Jackson Township Feasibility Study Insourcing the Legal Department

Citizens Budget Advisory Committee

Paul Mayerowitz Gary Moll Robert Nixon Barry Calogero William Spedding Eugene Davis January 23, 2012

Insourcing the Legal Department

Citizens Budget Advisory Committee

Table of Contents
Executive Summary ........................................................................................................ 3 Introduction ..................................................................................................................... 3 Historical Perspective...................................................................................................... 4 Billing Process................................................................................................................. 4 Shared Services Between the Township and Board of Education .................................. 5 Conflict of Interest ........................................................................................................ 5 Management ................................................................................................................ 6 Conclusion ................................................................................................................... 7 In Source Jackson Township Legal Services .................................................................. 8 Billable Hours............................................................................................................... 8 Billable Rate per Hour .................................................................................................. 9 Salaries and Wages..................................................................................................... 9 Technology ................................................................................................................ 10 Other Expenses ......................................................................................................... 11 Specialized Legal Services ........................................................................................ 11 Justification for In-House Counsel ............................................................................. 11 Staffing Levels ........................................................................................................... 12 Interns ........................................................................................................................ 12 Obligations to Township Employees .......................................................................... 12 ICMA Citations ........................................................................................................... 12 Use of Outside Counsel ............................................................................................. 13 Comparison to Other Municipalities ........................................................................... 14 Toms River............................................................................................................. 14 Howell .................................................................................................................... 15 Conclusion ................................................................................................................. 15 Cost Savings Alternatives ............................................................................................. 15 Appendix A - Open Issues and Questions..................................................................... 17

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Executive Summary
The proposal to in-source legal services and share them between the Township and School District is open to debate but the submitted proposal contains too many holes and open questions to determine if this is an accurate accounting of legal and potential savings. It fails to take into account serious questions about the quality of legal representation and ability of a sole attorney, with limited access to outside counsel, to perform the work required by two distinct government entities. Significant additional research and evaluation needs to be performed prior to any decision to in-source Legal Counsel, however, the Citizens Budget Advisory Committee (CBAC) was not charged with this responsibility and we have not initiated such a detailed study. In the interim, it is our recommendation that the Mayor and Township consider a protocol for controlling research conducted by Legal Counsel and that we analyze the bidding process for legal services as enumerated in the last section of this report.

Introduction
At the request of the Township Council President, Ken Bressi, the Citizens Budget Advisory Committee (CBAC)1 was requested to review a proposal on creating an inhouse Legal Department and considering a shared services arrangement with the Board of Education. This proposal was submitted to the Township Council by Ray Cattonar and Cathy Giancola at a Township Council meeting on November 14, 2011 . The proposal to in-source legal services and share an attorney between the Township and School District is a subject that requires serious analysis to answer a number of questions regarding the legality and costs savings of the concept. The CBAC needs to review these important matters carefully in order to report on the reality of the proposal. Generally, the CBAC needs to: 1. Review citations, references and quoted officials for accuracy. 2. Consider the underlying fiscal assumptions used in the proposal. 3. Investigate any and all legal/ethical restrictions upon sharing attorneys as proposed. 4. Review the amount of work required of an attorney employed by the Township/District to determine if a single attorney (as proposed) can handle the caseload in a shared services agreement and what impact those work

The Citizens Budget Advisory Committee (CBAC) was created by the Jackson Township Council on July 1, 2008. The current members were appointed on July 1, 2011. The six members of the CBAC are Paul Mayerowitz, Robert Nixon, Gary Moll, Barry Calogero, Eugene Davis and Bill Spedding. Various members of the CBAC were in attendance at these meetings. Members of Township Council were invited to attend the CBAC reviews as well. Wednesday, October 02, 2013 Page 3

