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Vernon's problems lead to huge legal fees

Latham & Watkins, which helped coordinate Vernon's battle against disincorporation, was paid nearly $7 million this year. 'The law firm is running the city,' one councilman said.

December 28, 2011|By Sam Allen and Hector Becerra, Los Angeles Times
  • The city of Vernon's water tower stands above the L.A. River near Soto Street, south of downtown Los Angeles.
The city of Vernon's water tower stands above the L.A. River near Soto… (Robert Gauthier / Los Angeles…)

Vernon has long spared no expense when it comes to hiring attorneys.

But this year, as officials fought back an effort to disband their municipal government, the scandal-tainted city turned to lawyers like never before.

The blue-chip law firm that helped coordinate Vernon's political battle, Latham & Watkins LLP, was paid nearly $7 million this year, according to records reviewed by The Times. Over $2 million more went to other lawyers and lobbyists working to defend the city.

Now, some of the city councilmen who approved the legal expenses say that lawyers have taken control of Vernon and are leaving it with a mountain of bills it cannot continue to pay.

"The law firm is running the city," said Councilman Daniel D. Newmire. "That's the way I smell it."

Newmire and other city leaders agreed to speak with The Times because they said that neither Latham & Watkins nor city administrators would provide them detailed legal billings or answer other questions about the services for which the firm is charging.

The councilmen's outspoken criticism of Vernon's staff is extremely unusual, if not unprecedented, in a city that has been known in the past for its insularity and lack of open debate. Only about 100 people actually live in the industrial city, where three top officials have been charged with public corruption in recent years.

The councilmen also expressed alarm about Vernon's financial condition, given the high legal fees as well as a $60-million contribution the city has agreed to make over the next decade to support community projects in surrounding cities.

"My concern constantly is the solvency of the city in the future," Councilman Richard J. Maisano said. "Who is going to end up paying for this?"

Some in the city have questioned the councilmen's motives, given that they have disagreed with some of the government reforms Vernon initiated in response to the disincorporation bill, AB 46. The councilmen, once among the highest paid elected officials in Los Angeles County, recently had their salaries cut by more than 60% to $25,000 a year, and term limits have been imposed.

But concerns about Latham & Watkins' billings go well beyond the councilmen.

John Van de Kamp, the former state attorney general who is Vernon's ethics advisor, said he also believes the firm's rates are too high. He praised Latham & Watkins' performance but said the hefty legal fees underscore a larger problem Vernon has in paying attorneys far too much.

"If you look at the history of Vernon in the last 10 years and the amount of money law firms have taken out before, it's much too high and there's no question about it," Van de Kamp said. (He charges the city $550 an hour, which he described as a discounted rate.)

Between 2005 and 2010, Vernon spent more than $40 million on outside law firms, The Times reported earlier this year. During the same period the city awarded annual compensation of more than $500,000 to three different staff attorneys, including Eric T. Fresch, a city attorney and administrator who made as much as $1.6 million in 2008.

State Sen. Kevin De Leon (D-Los Angeles), who helped kill the disincorporation bill in the Legislature this summer, has also said that he is concerned about the rates that attorneys have charged Vernon.

Before he came out against disincorporation, De Leon's office reached an agreement with Vernon on a lengthy reform plan aimed at improving its government and making it more open. In addition to the $60-million contribution to the community benefit fund, the agreement calls for Vernon to create an open bidding process for all service contracts and to post details about each contract online.

The deal was negotiated by De Leon's chief of staff and George Mihlsten, an attorney at Latham & Watkins who helped manage Vernon's campaign against AB 46.

Beginning late last year, Mihlsten and others from the law firm began to help Vernon assemble a team of powerful lobbyists and advisors to fight disincorporation. The group included media consultant Fred MacFarlane as well as political strategist Chris Lehane. Latham & Watkins also arranged the hiring of Van de Kamp as Vernon's ethics advisor and oversaw the city's handling of media inquiries and public records requests.

More than 160 different lawyers from Latham & Watkins have worked for Vernon since 2005, charging rates as high as $975 an hour, the city said in a letter to The Times earlier this year. Much of the previous work pertained to various litigation and matters related to land-use and energy finance, city officials said.

Attorneys from Latham & Watkins did not respond to several requests for comment for this story, and City Administrator Mark Whitworth declined to be interviewed.

In a statement issued through the city's media consultant, Whitworth said the disincorporation battle required "an extraordinarily talented, skilled and experienced team of legal professionals to counsel city leaders."

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