City Sues over $66 Million Legal Bill

By Jorge Casuso

May 7 -- After being hit with a $66 million legal bill, the City on Thursday sued a group of outside attorneys who helped litigate a major lawsuit against multiple oil companies accused of contaminating Santa Monica’s water supplies.

Filed in Superior Court, the lawsuit charges a dozen Texas and California firms and individual lawyers with “unreasonably” interpreting the Legal Services Agreement to boost their take in a landmark $92.5 million settlement with three major oil companies, as well as a number of smaller settlements.

The defendants “made decisions and engaged in conduct” that caused delays they now contend increased attorneys’ fees by “many millions of dollars,” according to the suit. The defendants also failed to notify the City of alternatives that could have saved many millions more.

“By their acts and failures to act, Defendants breached their duties and violated the public trust,” according to the suit.

“We’re disappointed that it has come to this, but we need to get as speedy a resolution to this as soon as possible,” said Assistant City Attorney Joseph Lawrence, the City’s lead lawyer on the case.

Lawrence would not disclose what the City has agreed to pay the outside attorneys for their work, but said the difference between that amount and the billed fees was “a lot.”

“We are very far apart,” Lawrence said.

Under the Legal Services agreement, the firms would be paid a contingency fee that progressed from 10 percent to 20 percent to 25 percent, and, if trial occurred, to 27 percent, according to the suit.

The oil companies have paid the City a total of about $115 million in cash under the settlements, Lawrence said. The three major oil companies -- Shell, Mobil and Chevron -- must also build and maintain a water treatment facility to remove the gasoline additive MTBE from the City’s water wells in West Los Angeles.

Lawrence said it is unclear on what amount the outside attorneys are basing the 25 percent contingency or if it includes the worth of a treatment facility that hasn’t even been designed yet.

“Twenty-five percent of what?” Lawrence said. “It’s unknown and unknowable, so it’s premature.”

The attorneys, Lawrence said, have not accounted for the hours they worked.

“The lawsuit against the oil companies had a claim for attorney’s fees,” Lawrence said. “Even if you have contingency lawyers, you would expect them to be keeping track of their time.”

The City hired the law firms “based, in part, upon their trial experience,” but the cases against the companies were settled out of court, according to the suit.

“The litigation activity which occurred involved mainly procedural matters and settlement negotiations,” the suit stated. “Indeed, a significant portion of the work on the case was actually performed by attorneys employed in the City Attorney’s Office, not by Defendants.”

The City continued to be charged during a one-year stay, when the case was transferred from San Francisco to Los Angeles to Orange County, according to the suit.

“Defendants currently contend that this delay advantaged them and allowed Defendants to double their attorneys’ fees while the MTBE litigation was otherwise stayed,” the suit stated.

The Lookout obtained a copy of the suit too late to reach the defendants for comment.

The City’s suit comes five months after attorneys from the law firm Miller & Sawyer placed a lien on the settlement and requested that any checks paid by the oil companies be made out to them as well as the City.

The lien -- which could have delayed or frozen payment of the largest settlement in Santa Monica’s history -- was subsequently lifted.