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requirements would have on hiring a qualified attorney(s) as well as its impact on the need contracting for outside counsel for specialized legal matters. 5. Review of in-house counsel in Howell and Toms River, as quoted in proposal, to determine if savings and staffing is germane to Jackson. The decision to insource the Jackson Legal function is not a simple question of dollars and cents, as some would suggest. There is a cost associated with providing any governmental function but certain functions deal directly with issues of the safety, health and welfare of the residents of Jackson. The Legal function is one of those departments. It can and will impact the financial stability of the Township if inappropriate or misleading information is provided to our elected officials. Whether we insource or not, comes down to what is in the best interests of the residents after due consideration of the fiscal impact and the service levels to be provided. It is the objective of the Citizen Budget Advisory Committee to review the underlying assumptions and conclusions of the proposal and to advise the Township Council of any needed clarifications or additional information to complete our review and to provide recommendations on steps that can be taken immediately. Our goal is to have the Jackson Township Legal function, whether in house or not, to be efficient, cost effective, competent, and responsive to the residents of Jackson. Our residents deserve no less.

Historical Perspective
Jackson Township currently utilizes ten different professional firms for legal advice. The Townships primary Legal Counsel is Gilmore & Monahan. They are assisted by a number of other legal firms who provide specialized legal expertise in support of Gilmore & Monahan or specific Township functions such as the Planning Board or COAH. Spending for legal services for the last three years has fluctuated significantly and is more a direct function of project work load and special assignments rather than increases in hourly rates. For example, 2011 is impacted by issues relating to J&R Landscaping, 2011 Budget Referendum, potential changes in the election date and increasing the number of plenary retail consumption and plenary retail distribution licenses.

Billing Process
Volume is the principal driver of costs and keeping legal expenses under control. If the Township establishes guidelines, policies and procedures that provide a solid foundation for good governance and adheres to them, the need for incremental legal services can be minimized. When the Township or its employees do not adhere to these basic guidelines, we will probably incur incremental legal expenses. During our review of legal bills we observed that some professional firms are not providing sufficient information to analyze the root drivers of our legal expenses. We believe our current legal billing process can be strengthened through sharing details
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from our legal firms case management and time reporting systems. Our professional firms should bill the Township by Department and not combine all of the services rendered in one master bill. Such billing can be easily accomplished through the use of sub-accounts. Additionally, providing the specific resources and time utilized can and should be provided from their time reporting system. Such details will permit a better understanding of where our monies are being spent and allow for better insight and control of our legal expenses. It is apparent that there is no protocol governing who has access to our professional firms. Every time legal counsel is consulted, the Township spends money. On a regular basis, the Mayor, Business Administrator, members of the Council and Department Heads consult with Legal Counsel. We were told of situations where residents of the Township discussed issues with Counsel and such expenses were billed to the Township. Contrast this to the Jackson Board of Education where only the Board President and Superintendent can directly contact Legal Counsel. Although we find this concentration of control to be an extreme, the municipality needs to adopt a practice that establishes some form of gatekeeper to control costs. Establishing sub-accounts will identify the problem areas, but unlimited access to Legal Counsel can only drive costs up since those Departments utilizing those services do not need to pay for those services.

