Why Rockville

Need s an
In-House
City Attorney

Page 1 of 22
Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
June 9, 2008

The City of Rockville

Mayor and Council
111 Maryland Avenue
Rockville, Maryland 20850

Executive Summary

The City of Rockville currently uses an out sourced attorney for all of it legal services. On average those out sourced fees
total about $1M over the last eight years. When compared to other Maryland municipalities of similar population,
Rockville’s legal costs are substantially higher. Also, there may be potential conflicts of interests in that Venable, LLP,
Rockville’s out sourced attorney, represents many clients who do business in Rockville and/or do business with the City
of Rockville itself. Transitioning to an in house attorney would a.) substantially reduce costs, b) increase budgetary
predictability, c.) eliminate potential conflicts of interest, and d.) increase legal services availability.

Why Rockville Need s an In-House City Attorney

The Mayor and Council should be commended for swiftly moving forward on this initiative, which will have many
positive effects for our city. Although the current out-sourced city attorney, Venable LLC, has served the city adequately
for nearly two decades, the cost of Venable and other out-sourced legal services soaks Rockville taxpayers an average of
more than $1M per year over the last seven years. Other Maryland cities of similar population employ in-house city
attorneys and spend one quarter (Gaithersburg) to one half (Frederick) as much for all of their legal services.

Having an in-house attorney also increases budgetary predictability. Rockville’s legal bills have vacillated between
$0.8M to $1.5M in recent years, compared to other cities’ significantly lower and constant rates. In these tight times,
being able to accurately budget for the next fiscal year’s costs are even more important.

Comparing apples to apples (only out sourced attorney’s fees), in 2004, Venable billed Rockville for more than $1.2M in
legal services, while the City of Gaithersburg paid their out-sourced attorney $149K and the City of Bowie paid their out-
sourced attorney $160K. Gaithersburg's population is slight larger than Rockville's and Bowie's is slightly less. In other
words, Rockville's legal bills, which totaled nearly 1.4M in 2004, were nearly TEN times that of other comparable
Maryland municipalities.

Cities such as Gaithersburg have been presented with significant legal challenges, such as the development of Rio Center,
day labor centers and the annexation of Crown Farm. Yet their legal bills remain dramatically lower than Rockville’s.

Add to that, possible conflicts of interest regarding Rockville’s current out-sourced attorneys, as they represent not only
the City, but developers, who in some cases do business with The City of Rockville. It’s easy to understand some
citizens’ concerns, when Rockville’s legal representatives sit on both sides of the table.

Any city attorney must report to the Mayor and Council, as stipulated by Rockville’s City Charter. This is how all other
Maryland municipalities structure their legal departments. It’s crucial that Rockville’s city attorney be able to act
autonomously and minimize actual or perceived conflicts of interest by reporting directly to this city’s governmental
body. ■

Respectfully Submitted,

by Drew Powell Jacques Gelin Rich Gottfried Christina Ginsberg

1035 Carnation Drive
Rockville, MD 20850

Presentation follows:
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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
What are the Advantages
of an In-House Attorney?

Conforms to the Rockville

City Charter
(City Attorney reports to the Mayor & Council)

Stabilize Year to Year

Operating Costs
(Budgetary Predictability)

Eliminate Potential
Conflicts of Interest
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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
What are the Advantages
of an In-House Attorney?

Increase Legal Services

Accessibility

Increase Oversight and

Review

Cut Costs by 30% to 50%

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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
How We Compare ….
to other Maryland
municipalities with
outsourced attorneys
City of Frederick
Growing city adding more
housing and industry,
significant infrastructure

City of Gaithersburg
Recent Projects include Rio
Complex and Crown Farm
Annexation
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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
Population:
60,000

55,000

50,000

45,000

40,000

35,000

30,000

Gaithersburg Frederick Rockville

Gaithersburg, at approximately 59,000 people, is only slightly

larger than Rockville, with approximately 58,000 people, and
Frederick with 56,000 people. There is no statistical
difference between the size of Rockville and the size of
Gaithersburg.
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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
Attorney fees:
*As reported in the city budgets, may include staff and
consultants.
Average 2001-2008
FY '07

$1,000,000.00

$800,000.00

$600,000.00

$400,000.00

$200,000.00

$0.00

Gaithersburg Frederick Rockville

Rockville has a consistent pattern of significantly higher

attorney costs than comparable cities.
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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
Cost Comparison:
Rockville spends:
179% proportionate to legal
expenses in Frederick

427% proportionate to legal

expenses in Gaithersburg

Cost of one lawyer per hour:

