December 11, 2015 || Previously Published: Better Government Association || 10/25/15 || Andrew Schroedter & Patrick Rehkamp
Since 2010, Maywood has spent nearly $3 million on legal fees. Klein, Thorpe & Jenkins, the private law firm that the village pays to handle its legal affairs, is among the most well-paid firms when it comes to doing business with suburban Cook County municipal governments.
Suburban Cook County municipalities spent $244 million on private attorneys since 2010 with many of the largest bills being paid by suburbs suffering severe financial hardships brought on, in some cases, by police misconduct and corruption claims, according to a Better Government Association “Rescuing Illinois” analysis.
A significant amount of the suburban legal payout, nearly $98 million or 40 percent of the $244 million, is going to just seven law firms. Some small but influential practices go beyond legal work and double as fundraising powerhouses for municipal leaders, according to the analysis.
The suburban legal fee payout is more than twice the $110 million that Chicago paid to outside counsel during Mayor Rahm Emanuel’s first term, starting May 2011. Combined, Chicago and the 133 Cook County municipalities have spent a whopping $354 million for outside legal counsel over the past five years.
“There’s no way you can eliminate lawyers,” says Jeff Tobolski, mayor of the Village of McCook. “You definitely need these guys. It’s a lot of work they do. But it’s the responsibility of the [village] board to be watching what these guys are doing. I’m constantly telling [village attorneys], ‘Keep your bills in check.’”
The BGA tally is based on records obtained through the Illinois Freedom of Information Act. The BGA requested 133 suburbs provide records of outside legal spending from 2010 to early 2015.
The BGA’s review of those records reveals:
- The highest paid firms are: Klein, Thorpe & Jenkins, $23.4 million; Odelson & Sterk, $20.3 million; Storino, Ramello & Durkin, $16.4 million; Del Galdo Law Group, $14.8 million; and Holland & Knight, $9.7 million.
- Three of the firms – Odelson & Sterk; Storino, Ramello & Durkin and Del Galdo – are generous political campaign donors. Collectively, these firms have donated about $400,000 since 2010 to candidates and elected officials in towns they have counseled.
- Twenty-one suburbs have spent at least $3 million on private attorneys since 2010. The biggest spenders are Cicero, $15.3 million; Calumet City, $7.2 million; Harvey, $6.7 million; Oak Lawn, $6.6 million; and Rosemont, $6.1 million. (Elgin had the eighth-highest outside legal expenses, at $4.5 million; Mount Prospect was No. 9 at $4.2 million.)
While the city of Chicago has a law department to handle routine legal issues, the BGA found that outside legal firms often act as a municipality’s primary counsel handling issues from routine zoning to complex litigation.
In that role, attorneys are called upon to write ordinances and resolutions, negotiate contracts and collective bargaining agreements, prosecute village code violations and oversee public meetings to ensure transparency laws are followed.
Most Cook County suburbs pay private attorneys hourly rates of $150 to $300 to handle those often thorny and complex tasks. However, a small number of larger municipalities also employ in-house counsel. There are as many as 24 of those attorneys countywide, and they are typically paid at least $100,000 annually, though neither they nor outside legal settlements are included in the $244 million tab.
The going hourly rate for outside municipal attorneys is considerably less than what many corporate attorneys charge. But a small group of municipal lawyers are still well compensated because it “has become a highly specialized field,” says Michael Zimmermann, a local government attorney at law firm Tressler LLP.
BIG FEES, CASH-POOR TOWNS
Suburban officials say that in most cases they can afford the legal bills but there are examples of suburbs that cannot.
Harvey is one of them.
The cash-strapped south suburb owes the city of Chicago millions of dollars in unpaid water bills and lost millions more in a failed hotel development deal. And yet since 2010 it has spent $6.7 million on legal fees relating to, among other things, a SEC investigation and lawsuits alleging police misconduct, financial mismanagement and politically motivated employee terminations.
The legal bills in Robbins are small by comparison but the suburb of 5,400 residents is still struggling to meet its obligations. Since 2010 the village’s government has paid outside attorneys $345,000, records show.
But Robbins could not afford to pay Odelson & Sterk. The village fell behind on payments to the law firm and in 2013 worked out a deal to pay off a $175,000 debt over a five-year period, at a total cost to taxpayers of $195,000 in principal and interest, municipal records show.
“I don’t know of any other town that has done this,” says Ernestine Beck-Fulgham, the Robbins village administrator. “Our budget deficit this year was $1.7 million. We’re barely making payroll.”
Odelson & Sterk no longer works for Robbins but the firm continues to advise about 30 suburbs, mainly in south and west Cook County, Burt Odelson says.
“They’re an impoverished town and we wanted to help them out,” says Odelson, adding that Robbins’ actual legal bill was much higher. “We didn’t want to get paid and not have them have a police department.”
Legal costs have soared in suburbs facing serious claims of corruption or police misconduct, such as Schaumburg, which has paid about $500,000 to defend 17 wrongful arrest lawsuits involving three rogue cops who reportedly operated a drug ring. Six of those cases are still pending. In the 11 lawsuits that have been resolved, one was dismissed and 10 were settled with Schaumburg paying accusers $5,000 to $32,000, according to the village.