Shared Services Between the Township and Board of Education

Conflict of Interest The New Jersey Advisory Committee on Professional Ethics, Opinion 464, February 12, 1981, ruled that an attorney for a Township Board of Education could also serve as attorney for the township. The one caveat was that if events occur which give rise to a conflict or an appearance of conflict between the two public entities, counsel cannot represent either of the two entities. A conflict of interest would exist if: There is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client, or a third person or by a personal interest of the lawyer. A lawyer employed by a public entity, either as a lawyer or in some other role, shall not undertake the representation of another client if the representation presents a substantial risk that the lawyer's responsibilities to the public entity would limit the lawyer's ability to provide independent advice or diligent and competent representation to either the public entity or the client. Such conflicts would arise, for example, in the transfer of governmental municipal lands to the board of education, planning and zoning board issues relating to school construction or the rejection by the electorate of the school board's budget whereupon the duty to fix the budget then rests upon the municipal council. The same concern
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applies to the attorneys impartiality or conflict should the Board or Council adopt a resolution or ordinance that is adverse to the other. Which side would the attorney take and at what point would the attorney need to declare a conflict and request outside Counsel? In those cases an attorney would be required to recuse himself from both entities. Such disqualifications could increase the cost of legal services to the public and deprives the Township and Board of Education of representation by the attorney first selected by it. It is interesting to note that excluded from the summary opinion but contained in the Opinion 464 issued by the Advisory Committee on Professional Ethics is the following statement: While it is not inevitable that there will be any conflict between the board of education and the municipality, this may occur, and it would be better if the attorney declined to serve in this dual capacity. The Supreme Courts Advisory Committee on Professional Ethics has changed its mind several times on this matter, (Opinion 707), therefore, the Township needs to carefully consider what another reversal of this Opinion would do to legal services and employee costs for the Township and District. It is apparent that most municipalities recognize the inherent dangers in this and have not created a shared service arrangement between a governing municipal body and a Board of Education. Although an intriguing idea, the expenditures of additional funds for legal research is not recommended at this time based on the aforementioned and subsequent comments. Management Should the Township and Board of Education agree to establish a shared service contract for legal services, a number of issues must be resolved: Who would serve as the employer of the attorney(s) and staff? Under New Jersey Shared Services laws when one government entity assumes a service for another it takes on the role of employer for employees impacted by the shared service agreement. In the proposed scenario, who would serve as the employer of the attorney/staff? Would the Township assume all of the liability and costs if it is the employer and what financial reimbursement would be required of the District to mitigate those costs? The proposed use of a single attorney appears unrealistic and more analysis is required to determine whether it is reasonable to expect one person to handle matters that require an attorney for both the Township and District. No person can be two places at once and how would an attorney reasonably represent the Township and District when they have immediate needs at the same time? Does sharing an attorney, if legally/ethically permissible, create an environment in which the Mayor/Council and Superintendent/Board fight for attention and control of the attorney and wouldnt this also lead to political interference and competition if Township and Board agendas are in conflict? How many cases (regarding employees, students, the public, etc.) are currently pending with/by/against the two entities?
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How much time is spent by attorneys to travel to and from court and would this allow reasonable time in the office to handle duties discussed in the proposal? How many calls do attorneys for both entities take per month (from elected officials, authorized staff and the public) and can one person reasonably address them while performing duties described by proposal? How much time is spent by current attorneys prepping for Council/Board meetings and in the review of ordinances/resolutions? The proposal does not address how a single attorney and paralegal can operate efficiently in a shared service agreement considering that the School District has more than 9500 students and 1300 staff and Jackson Township has more than 200 employees. The proposal suggests that an in-house attorney could work flex time to meet the obligations of public meetings of the Township and District. It is unclear how a single attorney could perform all the duties suggested by the proposal and come in late on days where there are public meetings

Conclusion Our preliminary assessment is that such a shared services arrangement would not be in the best interests of the Township. Additional information and factual data as enumerated above could influence our preliminary assessment. The current proposal provides no factual data, only speculation and conjectures. However, our greatest concern is not economics but the perception and reality of conflict of interests and the confidentiality of information between entities that at this time do not have the same objectives. The latter concern may help explain why to the best of our knowledge no such dual role sharing exists in the State of New Jersey today.

