COSTA MESA?? The legal battle over the City Council's outsourcing plan has cost the city more than $400,000 ? almost doubling the total legal fees so far this fiscal year ? and there's no end in sight.
High-level attorney firm Jones Day has charged the city $390,701 at $495 an hour to handle a lawsuit from the Costa Mesa City Employees Association that seeks to stop the City Council's plan to lay off more than 200 of its workers. Employees allege that the council acted illegally in its pursuit to explore the viability of outsourcing city services.
After the trial begins in April, an unknown number of motions and appeals could be filed, potentially drawing out the process ? and attorney fees along with it.
Residents and union leaders have voiced concern at meetings and public forums that the seemingly limitless cost of the lawsuit could exceed the savings the council hopes to attain from outsourcing.
The city could not put a dollar limit in its contract with Jones Day, which is mounting a "vigorous" legal defense, city spokesman Bill Lobdell said.
"In litigation, you can't have a cap because when you hit that cap what are you going to do?" Lobdell said. "When you're being sued, there's no choice."
The city's total legal fees through November amount to $1.05 million. Jones Day has not billed the city for work done in December and January.
The city has also paid $18,286 to Jones and Mayer, the attorney firm the city contracts for general legal counsel, for costs regarding the litigation since it started last year.
"We don't budget for being sued by our employees," said Councilman Jim Righeimer, the catalyst behind the outsourcing plan and the proposed city charter.
"Nobody wants to pay for litigation," he said. "But the citizens of the community aren't going to want the council to just roll over if it's getting sued by its employees and not do what it was elected to do, which was get the city's finances in order."
The funds used to pay for the city's legal defense come from a self-insurance fund, up to $2 million set aside from the general fund by the city for potential settlements, litigation and other legal issues, Lobdell said.
While the council's goal in outsourcing is to save money on future pension expenses, critics have questioned the plan's net savings after all the legal bills are paid.
"We wouldn't have to go to court if they would have followed the law," said Jennifer Muir, spokeswoman for the Orange County Employees Association. "Taxpayers should be furious because this is just a waste. Instead (the council majority) wanted to make a political statement in Costa Mesa."
Muir said the city is paying 400 percent more on the lawsuit than what the association is paying, but would not provide an exact amount.
"We're no where near what the city is paying to advance this outsourcing scheme," she said.
The city does not yet have a complete figure reflecting the total potential savings from outsourcing. Once city staff completes an analysis of bids received on 19 city services, a clearer picture of the potential savings will emerge.
On jail services alone, Righeimer said, the city could save $600,000 a year if it contracted out. Staff recently completed interviews with an organization that responded to a request for proposal on jail operations.
Councilwoman Wendy Leece, who has opposed the outsourcing process from the beginning, said the $400,000 legal bill could have been avoided if the city had asked its employees to pay more toward their retirement before the process began.
"All these legal fees would have been unnecessary if we had gone back to the table and met with our general employees to achieve more savings and talk about efficiencies in outsourcing," Leece said.
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Source: http://www.ocregister.com/news/city-337982-legal-outsourcing.html
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