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Home My WebLink About10142019 City Council Special Mtg Laydown - City Atty Report moo] Laqc16-101 MEMORANDUM sPrRL m TO: SEWARD CITY COUNCIL SCOTT MESZAROS FROM: HOLLY WELLS RE: CITY ATTORNEY SERVICES AND OPTIONS CLIENT: CITY OF SEWARD FILE NO.: 507486.1006 DATE: OCTOBER 14, 2019 I. INTRODUCTION The purpose of this memorandum is to provide City Council with requested information regarding the viability of in-house legal services and present a flat-fee agreement to Council that incorporates services and budgetary restrictions requested by Council members. II. OPTIONS A. Flat Fee Services Due to increased legal fees over the last two years, several City Council members expressed an interest in exploring the benefits of paying a monthly flat fee for general legal services instead of paying hourly for such services. As a result, our firm began monitoring the monthly amount of legal services used by the City and the reasons for this use. When considering the viability of a flat fee services agreement for a public entity, our firm generally considers: 1) the predictability of the nature and extent of the entity's monthly legal services and 2) the ability to safe guard the entity, and the firm, from unexpected increases and decreases in needed services. At first blush, the City is not a great candidate for a flat-fee agreement because the amount of its general legal services have fluctuated significantly over the last four years. In 2016 and 2017, the City used approximately$68,200 of general legal services per year. In 2018, these services more than doubled. In 2019, legal services rendered declined Memo Re: Legal Services Options Page 1 of 4 substantially but still exceeded services rendered in 2016 and 2017, with current 2019 fees above $100,000.1 Despite the unpredictability of the legal services used by the City over the last four years, Council's use of legal services appears to be increasing in efficiency. While there are still months with greater use of legal services than the monthly averages in 2016 and 2017, legal services rendered during such months generally involve review of substantial legislative actions, core transactions, and/or mandated administrative proceedings. This trend suggests that despite inconsistencies in the use of legal services over the last four years, a flat fee agreement modified to allow for variations in the use of legal services may be a viable option for Seward. Appendix A includes a modified flat-fee agreement that provides Council greater oversight over legal counsel while protecting the City from extreme overages and ensuring the City receives essential legal services at no additional cost. Under the proposed Agreement, the City pays a fixed fee of $6,800 per month in exchange for up to 33 hours of general counsel services per month as well as a list of other services at no additional cost to the City. The $6800 per month equals $81 ,600 per year. The other services offered as part of the proposed agreement, at no additional cost to the City, include: Several essential services that ensure Council meaningful legal representation and training regardless of legal service hours incurred. These services include: 1 . In-person attendance and participation by the named City Attorney at 12 meetings per year. 2. Two "in-house counsel sessions." These "in-house counsel sessions" involve a member of the municipal team traveling to the City and residing in the City for five consecutive work-days. The purpose of this service is to ensure that the City Attorney understands the City, its land use, its culture, and its priorities as much as possible. It also gives the Administration and Council an opportunity to assess the value of having an attorney in-house. 3. One half-hour in-person training session with the named City Attorney for all newly-elected Council members. The purpose of this service is to give new Council members an opportunity to ask questions without doing so in a public forum. 4. One half-hour in-person with the named City Attorney session annually for each Council member to discuss concerns, goals, and priorities. This is a service the firm recently provided Council that seemed to be beneficial for both new Council members and the City Attorney. 1 See Appendix B. Memo Re: Legal Services Options Page 2 of 4 5. One in-person training on municipal governance per year for Council, commission, and board members not to exceed four hours. 6. Travel time and travel-related expenses arising from attendance at the 12 Council meetings. 7. Long distance telephone calls 8. Photocopies created at firm offices 9. Two one-hour sessions with the City Manager annually to discuss firm performance and outstanding goals and priorities of the City. Under the proposed Agreement, the hourly rates for general legal services beyond 33 hours per month as well as the hourly rates for litigation remain the same as current rates. The proposed agreement does permit the City to roll over hours for general legal services exceeding the 33-hour cap to the next month, allowing the City to maximize the value of the 33-hour cap. Given the amount of new services included in the proposed agreement at no additional cost to the City and the firm's uncertainty of the cost of these services, the proposed Agreement is only for one year. However, there is a provision that permits the City to renew the agreement with mutual consent of both parties. B. In-house Counsel While the City has always retained outside legal counsel to serve as its designated City Attorney, Council recently expressed interest in transitioning to in-house counsel. In an effort to assist City Administration and Council in exploring the in-house counsel option, we reviewed data and documents regarding the costs of in-house legal departments in municipalities similar in size to Seward. As was the case with the flat-fee agreement analysis, the City's determination of the viability of in-house counsel may be difficult to assess given the fluctuation in legal services over the last four years. According to Kenai's 2020 Fiscal Year Operating Budget, the FY2020 Adopted Budget affords $348,786 for legal services.2 While this exceeds the general legal services rendered Seward, the fees resulting from litigation and other considerations may warrant a deeper analysis of the pros and cons of the in-house counsel system before dismissing it. Many city managers find in-house counsel to serve 2https://www.kenai.city/sites/default/files/fileattachments/finance/page/1971/final update d budget.pdf Memo Re: Legal Services Options Page 3 of 4 not only as the designated municipal attorney, but also as a valuable member of the administrative team, which may have intangible cost savings worth considering. If the City delves into this option further, we recommend reaching out to the Alaska Municipal League-Attorney's Section, which has among its members many in-house municipal attorneys. Further, we also would recommend discussing the potential transition with the City's insurance carriers and the Alaska Municipal Manager's Association, both of which may have additional resources for the City. Memo Re: Legal Services Options Page 4 of 4 ! q/011 Laydoluvi Horton Bittner Cherot (C.,t C� General Matter Summary City of Seward 2016-2019 507,486.1006 2016 2017 1 Month Amount Month Amount January 6,823.50 January 4,313.50 February 6,044.00 February 4,128.00 March 12,540.50 March 10,083.50 April 2,049.50 April 5,869.50 May 3,705.32 May 5,725.50 June 4,407.50 June 2,945.50 July 4,364.50 July 4,665.50 August 5,998.50 August 2,472.50 September 6,651.00 September 3,953.50 October 4,051.00 October 6,234.00 November 2,905.50 November 8,057.50 December 8,729.00 December 9,828.00 TOTAL 68,269.82 TOTAL 68,276.50 2018 Month Amount Month Amount January 15,966.00 January 9,400.00 February 19,091.50 February 14,000.00 March 13,264.00 March 9,427.00 • April 12,600.00 _ _ April 11,861.00 May - 24,662.00 May 14,212.00 June 16,616.00 June 15,299.00 July 34,692.50 _ July 16,747.00 August 22,341.00 Jan-Aug Subtotal$159,233.00 August 26,302.00 Jan-Aug Subtotal$117,248.00 September 18,987.00 September 11,000.00 October 8,500.00 October November 4,801.00 November December 3,400.00 December TOTAL 194,921.00 TOTAL 128,248.00 507486\1006\FE4548-1 1 of 1