4.2. SR 03-31-1997ty of
ITI~ 4.2.
MEMORANDUM
iver
Mayor & City Council
FROM:
DATE:
SUBJECT:
Pat Klaers, City Adm~a~~
March 26, 1997
Attorney Fees
In February, 1996, the City Council changed the long standing city attorney
fees policy. The former policy called for the city to get a preferred client
discount in its legal rates from the attorneys at our city attorney law firm
whose hourly rate exceeded $110 per hour. This preferred rate was offered to
the city because it is a long standing client with a solid payment history.
This preferred client rate was applied to all city projects, funds, and
departments. Legal expenses which the city passes through to private
development projects were charged the city attorney's standard rates.
All of this changed in February, 1996, whereby a $135 maximum rate was
established for the city and all development clients. This rate allowed the
city attorney and his peers to make about 70 percent of their normal fees for
all Elk River business. At this rate structure, the city attorney will make out
better if there are lots of city activities and, conversely, will make out worse
financially if there is a great deal of developer work coming through the city.
It should be stated that this $135 rate actually affects only three of the
attorneys that we use at the Doherty Rumble Butler law firm. A number of
the attorneys who provide services to the city under the direction of Dave and
Peter and Dean Bussey charge the city at their going rate which is between
$85 and $110 per hour.
In 1996, there was a great deal of city work requested from Dave, Peter,' and
Dean and, accordingly, the law firm actually made a little bit more than what
they would have under the previous agreement. One fact that cannot be
disputed is that by going to this new rate structure the city pays more no
matter what, and the developers pay less no matter what.
Attached for your review are the minutes from the February 19, 1996,
meeting when this issue was discussed. Please note that the motion
indicates that this new fee structure was for a one year trial basis. Also
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
attached is the background material from the city attorney on his fee
structure.
The change in the retainer fee was supported by city staff and the new
retainer amount of $2,500 is still roughly only one-half of the actual cost of
the services that the city is receiving. City staff continues to strongly support
the full service law firm approach to doing legal work in Elk River and I
believe that we are getting excellent quality service for the fees that we pay
Doherty, Rumble and Butler.
I have asked Assistant City Administrator Lori Johnson to provide me with a
summary of non-retainer expenses from Dave, Peter and Dean that the city
and developers paid in 1996. The results are as follows:
280.25 hours
City expense at $135/hr - $37,833.75
City expense at $110/hr = $30,827.50
Extra Cost =$ 7,006.25
108.25 hours
Developer expense at $135/hr = $14,613.75
Developer expense at $180/hr = $19..485.00
Savings =($ 4,871.25)
\\elkriver\sysXshrdocXcouncil\attyfees.doc
~"~Special City Council
~~.~ebruarv 1'9, 1996
Page 5
~HAJ~BER OF COMME~E. AND THE CITY ADMINISTR~d~R AND ASSISTANT CITY
ADMINISTRATOR TO TH_E EI~ONOMIC DEVELOPMEnt"COORDiNATOR TASK FORCE.
COUNC,LMEMBER D,ETZ_SEC~DED_____ X- THE MOTI/~./ THE MOTION CARRIED 5-0.
COUNClLMEMBER HO E_ _N_ M'e,,VED. d AUTHORIZE THE TASK FORCE TO ENTER
INTO AN AGREEMENT _W_IT_H AN EXE~tfl'IVE SEARCH FIRM TO ASSIST IN THE
SELECTION OF A NEW ECONOM~DE~LOPMENT COORDINATOR IF THE TASK
FORCE DEEMED IT APPROPRI~51~. COUN~S~LMEMBER FARBER SECONDED THE
MOTION. TH E MOTIO~.I~RIED $-0. ~
It was the consen~ of the Council that it was~mfodable receiving only one
recommende~l~andidate from the Task Force an~that if the candidate was
not..a, ccept~51e~erview another one o~he finalists for the
poslt~on.,,,,/ -,
City Attorney Fees - The City Administrator gave an overview of the issue and
indicated his support for an increase in the retainer fee.
The City Attorney reviewed his memo on this topic.
