Special report: “The No-bid Deal”

Special report: "The No-bid Deal" (Image 1)

For most of 2013 the Muscogee County School District has been under fire for the amount of money it spends handling legal matters. In 2012, MCSD spent $700,000 in legal fees. From January to August of this year the district has spent $380,000.

In March, a concerned citizen brought to the school board the allegation that the district is over-paying for legal services.

It was also in March when News Three began filing open records requests for invoices from the district’s legal counsel, The Hatcher, Stubbs Law Firm, in an effort to find out how taxpayer dollars are being spent. After months of wrangling the district released some of the documents. 

When News Three initially made the request Hatcher, Stubbs only provided statements showing only the date, time billed and the total amount. After our lawyers spent months carefully and methodically dealing with district objections to our demands we finally received another set of invoices. Most of the pages had black boxes that hid detailed information, but most of the subject lines revealed the legal matter being handled. 

Invoices showed the fees paid for handling internal personnel matters, expulsions and tribunals and lawsuits among other things. Around $34,000 went to lawsuits, about $25,000 to special education matters and nearly $19,000 went to worker’s comp claims.

But the district has been billed the most for a vague category called “general.” In the first eight months of 2013 MCSD was billed more than $85,000 in that category. The lawyers doing the billing for the district refuse to explain what legal services are included in the “general” category.

“I think it shows a shocking lack of public transparency,” said Georgia State Senator Josh McKoon, who has been one of the district’s most vocal critics, claiming MCSD overpays for legal services.

Hatcher, Stubbs charges a partner rate of $165 per hour and $115 for associates. The firm has been representing MCSD for more than 60 years and they have never had competition. There is no bid-process for legal counsel. McKoon and others have been calling for a transparent process. “This is not a new debate in 2013, it’s a debate we’ve been having for years. Unfortunately it’s a debate that’s been stifled.”

But it came to a head in March. At the time, local political consultant Frank Myers was very outspoken about the issue and spoke at several school board meetings. Shortly after, two school board members went to police calling for a GBI investigation claiming Myers and McKoon over-stepped legal boundaries in their efforts to influence the board to replace Hatcher, Stubbs. Both were cleared of any wrong-doing in late September.

McKoon is convinced it was an attempt to silence critics of the school board.” You have a board of education and a leadership that has been arrogant and has been unwilling to deal with this issue.”

McKoon said at issue is not whether Hatcher, Stubbs should represent the district, but about protecting taxpayer dollars and ensuring every dollar possible is spent on education. “It’s what gives somebody that first rung on the ladder to economic opportunity and success and for these folks to fritter away tax dollars on no-bid contracts it’s immoral and it’s got to stop.”

He believes money can be saved by using a bid-process to encourage competitive pricing or hiring an in-house lawyer who could take care of most of the matters currently being handled by the outside firm. “A lot of these charges could be taken off the table by having a full-time attorney that was employed by the school district.”

Bibb County School District in Macon, Georgia decided to make the move to in-house legal counsel nearly two years ago. Since the change about 85% of the district’s legal matters are handled by an internal lawyer. The district has around 25,000 students.

“In the long run we definitely expect to see a cost savings with in-house legal counsel,” said Dr. Steve Smith, interim superintendent for Bibb County School District. He said it was a wise decision for them and counsel is readily available whenever anyone in the district might need it.

The in-house lawyer receives a salary of $116,000 a year and the district only uses external counsel on cases that have the potential for litigation or sensitive special education issues that require expertise.

In 2012, Bibb County spent an estimated $523,000 using outside lawyers. From June 2013 to October 2013 they spent $176,000. But Dr. Smith said there were special circumstances. “There were extensive discussions involving potential litigation for a case that we were hoping to avoid going to trial.”

MCSD maintains they require an outside law firm because of its 32,000 student population and specialty cases. “I just don’t think we’re being spend thrift and wasteful in this area and I don’t think our law firm is padding bills or over-charging us,” said Muscogee County School Board Chair Rob Varner. He believes legal counsel cannot just be switched out for another because more than money is at play when choosing good legal representation. “Legal services, professional services, they’re similar to what many of us experience when we go to a physician. You develop comfort, you know their education, you know their background, their experience, In this case with Hatcher, Stubbs we know all of that about them,” said Varner.

A few years ago, when the debate about legal counsel arose Varner said an independent lawyer made a presentation to the school board and that is when he realized MCSD was doing the right thing. Varner feels using a bid-process would be even harder and said it would be difficult to determine and fairly measure dozens of areas of expertise.

He also said hiring an in-house lawyer has too many overhead costs. “Let’s say we pay somebody 100 [$100k]. Add another 40 [$40K] for secretarial support. Add 20 percent benefits on top of that. Add another 10 [$10k] or 15 [$15k] a year in whatever it costs for subscriptions and dues and things like that to professional organizations… You’re probably all in, close to $200,000 a year.”

Varner also said the bulk of the district’s legal expenses come from complex issues that require external counsel. “I don’t think an in-house lawyer would ever be able to develop the level of expertise and experience around some of the more complex and therefore more expensive and litigious things that school districts get into. EEOC, students with disabilities, federal court challenges,” Varner said.

In the Bibb County School District Chief Legal Counsel Randy Howard, said a lot of his time is devoted to personnel issues. On average, he handles between 100-150 per year. “I handle personnel matters, EEOC notice of claims, discipline matters, special ed matters,”

Varner believes the legal counsel debate is distracting the community and board from focusing on education. But he said neither he, nor the board, will ever try to silence the critics. “I want them to talk all they want to talk and sometimes it’s frustrating because I think they say things that aren’t true, that are almost slander-ish to individuals as well as groups of individuals,” Varner said.

Senator McKoon is currently working on a bill that he hopes will be passed in the upcoming legislature session. It would prohibit no-bid legal deals for boards of educations across the state, except in special circumstances. Varner does not support it.

News 3 is still battling with Hatcher, Stubbs trying to get the lawyers to uncover what’s in the “general” category. We have been unsuccessful in our attempts.

Numerous open records requests have been sent to Hatcher, Stubbs, but none of the invoices provided to News 3 mention them. We cannot tell you how much money MCSD has spent over the last six months on News Three’s open records requests.

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