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In Source Jackson Township Legal Services

Although the proposal presented by Cattonar and Giancola recommends a shared services arrangement between the municipality and the Board of Education, the CBAC felt it would be appropriate to review the feasibility of insourcing just Jackson Township Legal Services. Such a proposal, if implemented, could provide a foundation for future consolidations with the Board of Education, Fire Districts and Municipal Utility Authority, assuming that conflicts of interest issues can be resolved successfully. The submitted proposal contains a number of significant generalities, statements of opinion not based in fact, assumed cost savings without budget analysis where savings are proved, misstated conclusions from reference materials quoted and a lack of attorney review to demonstrate accuracy in assumptions of legal activities needed for a proposed shared services agreement of this kind. These are critical points that need to be considered to determine the effectiveness of the proposal. Proving budget savings might not be conclusive until after the Department is established, employees are hired, outside counsel is retained and in-house work begins. This is not a workable proposal. The proposer also makes the same claim in the Conclusion section of the proposal: The information included with in this study, along with assumptions, projections and forecasts can vary from actual results (Emphasis added) Therefore, it is the authors own admission that these savings require additional review and scrutiny. We concur. The current proposal does not provide sufficient detail to render an appropriate decision. Our preliminary assessment is that the case for an inhouse Legal Services Department has not been made. The rest of this section identifies many of the issues that we are concerned with and that still need further examination. Billable Hours The most consistent issue in the proposal appears to be a concern with the billable hours versus a salaried employee. Unless the proposal is inferring that the professional firms billing is inaccurate or fraudulent, the billable hours simply reflects the number of hours needed to research and conclude legal issues requested by the Township. Assuming similar competency levels for both in-house and outside Counsel would still require the same number of hours to complete these assignments. However, an outside firm would have the benefit of assigning these legal tasks to multiple individuals based on the level of legal expertise required to complete the assignment. The level of legal expertise required in an in-house department would require outside professional help for a task that is beyond the expertise of in-house Counsel. More importantly, there are probably a number of time-consuming tasks that could be easily be handled by in-house staff but not necessarily with an efficient use of the available limited resources of an in-house staff, i.e. experienced staff needing to do menial tasks for their level of expertise.
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The proposal cites a number of disadvantages to hourly billing2, however, there is a clear omission of the positive facts of the ABA report3 quoted in the analysis as follows: The method is simple. It is a comfortable standard completely familiar to both sides. Serves when no one can calculate the value of a service Minimizes transactions costs for both sides in engagement Works regardless of volume or type of services Fits with attorneys risk aversion The report actually concludes with this statement there are no easy or clear-cut answers to developing successful alternatives to the billable hour. If there were, the legal profession would undoubtedly already have had these answers.4 Billable Rate per Hour There are repeated attempts to derive a true billable hour rate by simple division but this math doesnt explain what was driving the billing. Was there a particular case or problem that drove hours to the level described? Have inquiries with the attorney from elected officials, staff and the public had an impact on the cost of legal services? If the report is accurate, then is hiring a staff lawyer the most prudent option to cut these costs? A comparison to surrounding towns with internal law departments does not appear to prove that they are cheaper by the hour than Jacksons approach to legal representation. If anything, the final costs which is the most important concern to the taxpayer seems to show they are exactly the same in terms of expenditures. However, respecting that the legal community has different opinions of billable hours versus retainers and other approaches, the more pressing question facing the Township is whether costs can be reduced in other ways without employing additional staff. We believe they can and these are discussed in further detail in the Cost Saving Alternatives section. Salaries and Wages Jackson would be required to hire at least three new employees under this proposal. This raises a number of concerns about taking on additional staff at a period of economic downturn: Assuming a top-end rate for the 3 employees at $120,000 for the attorney, $50,000 for the paralegal and $30,000 for the clerk/staff, the salary impact to
2

Jackson township Feasibility Study Insourcing Legal Department, Cattonar and Giancola, November 2011, Page 4 3 ABA Commission on Billable Hours Report, Liss and Kelly, American Bar Association, 2001-2002, Page 34 of 90 4 Ibid, Page 59 of 90 Wednesday, October 02, 2013 Page 9

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Citizens Budget Advisory Committee

