Town board considers legal service options

Over the past few years, the Town of Pagosa Springs has accrued much higher than normal legal expenses, so, during the recent budgetary work sessions, council asked staff to research the possibility of hiring an in-house attorney, similar to Todd Starr’s position with Archuleta County.

“I think it is fair to say there was considerable comment about the amount of legal expenses we are incurring as an organization,” Town Manager Greg Schulte began. As a result, Schulte requested billing statements from Collins, Cockrell and Cole, the town’s law firm, and had the documentation categorized according to certain areas.

“We incur legal expenses for a lot of different reasons,” Schulte continued, explaining that this list can be divided into two categories: ongoing expenses versus onetime projects. Examples of onetime projects include Wal-Mart and the recreation center ballot issue.

Schulte referred to the document in front of council and explained that some of the items on the list included situations where the town later received reimbursement for its legal expenses. Wal-Mart, for example, gave the town about $70,000 to partially make up for the $94,000 the town incurred in legal expenses related to Wal-Mart.

“We did incur quite a bit of legal fees associated with the pipeline project,” Schulte went on, referring to the forced main sewer pipeline the town is in the process of having built from its sewer lagoon facility south of Yamaguchi Park up to the Pagosa Area Water and Sanitation District’s Vista Wastewater Treatment Plant.

In the document, Schulte had this item color-coded as a onetime expense. “I’m hoping that’s the last pipeline project we do in a really long time,” he joked. He also expressed hope that the legal expenses the town incurred because of the rec center issue were a one-time occurrence.

On the other hand, there are items for which the town needs ongoing legal advice, such as the drafting of ordinances or ballot questions. Schulte explained the gross legal costs included both ongoing and onetime expenses, while the net legal costs were only those the council could expect to spend every year.

The document Schulte presented to town council contained data dating back to 2010, when the town spent $73,889 for net legal fees. In 2011 the cost skyrocketed to $118,036, an increase of 59.7 percent, while in 2012 legal costs jumped another 22.3 percent to $144,406. In 2013, the amount the town paid to its lawyer for net legal fees dropped back down to $121,098, while so far this year $90,572 has gone to the law firm. Schulte projected the total for 2014 would probably exceed $100,000, as well.

“What this shows is that in the past four or five years,” Schulte explained, “we have been having legal fees in an amount consistently over a hundred thousand dollars, and the question posed by council was at what point does this become a tipping point for looking at how we do legal services for the town.”

Schulte outlined two alternatives: advertise for bids from other law firms, particularly for someone local (the law office for Collins, Cockrell and Cole is located in Denver), or hire somebody to work in-house, meaning they would be on the town’s payroll instead of an outside contractor.

Though he admitted it might not be completely comparable, Schulte looked at the county’s budget for its attorney. “They do have an attorney there,” he said, “and they do have a dedicated support staff person.”

Schulte explained that the total county budget for legal expenses each year is about $225,000, of which $190,000 covers salary and benefits for the attorney and his staff person, and the remainder goes to overhead expenses.

Two final points Schulte made about the document he presented to council were that the town does incur legal expenses for the municipal court prosecutor, but that is separate from Collins, Cockrell and Cole. The legal expenses the town has incurred for anything related to geothermal was also categorized separately.

Once Schulte finished his presentation, Councilor Clint Alley asked if it would be possible for the town to hire just an attorney without the additional staff person.

“If we wanted to bring a person in-house as an employee,” Schulte responded, “I think we could do that for less than what the county is doing. It’s not totally analogous.”

Schulte went on to explain a number of variables that could either lower or raise the cost, including having the attorney work from home so the town wouldn’t have to pay for his or her office space and equipment, or having the attorney decide whether or not there is a need for an assistant and covering that expense out of his or her pocket.

Schulte also questioned how much work the attorney would be assigned. Would the town continue to retain a separate prosecutor for municipal court, and, if so, would the in-house lawyer be full or part-time?

Councilor David Schanzenbaker spoke up next, and while he thanked Schulte for the time and effort that went into his research, he went on to say, “I would quibble a little bit with the numbers. I’m not sure, I guess, about the ‘onetime costs’ idea. I’m not sure you can totally discount every onetime project, because we continue to have onetime projects that come up year after year after year, and our legal council would still be working on those projects, so maybe there is a middle ground when we’re looking for that net cost.”

Schanzenbaker went on to argue that another benefit to hiring someone in-house, or even contracting out to a local attorney, would be having that person present at all town council meetings. Bob Cole only comes down from Denver when there is a clear need for his assistance.

“This is not meant to be accusatory in any way, shape or form to current staff,” Councilor Tracy Bunning commented next, “but in our recent history (the town) has allowed, or made it possible for, interaction between staff and our legal council, which we paid for, without any kind of checks or balances or coordination.

“Perhaps going forward, while we look into these other options—and I agree it’s probably time to look at that — direct communication without going through our town manager with our legal staff should be something of the past. Department heads should bring their questions or concerns to the town manager, and he should approve that kind of interaction.”

Schulte agreed with Bunning and then referred back to Schanzenbaker’s comment, relaying the discussion the hospital board had when it decided to hire an in-house attorney.

“Money was part of it,” Schulte explained, “but the other factor that weighed into this was the value of having legal council available at a moment’s notice. This isn’t a refection on Collin, Cockrell and Cole, but by having somebody that is a part of your organization and is really in tune with it, you can be more proactive about stuff rather than just being reactive.”

In other words, the town could avoid problems before they happen, according to Schulte, instead of always reacting to legal messes after they happen.

In the end, Mayor Don Volger suggested, for budget purposes and because of the time crunch associated with budget season, the town should go ahead and budget a certain dollar amount for legal expenses ($100,000, as it turns out), without locking the town into any specific decision about a law firm or in-house attorney, and then decide later if a change is justified.

“Bob Cole’s firm has represented the town extremely well over the years,” the mayor pointed out, “and most of us recognize they are one of the premier law firms in the state that represents local government. They have a lot of experience and a lot of expertise and an exceptional staff, so when we get information from that firm, I am very confident we are getting good information and we’re not being led astray.

“No matter what we decide to do in the future, I would never want the public or Bob Cole’s firm to think we are doing it because we were not satisfied or we think we can find something better than what his firm provides.”

 

This story was posted on November 13, 2014.