Revised 7/19 - I removed information on a separate matter related to the County Counsel and posted it in another posting on 7/19.
The interim County Counsel, Melanie Marsh, is requesting Board approval at Tuesday's (Jul. 20, 2010) Board meeting (agenda tab 15)to increase the hourly rate of a labor law consulting attorney by 13.6% without much justification (in my opinion) except to include the attorney's letter saying they wanted to increase rates.
You can review the meeting agenda HERE for the Lake County Board of Commissioners July 20th meeting, and click on the tab 15 to see the details about this issue.
My opinion is that the requested rate increase should be rejected by the Board until better justification data is provided, like described below. (More details below)
The only supporting documents are an "agenda request" document, and the rate increase letter from the attorney, Fisher & Phillips, LLP. The documents said the firm has not received a rate increase since 2007.
I am not questioning the skills or reputation of the attorney involved, or the merit of the rates they receive, but I am questioning the process used by the County Counsel to request the Board approve the rate increase.
So, what facts were provided by the County Counsel to justify the $30/hour rate increases?
- The agenda request document said the "fiscal impact" was "unable to be determined" although I could clearly calculate the rate was 13.6%, or $30 dollars higher per hour for the Partner. Nowhere was there an indication of the volume of hours billed in the last year by the law firm.
- The firm has not requested a rate increase since 2007.
- They included the request letter from the attorney, which said "we are no longer able to offset these increased expenses" at the current hourly rate. But there was no specific list of verifiable expense increases.
Now, here is cost increase justification data that is missing, but a corporate manager might expect to get this from staff when consultant fees proposed for an increase:
- A review of industry practices and comparison to the rates of other attorneys should be supplied. Does the County Counsel even track different attorney rates, compare them to industry standards, and know what is a valid rate range for each specialty? We don't know, because there was no mention of any such tracking system or data.
- A history of rates for all attorneys for the last few years so the reviewer could see how the proposed increase compared to other firms, and over a trend of years. How do changes compare to economic indicators like CPI?
- An analysis from the requester on the value of the services provided by the consulting firm. Were the services routine in nature and easily replaced by others, or were they high value? Marsh gave no such analysis of the value of work from this firm.
- A description of how easy or hard it would be to go to bid and change firms if the old rate schedules could be continued.
- A history of actual payment totals to the referenced firm over the last several years. Is this a firm that is only used a 100 hours per year for a total of $22,000, or are they billing 800 hours at a cost of $176,00 per year or quarter? At those levels, what is the incremental cost of the $30/hour? The statement that the fiscal impact of the increase cannot be determined is not valid. They could use the most recent year's billings and calculate the incremental costs if billable hours are the same next year. '
- The use of a billings cap total. For instance, if the attorney wants a 13.6% rate increase, but economic and revenue indicators do not justify that, agree to the rate, but limit the total billings to a 0% OR negative 10% increase and either specify that in the new agreement, or hold the County Counsel to that as a budget.
- A review of any policy that requires going to bid for consulting / legal fees when costs go up over the CPI rate per year. If there is no policy, there should be one.
- A review of any policy that requires that all consulting service agreements go to bid every three years. That is common in the Accounting field, and if there isn't such a policy at the County, there should be one.
- A comparison of economic indicators like CPI, Unemployment rate trends, drops in valuation, etc to the trend of rates paid to the consultants / attorneys. 2007 was a year of high spending, but if economic indicators indicate that revenues are dropping, then why approve an increase in such a down economy?
- A comparison of the proposed and actual spending totals for outside attorneys for the last year to identify how well budgets are adhered to by the County Counsel office. I would tend to support recommendations more from an legal office that controlled spending within budgets than one that did not.
All of the above are factors that if addressed in rate increase requests, would increase the credibility of both the County Counsel and the Board when they approve the requests.
Conclusion
1. Without such justification data, the current request to increase the attorney rates should be denied by the Board until the County Counsel provided adequate justification data.
Vance Jochim