Jackson would be at least $200,0005. Applying the cost of pensions/benefits to be roughly 42% of base pay, the total costs of those employees to Jackson would be $284,000. An examination of paralegal salaries for the State of New Jersey indicates that a base pay of $65,000 would be more appropriate for planning purposes. There are also varying estimates as to what constitutes an average salary for an attorney in New Jersey. It is highly unrealistic that Jackson would be successful at retaining a quality attorney considering the workload for only $120,000 but the proposal is taken at face value for argument sake here. Considering that the attorney would also be a Department Head it would not be unrealistic considering education, expertise and experience for that person to be paid at least and between the $121,000 earned by Township Engineer and the $125,000 earned by the Business Administrator. This could add an additional $25,000$30,000 to the proposed budget for salaries and wages. The current legal budget for Jackson Township is $440,000. This leaves $156,000 before a number of other critical factors are considered, not the least of which is the use of outside counsel and other expenses that are not included in the report. 2010 legal cost, excluding Gilmore and Monahan were $218 thousand. However, if it can be determined that the work required under this proposal would need more than a single attorney then any savings would be completely lost before outsourcing for need or specialists are even considered.

Technology The submitted proposal states that Technology should revolutionize the practice of law improve the relationship between client and lawyer, improve law firm structure and billing practices.6 We fully concur with this statement. When the acquisition of technology is cost justified, it can yield significant increases in productive and reduction in costs. However, the proposer fails to discuss what technology he is referencing, what it would cost the Township to purchase, install and utilize. It also assumes, without any detailed review, that our professional firms do not utilize technology to reduce billable hours. Most professional practices today utilize technology for time reporting, e-filing, ediscovery, case management and document management. The use of technology by professional firms is necessary to remain competitive with other practices and to make the most efficient use of their staff. We note that the Township possesses none of the aforementioned systems and such costs are absent from the proposals analysis. The authors claims that new document assembly systems would reduce time and money and allow non attorneys to perform tasks. This is unsubstantiated and begs the question of what systems he is referencing, what non attorneys could or would be assigned to these tasks, whether Jackson would need to purchase them and at what

Ibid, Page 5 Page 10

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cost and what tasks would be assigned to non-attorneys that are not already part of the billable hour charged by our outside professionals. It also assumes that other nonattorneys are available to perform these tasks. Other Expenses The proposal does not appear to take into consideration the hard costs of running a legal department, including: Continuing Legal Education costs Transportation/mileage expenses to and from court Use of Township vehicle Courier and special mail services Delays in court proceedings if single attorney is hired for both entities and distracted by workload Purchase of New Jersey Statutes, Court documents and other law books and subscriptions (if not currently paid for by Jackson) Specialized Legal Services The proposal does not address the costs of outsourcing attorneys. Jackson would, at minimum, require specialized attorney services or conflict attorney(s) for the following types of situations: COAH Harassment and Discrimination Labor Law/negotiations/Arbitrations Bond Counsel Special Education issues Justification for In-House Counsel In-house counsel advantages/Determining the capacity of an in house counsel While it is a point that deserves analysis, nothing in this section of the submitted proposal is a concrete justification for hiring an in-house lawyer. If anything, the statements are either incorrect or opinion. For example, the proposer suggests that hiring an in-house attorney doesnt come with added costs. However, questions raised above about continuing education, technology, mail costs, travel expenses and pensions and benefit costs clearly show substantial added costs to Township. The author also suggests an in-house lawyer could handle planning and zoning which is not permitted and is an area that would continue to require outside counsel. It is also an opinion that the Township does not require specialized services from a labor lawyer during negotiations. Contract negotiations and Police Arbitration cases are highly specialized areas of law. In addition, the number of contracts currently up for negotiation or matters that are subject to grievances by employees would ensure an inhouse counsel would be completely distracted from the myriad of other duties required under the proposal to properly represent the Township in negotiation matters.
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This will be especially true in light of the suggestion that an in-house lawyer be present at the initial thinking and planning of projects and regularly attend senior staff and Department head meetings. Is it realistic to propose that one person attend every staff, Zoning and Planning Board meeting? Does this again suggest that more than one attorney be required to fulfill the suggestions of the proposal? Staffing Levels The guidance suggested by the proposal on determining the workload and experience of the in-house counsel is thoroughly subjective7. The proposal implicitly assumes that we should establish an in-house Counsel prior to determining the workload of that counsel. It further suggests that the difference between needing inside and outside counsel will depend on the size and the expertise of the in house legal team. The proposal then recommends a staff of one attorney and one paralegal. This recommendation represents an initial staffing level and a recognition that outside professional services will be needed to augment their work. In Howell, these additional services amount to $300,000 a year. Interns Suggesting that money can be saved by using interns fails to recognize the time spent by the lawyer in overseeing and mentoring them8. Interns could have no role in any independent legal work thus limiting their value in this example. Interns are also temporary, and while they could be considered in Township government to cover certain functions today, they cant be relied on to be more than clerks in a Law Department unless they were Law School Students working under the attorneys tutelage. The recommendation to utilize interns has been previously made by the Citizens Budget Advisory Committee and is not a new suggestion. The Township, in fact, is currently exploring the use of interns in the Office of the Business Administrator and Township Engineer where the need for additional resources is particularly acute. But this is not the solution to the problem. Obligations to Township Employees The Township is currently considering layoffs for Township employees and a layoff of 23 police officers was only avoided by union concessions last year. Mayor and Council will need to consider what services are most important to provide the public and whether hiring 1 or 2 six figure employees is worth terminating others when attorney services can be rebid or billing/retainer costs can be negotiated with an outside counsel. ICMA Citations The Authors mentions that recent studies conducted by the International City County Management Association (ICMA)9 show a trend toward bringing privatized services
7 8