Councilmember Holmgren indicated his concerns when charging two different
rates for legal services. Councilmember Dietz offered a different opinion.
COUNCILMEMBER HOLMGREN MOVED TO INCREASE THE RETAINER FOR THE CITY
ATTORNEY TO $2500 PER MONTH AND TO HAVE THE LEGAL FIRM CHARGE ONE
RATE OF $135 PER HOUR FOR SERVICES ON A ONE YEAR TRIAL BASIS.
COUNCILMEMBER DIETZ SECONDED THE MOTION. THE MOTION CARRIED 3-2.
Mayor Duitsman and Councilmember Dietz opposed.
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FROM:
DATE:
SUBJECT:
MEMORANDUM
Mayor & City Council
Peter K. Beck, City Attorney
February 20, 1996
Attorney Fees
Several Councilmembers have asked that I propose an alternative fee
arrangement for Council consideration. The current fee arrangement is as
follows:
$1,650.00 per month retainer. The retainer pays for all legal
services for which a separate file has not been opened, including
most City Council and staff meetings.
Reduced hourly rates up to a maximum of $110.00 per hour on
files which will be paid from city funds.
o
Normal hourly rates, up to a maximum of $180.00 per hour, on
files for which a third party is reimbursing the city for fees.
This structure and these amounts have been in place since, I think, sometime
in the 1980's. I believe it was set up during Bob Middaugh's tenure with the
city.
Retainer. The $1,650.00 retainer amount was established at a time when
the city attorney's involvement in the day-to-day business of the city was
minimal. At that time, the city attorney rarely attended a Council meeting
or traveled to the city for staff meetings. As late as the early 90's, the
$1,650.00 retainer amount covered all of the time actually billed to the city
for general legal services.
In 1992, when the Council appointed me as city attorney, I made a
commitment to the Council to be more available to city staff and to regularly
attend Council meetings, including the Council's monthly planning and
zoning meeting. As a result of this increased level of service, the hourly
value of services rendered over the past 2 or 3 years (at $110.00 per hour) has
been between $5,000.00 and $6,000.00 per month.
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
I consider the difference between an hourly value for the services I am
rendering and the retainer amount to be my investment in a client that I
enjoy working for very much. I am not asking the Council to raise the
retainer amount to $5,000.00 or $6,000.00 per month. However, I would
appreciate the Council considering the change in the nature of the services
being provided since the $1,650.00 amount was established, and raising the
retainer amount closer to approximately one-half of the average hourly value
of services rendered over the past two years (somewhere in the $2,500.00 to
$3,000.00 per month range).
.Hourly Rates. The city currently pays a reduced hourly rate, with a
$110.00 per hour maximum, for legal services rendered on separate files for
which payment will be made from city funds. Files for which the city will be
reimbursed by third parties are billed at normal hourly rates, with a $180.00
per hour maximum. Once again, I believe this structure was established by
Bob Middaugh. The theory behind the structure is that private parties
should pay at the same rates they would pay if the city attorney were
working directly for the third party.
From my perspective, my goal is to realize approximately seventy (70%)
percent of normal rates on the hourly work which I do for the city. The thirty
(30%) percent discount is, in my view, justified by the fact that the city is a
long time client which has a perfect payment record. By charging third
parties the rates they would pay if payment was not going through the city,
we have been able to keep the city's hourly rate even below the seventy (70%)
percent goal.
If the city were to go to a single hourly rate, in order to achieve my goal of
seventy (70%) percent of normal rates, the hourly rate would have to be an
across-the-board $135.00 per hour. This would be the hourly rate for all legal
services provided on all files. This rate is at the bottom of the hourly rates
charged by my present firm to other public sector clients.
There are, of course, any one of a number of options between the current
$110.00/$180.00 split rates and an across-the-board $135.00 rate. I would be
happy to come up with other split rates, or discuss with the Council other
alternatives. One idea I have heard suggested is that the city try the $135.00
across-the-board rate for a year to see what the impact is. I have no
preference between the existing split rates or a $135.00 rate, as long as I
have an opportunity to achieve somewhere close to seventy (70%) percent of
normal hourly rates.
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