The Los Angeles City Attorney’s Office Thursday announced it will make changes to the way in which is contracts outside legal counsel, which was prompted by an FBI investigation regarding the office’s handling of a class-action lawsuit of the Department of Water and Power’s 2013 billing system debacle.
Ethicist Ellen Pansky compiled a review of the situation as requested by the City Attorney’s Office. Throughout the 172-page document, Pansky reported there were opportunities for conflicts of interest to take place when the city hired an attorney already representing a client in a similar lawsuit, but she said the cases were unique enough to not warrant any wrongdoing.
“To the extent that the city and the ratepayers had a mutual interest in pursuing the ultimate responsible party to recover for the benefit of the ratepayers, full reimbursement of the amount of the overcharges paid by ratepayers, there was no actual conflict of interest and therefore, there was no impropriety on the part of the city attorney in exploring either joint or separate efforts to recover from the responsible party 100% of the losses suffered by the ratepayers,” Panksy stated.
Los Angeles City Attorney Mike Feuer said he would make significant changes to the way his office hires outside lawyers to remove even the appearance of a conflict of interest.
“(Pansky’s) conclusions speak for themselves. The outside lawyers about whom issues have been raised withdrew in early March, no longer represent the city and received no compensation from their engagement for legal services,” Feuer said in a statement. “While it is impossible to effectively oversee behavior that is, at the very least, undisclosed — or to take timely measures to correct actions connected to that conduct — the conduct of outside counsel occurred on my watch. Upon learning about it this year, my responsibility as the leader of this office included getting to the bottom of what happened, then taking action.”
Feuer said he will direct any potential non-competitively awarded outside counsel contract to be approved by his office’s Outside Counsel Committee. Before approving such a contract, the committee must determine that the use of a “competitive process would not be practicable or advantageous,” as such a policy did not previously exist.
The city attorney also said all preexisting contracts in which lawyers outside his office are engaged must be disclosed before working with the city for non-legal services and they will go through a series of reviews.
“I am instituting mandatory training for all staff attorneys with oversight responsibility for outside counsel, whether operating under contingent-fee agreements or otherwise, including proprietary departments, drawing lessons from the DWP billing and (PricewaterhouseCoopers) cases,” Feuer said. “In addition, when our office handles cases that are related, a senior attorney will assure complete, real-time communication between attorneys and legal teams.”
FBI agents served search warrants in July at the downtown headquarters of the DWP and City Hall East as part of a probe into the city’s handling of litigation and a settlement over the botched rollout of a DWP billing system in 2013.
That botched rollout led to thousands of customers receiving inaccurate bills, with some being wildly overcharged. The debacle prompted a class-action lawsuit that led to a settlement requiring the DWP to reimburse customers roughly $67 million.
The city and DWP, meanwhile, sued PricewaterhouseCoopers over its handling of the system’s rollout.
But PricewaterhouseCoopers earlier this year questioned the city’s relationship with an outside attorney it hired to handle the litigation against the company. The firm said the attorney, Paul Paradis, was hired by the city as a legal consultant in its lawsuit against the company, while he was also serving as legal counsel suing the city on behalf of a DWP customer in the class-action lawsuit.
PricewaterhouseCoopers argued in court papers that the arrangement with Paradis was made specifically to secure a more favorable legal outcome for the city and DWP.
While the city denied wrongdoing, it subsequently canceled $30 million in contracts it had awarded Paradis for legal services and efforts to correct the billing system issues.
Paradis and the city both denied any wrongdoing. An attorney for Paradis told the Los Angeles Times earlier this year that Paradis stepped down as special counsel for the city to focus on “cybersecurity work” he was doing for the DWP.
Dogged by the FBI probe leading to witnesses unwilling to testify in the case, the city dropped its lawsuit against PricewaterhouseCoopers in September.
Rob Wilcox, a spokesperson with the City Attorney’s Office, said key witnesses in the city’s case — David Wright, former head of DWP, and Paradis — invoked their 5th Amendment right against self-incrimination, impairing the city’s ability to proceed with its lawsuit.