all operations were under strict budgetary control except his general counsel. He then related that the general counsel had an unlimited budget and he exceeded it every year.
The position of Kaua‘i County is rather analogous to that of the corporation I mentioned, except that the County nominally has a budget for the legal costs it expects to incur in each fiscal period. These costs have escalated very sharply in recent years. In the 2002 fiscal year the County budgeted $544,000 for salaries of six lawyers in the County Attorney’s office and $245,000 for the cost of special counsel.
In the 2007 fiscal year the County budgeted $815,000 for salaries of eight lawyers in the County Attorney’s office and $1,200,000 for cost of special counsel. Despite a one-third increase in the number of lawyers working for the County, the County found it necessary to budget almost five times more for the costs of retained counsel.
And, regrettably, the budget for special counsel costs means very little. Seldom does the County Attorney’s office handle any significant litigation matters. So when the County needs lawyers to represent it in lawsuits, usually the County Attorney or a deputy goes to the County Council for authority to retain outside counsel and funds to pay them.
The Council then goes into an executive session cloaking from the public the nature of the controversy, why the county attorney lawyers are not competent to handle the matter, and the factors expected to generate legal costs. When the executive session ends, the Council adopts whatever funding authority it agrees to bestow for special counsel. Typically litigation is a multiyear event occurrence so it is difficult to get a meaningful picture as to the legal expense the County incurs for a given year. When the County Attorney’s budget for special counsel is depleted, the County charges the excess to the boondoggling unappropriated surplus and the true legal expense becomes even murkier.
Concerned about the burgeoning increases in County legal costs, in January 2007 The Garden Island requested information under the Uniform Information Practices law as to all cases in which the County was a plaintiff or defendant in 2006 and the amount of money spent on each case. After nine months of foot-dragging by the County, in October 2007 the County provided what they asserted was a complete response to The Garden Island’s request.
The response covered 18 cases where services of retained counsel were used and showed expenditures of $1,933,447. The response was unclear whether the costs represented billings to the County or payments by the County and whether the costs were only for services in the year 2006 or also preceding years. It did not include any costs for matters handled “in-house.” It did not disclose the source for the moneys paid by the County, and it omitted at least one case, County of Kaua‘i et al v. Baptiste et al involving the Ohana Kauai property tax matter that was pending in the State Supreme court (over $250,000 had been authorized for payment to counsel in that case).
The response also stated that the County had incurred $873,350 in costs in payment of settlement amounts. It was not stated what amount, if any, had been paid to meet judgments ordered by courts. Unfortunately, The Garden Island request related to a calendar year and the County operates on a fiscal year beginning July 1st so the County response to The Garden Island request could not be correlated with budget data.
From the available information several things are quite clear. In the past five years the expenses being incurred by the County for litigation have increased sharply. The amounts being shown on County budgets for legal costs are only a fraction of the amounts being incurred. The County does not voluntarily disclose its legal expenses and only dedicated inquiries seeking them are honored. There is no indication that the County is effective at controlling our mounting legal costs.
In addition to the counsel expense being incurred, there are also the amounts being paid in settlement or upon adjudication in cases making claims against the County. In just one 2007 case the adjudicated award was greater than that in all of the cases shown in the response for 2006.
Substantial numbers of dollars are at stake in these County lawsuits. Often they arise without adequate forethought. When County officials wanted to remove K. C. Lum from his police chief position, the legal costs paid in 2006 incident to his removal were more than eight times his annual salary. Taxpayers are derelict in not demanding that the County provide them with information as to the steps being taken to minimize the financial exposure the County, and thus its taxpayers, have to the various claims being made.
These steps should include the efforts being made to reduce the perils that foster accidents and claims and the attempts to control the amounts being spent for counsel. Instead of trying to hide these costs the County should welcome their disclosure and any citizen input that can be obtained as to how it might mitigate our tax burden.
• Walter Lewis is a resident of Princeville and writes a biweekly column for The Garden Island.