Ibid, Page 6 Ibid, Page 6

Whether or not to In-source or Outsource a Municipal Service, p. 4

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back inside government. No data is presented in this report to indicate whether these trends are directly attributable to Legal Services10 and suggests that as many municipalities insource as they do outsource.11 There is also a reference in the Conclusion section to an ICMA study of the Troy City Law Department (Managing an In House Law Department). A cursory inspection of this study shows the author is misrepresenting its point to prove his. Specifically, the ICMA study on the City of Troy Law Department came in response to a proposal to privatize an existing public entity, not in-source an already privatized function. In fact, the ICMA study in this case is clear that it is not proposing in-house legal services in every case. This report should not be interpreted to suggest that one form of representation should be favored over another, as each citys policies, goals and need for legal services will be different.12 While the ICMA study favors keeping existing employees in the Troy Law Department, it does suggest that decreasing city revenue and workload might justify outsourcing all or some of the Department.13 It is therefore difficult to understand what point the proposer was making by using this reference and there does not appear to be savings justification, comparable to Jackson, or proof of his concept herein. Use of Outside Counsel The proposal is not a realistic analysis of the need/costs of retaining outside counsel. The subjective comments that an attorneys personality will somehow determine which functions would be outsourced ignores the question of how much money will Jackson need to spend to outsource attorneys under this proposal. As referenced above, specialists on local government and school issues will certainly be required for special education cases, cases where the Township and District have adverse objectives, COAH, Labor law, Bond Counsel, etc. The author must also prove the statement that all in-house attorneys are going to be sensitive to the costs of outsourcing legal counsel14 An attorney is not a budget analyst
10