Contracted (now): $475 per hour

Staff (in-house): $100,000/2080hrs/yr

= $48.00 per hour + benefits
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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
 Each citizen pays:
Gaithersburg
Frederick
Rockville
$30.00

$26.34
$25.00
$23.79

$20.00
$17.50
$15.00 $14.50 $14.77
$13.77
$12.48 $11.89
$10.00 $9.62
$9.20 $9.16 $8.84
$8.11
$7.03
$5.00 $5.68
$4.56
$3.75 $3.68
$2.71 $2.75 $2.53
$0.00
2001 2002 2003 2004 2005 2006 2007 2008

$4 in Gaithersburg
$10 in Frederick
$17 in Rockville
FY05 Peak in Rockville $26.34
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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
 Comparison of Municipal Legal Expenses
Year / City Gaithersburg Frederick Rockville

2001 $160,000 $453,906 $533,826

2002 $162,000 $393,800 $798,458
2003 $221,000 $512,937 $841,142
2004 $149,000 $698,788 $1,379,597
2005 $269,000 $665,594 $1,527,565
2006 $217,000 $495,160 $856,581
2007 $335,000 $538,786 $1,014,786
2008 $348,000 $673,976 $998,700*

Total Cost ( 8 years) $1,861,000 $4,432,947 $7,950,655

Average Cost per Year $232,625 $554,118 $993,832**

Rockville Legal Fees
Compared w/other City 427% 179% N/A

City Budget $50,600,000 $75,200,000 $93,800,000

City '08 Population 59,000 58,000 58,000

Cost per Citizen $4 $10 $17

Data Sources (inclusive of ALL 2001 - 2008 legal costs (in-house and out-sourced), annual city, budget,
population, city attorney organization:

Gaithersburg: Harold Belton, Director, Finance and Administration, City of Gaithersburg. Phone: 301-258-6320
Frederick: Gerry Kolbfleisch, Comptroller, City of Frederick Phone: 301 600-1395
Rockville: March 2007 FOIA and Gavin Cohen, Director of Finance, City of Rockville Phone: 240-314-8402
Notes: * Rockville 2008 legal fees annualized based on July 2007 thru January 2008 data (all other expenses are actual)
** Legal expenses for Rockville do not include Anita McCombs, Assistant to the City Attorney,
who is an employee of the City of Rockville.

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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
 Comparison of Municipal Legal Expenses

$1,600,000
Rockville Tow n Center
$1,400,000 GDA signed September
9, 2003, how ever,
$1,200,000 Rockville legal expenses
spike 164% in FY 2004
$1,000,000 and 182% in FY 2005.

$800,000 Gaithersburg
$600,000 Frederick
$400,000 Rockville
$200,000
$0
2001

R o c k e r ic k r g
2002
2003

F r ea di t h e r s b u
2004
2005

G
2006

2007

2008

v ill e

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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
 Comparison of Municipal Legal Expenses
$1,000,000
$900,000
$800,000 Cost per Year over
$700,000 Eight Year Period
(2001 - 2008)
$600,000
$500,000 Gaithersburg
$400,000 Frederick
$300,000 Rockville
$200,000
$100,000
$0
R o ck
F re d
G a it h

v ill e
e r ic k
e rs b u
rg

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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
 Rockville Legal Expenses Lack of Budgetary Predictability

$1,800,000

$1,600,000 Rockville Town

Center GDA signed
September 9, 2003,
$1,400,000
however, Rockville
legal expenses spike
$1,200,000 164% in FY 2004 and
182% in FY 2005.
$1,000,000 Rockville

$800,000
Trendline shows
$600,000 radical deviation
from constant or
predictable legal
$400,000 fees year to year,
making budgetary
$200,000 planning difficult

$0
2001

2002

2003

2004

2005

2006

2007

2008

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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
Who is Rockville’s Attorney:
Outsource Contract with: Venable, LLP
formerly known as Venable, Baetjer & Howard LLP

“the Maryland REIT

counsel of choice”
What is a REIT?
A “REAL ESTATE
INVESTMENT TRUST”
Example:
Federal Realty Investment Trust
(NYSE: FRT)
o Developer
o Primary Rockville Town Center Developer and Signatory of
Rockville Town Center “General Development Agreement” (GDA)

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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
Venable LLP clients include:
• Federal Realty Investment Trust (NYSE: FRT)
o Developer
o Primary Rockville Town Center Developer and Signatory of
Rockville Town Center “General Development Agreement” (GDA)

• Archstone-Smith Trust (NYSE:ASN)