The Village of Countryside has spent $4.1 million since 2010 on private attorneys, with a “substantial amount” of those payments going toward an investigation into pension spiking, or boosting end-of-career employee retirement benefits, by the suburb’s police pension board and a probe of a former police chief, who was convicted on charges he misused donations intended for a nonprofit he ran, Countryside Mayor Sean McDermott says.
“There’s a price to pay for it,” McDermott says about municipal corruption.
Cicero and Calumet City were the municipalities with the highest legal bills, costs that soared in large part because of litigation involving alleged police misconduct, the BGA found.
Most of the cash has flowed to just two firms: Cicero has paid Del Galdo Law Group $10 million since 2010, while Calumet City has paid $6 million to Odelson & Sterk.
The suburbs have each been sued 28 times from 2008 to mid-2013 for excessive force, wrongful arrest and other related misconduct claims, the BGA previously reported.
Cicero spokesman Ray Hanania blames his town’s enormous legal bills on “lingering lawsuits that were dragged out by the prior administrations before [Town President Larry Dominick] came to office in 2005.”
Unlike Calumet City and Cicero, Elgin has an in-house staff of three attorneys but the suburb still spent $4.5 million on outside legal counsel since 2010.
The reasons vary but main drivers include costly litigation involving workers compensation and a revoked liquor license, and a labor spat with the fire department. The suburb also took legal action after a homebuilder went bankrupt amid the global economic collapse and left a massive residential project unfinished. Elgin paid about $570,000 in legal fees but ultimately received settlements totaling $3.5 million, says William Cogley, Elgin’s top in-house attorney.
The development is still under construction.
Mount Prospect’s legal expenses, totaling $4.2 million, were fueled in part by a legal fight over a downtown bar that the village wanted for redevelopment, according to records and interviews.
Municipal attorneys interviewed by the BGA say they obtain most of their local government business by going through a public bidding process.
But some municipal law firms also play a political role by making significant contributions to the political coffers of the people who employ them or could potentially hire them.
Case in point: When Robert Lovero ran for Berwyn mayor in 2009, Storino, Ramello & Durkin donated $750 to his campaign and Del Galdo Law Group chipped in $1,000. At the time neither firm did business in Berwyn.
After Lovero won, he hired both law firms and since 2010 Berwyn has paid Storino $347,628 and Del Galdo $736,647, according to interviews and municipal records.
Lovero declined interview requests. But Anthony Bertuca, Berwyn’s in-house city attorney, says the donations had no bearing on the mayor’s decision to hire the law firms.
“Absolutely not,” he says. “They’re two extremely well-qualified and renowned municipal law firms.”
Based in Rosemont, Storino, Ramello & Durkin has donated nearly $59,000 since 2010 to campaign funds benefitting Rosemont Mayor Bradley Stephens, according to data from the Illinois State Board of Elections.
Over that same span Stephens’ municipal government has paid the law firm $1.7 million, according to municipal records.
Attorney Don Storino says he sees nothing wrong with supporting Mayor Stephens and does so because “he’s done quite the job for his community.”
The donations, he says, have nothing to do with the firm’s Rosemont business.
The BGA found other examples of law firms giving big money to elected officials in towns where they work.
Since 2010 Odelson & Sterk has contributed $52,000 to Calumet City Mayor Michelle Markiewicz Qualkinbush and other elected officials in the south suburb, the firm’s largest municipal client, according to elections board data.
Meanwhile, Del Galdo Law Group has donated $40,000 over that same span to campaign funds benefitting Cicero Town President Dominick, according to the elections board.
Del Galdo declined interview requests.
He issued a statement through a spokesman that says, “My contributions to the Cicero Voters Alliance [Dominick’s campaign fund] aim to support a broad range of local candidates for multiple regional offices, including local school boards, rather than one particular individual.”
Not all municipal law firms agree that supporting candidates is appropriate.
For instance, the Chicago office of Holland & Knight has a long-standing policy of not donating to political candidates in suburbs the firm represents, says Steven Elrod, head of the firm’s local government practice.
Elections board data shows the firm has given to lawmakers at the state and county levels but “we are not involved in local politics,” says Elrod, whose firm counsels about 20 suburbs, mainly in north and northwest Cook County, including Arlington Heights and Des Plaines. “It’s to avoid the appearance of any [impropriety.] . . . We make that very clear.”
CHICAGO’S LEGAL COSTS
Mayor Emanuel made it clear when he took office in 2011 that he wanted the financially struggling city of Chicago to spend less money on private attorneys.
But as the BGA recently reported, under Emanuel the city has paid $110 million to outside counsel, roughly the same amount his predecessor Mayor Richard M. Daley spent on freestanding legal firms in his last term.
Emanuel’s aides say he has implemented reforms that have saved taxpayers cash but the BGA found legal spending is unlikely to drop sharply in part because of a sizable backlog of pending police misconduct cases, some of which date back to the Daley era. VFP