When we rank the top twenty services by level of new in-sourcing or outsourcing, we find ten services are on both lists (street repair, traffic signs, fleet management, building maintenance, park management, recreation, legal services, elderly services and public health). This suggests a constellation of factors including nature of local markets, management expertise and political preferences are also important in determining whether contracting is appropriate. In-Sourcing and Outsourcing: The Dynamics of Privatization among US Municipalities 2002-2007, Warner and Hefetz, June 2011 11 Although there is considerable variation by service, what we also notice is that within the same service, some governments will newly outsource while others in-source previously privatized . In-Sourcing and Outsourcing: The Dynamics of Privatization among US Municipalities 20022007, Warner and Hefetz, June 2011
12 13

p. 85, Appendix D: Law Department, Organizational Restructuring, City of Troy, Michigan , ICMA P. 91, Ibid 14 P. 7 Cattonar/Giancola Wednesday, October 02, 2013 Page 13

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and should not be expected to provide legal representations and advice to the Township and/or District based on cost cutting alone. This is a decision that the Mayor and Council must determine in the course of setting a Budget but an attorney who makes decisions on representation issues on the cheap could be doing a disservice to Jackson residents if those decisions result in payouts of settlements, incorrect legal advice or failure to act to avoid spending money on attorneys. There must be a recognition by the Township attorney that their role is to present elected officials with a legal interpretation of the alternatives and their consequences on issues rather than recommending specific management decisions. Whether to accept a specific risk or not is a management decision and not the realm of an attorney. This basic principal does not appear to have been considered when defining the role of the Township Attorney. The proposal includes a chart of outside counsel and expenses but fails to explain what the chart signifies or how much of the current spending could be projected in a need to hire outside counsel under the proposal. Without a clear understanding of the need for outside counsel in the proposal, the savings cant truly be proved. In addition, the second chart is a poor webpage copy of something that is not explained or referenced.15 Comparison to Other Municipalities The proposal relies heavily on comparing Toms River and Howell to Jackson to prove the case that savings can be found from an in-house attorney. Although there may be similarities between the three Townships, a one to one comparison fails to recognized differences in culture and organizational structure/history which significantly impacts governmental decisions. What may work in one township may not work in another municipality because of these differences. It, therefore, does not necessarily mean that Jackson will save money by repeating the different aspects of the in-house lawyers in these towns. Neither Howell nor Toms River shares an in-house lawyer in cooperation with their school district thus reducing the original project savings options in comparison to Jackson. A Township only review is all that is offered by the proposal. Jackson Toms River Howell Population 56,987 88,000 40,455 Square Miles 101 41 62 % Change since 1990 34% 21% 31% Median Age 33.65 38.9 35.86 Avg Household 92,471 84,468 94,739 Income Household Size 2.98 2.65 3.20

Toms River
Toms River is described as having a Law Department of three attorneys. The total salary for these three attorneys as of 2010 was $332,449 (exclusive of outside counsel)
15

Ibid, Page 14 Page 14

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which is almost identical to what Jackson paid Gilmore and Monahan in 2010 according to the proposal.16 There is also an issue unraised as to why a simple Google search indicates that Kenneth B. Fitzsimmons, Director of the Division of Law and Township Attorney maintains a law practice in Point Pleasant and R. Garry Mundy, Assistant Township Attorney maintains a law practice in Toms River. Are these current or outdated listings on findlaw.com? Are they permitted to perform outside legal work to supplement their incomes or to serve other government entities? These are relevant questions to be answered by the proposers.

Howell
Howell retains a single in-house attorney at a total salary of $108,000 according to the proposal. In addition, Howell still requires the use of external counsel in excess of $300,000 per year according to the proposal. This appears to be roughly what Jackson is spending currently on legal feels. Conclusion If the Mayor or Township Council deems it appropriate, CBAC members should consider interviewing officials in Howell and Toms River to determine if any savings are realistic for Jackson as proposed and if an apples to apples comparison is possible to make here. As stated previously, the current proposal does not provide sufficient detail to render an appropriate decision. Our preliminary assessment is that the case for an in-house Legal Services Department has not been made but may deserve further study.

Cost Savings Alternatives

It is the consensus opinion of the CBAC that a number of alternatives exist to reduce the cost of Legal Services while maintaining a level of expertise and productivity that serves the Township in the most efficient and cost effective manner. These should be explored in depth prior to any decision to implement an in-house Department of Law, whether it be on a small scale or large scale basis. The Township has in its power the ability to draft bids for legal services that utilize several variations of current billing techniques that could in theory allow the Township to reduce lawyer fees, notwithstanding legal needs that are unforeseen or serious in nature. These options dont require the hiring of additional employees but merely a change in how the Township pays for legal services. These can include, but are not limited to: Value Billing: A measure of the value of an attorneys potential services as opposed to paying a purely hourly rate for work performed. An attorneys value
16

www.app.com/datauniverse Page 15

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is determined by various factors but relies on a mutually established fee structure/retainer for the work to be performed. Blended Rate: A blended rate for legal services regardless of who is doing the work Flat Fee: An attorney can also be retained based on a flat fee that is inclusive of all costs or those that are repeatedly utilized. This retainer fee can be associated with either an hourly rate or monthly retainer fee. Not to Exceed contracts: A contract for services that contains a Not to Exceed amount that must be agreed upon in order to be eligible to be considered for the bid. Contingent Fees: An example would be outcome based billing and a base fee plus a success fee Hybrid models: Flat fee plus hourly, hourly rate plus contingency

It should be noted that these cost savings alternatives were reviewed in the 2002 ABA Commission Report used to critique billable hours but ignored in the proposal as possible solutions to reduce legal cost from outside Legal Counsel.17

17

ABA Commission on Billable Hours Report, Liss and Kelly, American Bar Association, 2001-2002, Page 34 of 90 Wednesday, October 02, 2013 Page 16

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Appendix A

Open Issues and Questions

1. The proposal indicates that Jackson Township has the opportunity to become one of the first Townships to combine the legal needs of the School District and the Township. We are unaware of any other Township considering this proposal and would welcome the opportunity to understand the issues with those municipalities.18 2. The proposal states that extensive phone interviews were conducted with various Township legal departments throughout the County, Jackson Township and School District employees, as well as interviews with various regulatory agencies, county and State officials and the Board of Education. The proposal lacks any details on who these individuals were. The details of such conversations would be helpful.19 3. The proposal also states that numerous web sites were studied for relevant subject area details. The proposal lacks any details on these items and there are very few footnotes or direct references to any of this information20. 4. The claim that Jackson is utilizing an excessive amount of specialized attorneys. Is unsubstantiated and is conjecture.21 5. Discussions were held with the Internship Department at Rutgers University about the feasibility of utilizing interns. The proposal does not indicate the source of these discussions and whether these are paid or non-paid positions.22 6. The proposal leads the reader to believe that John Rasimowicz of the New Jersey Division of Consumer Affairs and Dr. Mike Foster, Business Administrator of the Ocean County Superintendent of Schools support this proposal. Follow-up phone calls by a member of the CBAC and the Business Administrator to these individuals indicate that both individuals do not concur with the assessments presented in the proposal. This is particularly vexing and casts a significant question about the reliability of other statements in this proposal.23 7. The report suggest additional notable referenced material but does indicate why they are notable or what we can learn from them: Get Rid of the Billable Hour, The New York Times, January 30, 2009, 10 critical issues facing the legal profession, Randy Bachman, League of California Cities Practicing Ethics Municipal Lawyers The Hours September 2002, Nicki Kuckes Billable hour ethics, Richard Fogel Esq., April 4th 2005, Conflict of Interests American Bar Association Hiring your first In-house counsel, Steven Seckler lnhouse Counsel vs. Outside Associations now, September 2009 Intelligence, James Woehike
18

Jackson Township Feasibility Study Insourcing Legal Department, Cattonar and Giancola, November 2011, Page 7 19 Ibid , Page 3 20 Ibid, Page 3 21 Ibid, Page 5 22 Ibid, Page 6 23 Ibid, Page 8 Wednesday, October 02, 2013 Page 17