Recently Acquired by Tishman Speyer and Lehman Brothers' Real
Estate Division, brokered by Venable LLP)
o Developer
o 192 Unit Apartment Complex at Veirs Mill and First St (Rt 911)
o Archstone Communities 222 unit condo/apartment complex East
side of Hungerford Drive between City Center shopping center and
451 Hungerford Drive office building

• Corporate Office Properties Trust (NYSE:OFC)

o Developer
o Rockville Corporate Center, $221,702 sq ft, $43.3M located at 15
West Gude Drive and 45 West Gude Drive

• Ahold, USA (NYSE:AHO) (Giant Food, Inc.)

o Retailer
o Operating several grocery stores throughout the City of Rockville
• Marriott International (NYSE:MAR)
o Hotel/Hospitality
o Operates Hotels/Motels within the City of Rockville

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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
 Page 16 of 22
Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
SECONDARY OUTSOURCED ATTORNEYS:

Holland & Knight LLP clients:

• JBG
o Developer
o Twinbrook Commons
aka Twinbrook Station at the Twinbrook Metro Center

• WMATA (Washington Area Metro Transit Authority)

o Regional Transit Authority
o Owner of the Twinbrook Metro Center

• EYA (Eakin-Youngentob Associates, Inc)

o Town Center Developer
o Holland & Knight LLP acts as both council and Lobbyist for EYA

• Many other REITs and Developers

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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
 Personnel/Organization
City Attorney’s office consists of:
• In House City Attorney
• Administrative Assistant and/or legal aid
• Out sourced council as needed
City Attorney must report directly to Mayor and Council
Existing Org Chart from the City of Rockville Shows
Reporting Structure for City Attorney

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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
STAFFING:
Rockville
FY '08: $93.8 Million

StructureOutsourced
Reports Mayor and Council
to:

Gaithersburg Frederick
FY 08: FY '08:
$50.6 Million $75.2 Million
Structure In-House In-House
Reports Mayor and Council Mayor and Council
to:
Staff 1 City Attorney 1 City Attorney
1 Administrative 2 Assistant City
Assistant Attorneys
1 Legal Clerk
1 Legal Assistant
1 Administrative
Assistant

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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
Scope of Work
1.) Provides legal advice, counsel, services, training, consultation, and opinions to the Mayor,
City Council, Boards and commissions, and all levels of the City government, on a wide variety
of civil assignments, including but not limited to land use planning, laws against discrimination,
construction of public works, condemnation, purchasing and procurement, leasing, purchase and
sale of property, employment legal matters, public disclosure issues, and tort law. The City
Attorney’s advice includes methods to avoid civil litigation.

2.) Furnishes legal representation at all City Council meetings, and at other meetings when
requested.

3.) Prepares and reviews ordinances and resolutions, contracts and other documents for legal
correctness and acceptability.

4.) Assists officials and employees to understand statutes, regulations, ordinances, codes etc. that
apply to their respective offices and/or employment and assist in ensuring compliance thereto.

5.) Identify issues outside this scope of work that may require special counsel. Upon approval of
the City to engage special counsel, coordinate with other special counsel as needed to assure
proper management of legal issues, and proper coordination and transition of legal issues among
special counsel.

6.) Prepares legal opinions at the request of the City or the Mayor and Council.

7.) Provides the Mayor, Council, and administration a legal perspective and advice on various
governmental issues.

8.) Performs other legal services and tasks as assigned by the Mayor or the Council.

9.) Provides reports to the Mayor and City Council that detail the billings for general counsel
work and specialty work and compare to the budgets established for said services.

10.) May provide prosecution services either directly or through a subcontract with out-sourced
legal council for the City in the General District Court. May provide collection services directly
or through a subcontract with out-sourced legal council for overdue payments to the City such as
overdue tax bills.

11.) Serves as the Parliamentarian for the City Council meetings.

12.) Appears before courts and administrative agencies to represent the City’s interests.

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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
Specifications
1.) The appointed City Attorney (the “lead attorney”) must attend all regular City Council meetings.
These are scheduled for every Monday, beginning at 7:00 p.m. and typically lasting 2 - 4 hours. The
City Attorney attends all Council meetings to maintain continuity in representation.

2.) The appointed City Attorney also attends most City Council Work Sessions. These are typically
scheduled in lieu of a regular City Council meeting (above). Attendance is determined by the City,
and is generally requested by the City if there are matters of concern scheduled, which could benefit
by the City Attorney’s attendance.

3.) The appointed City Attorney also attends most City sponsored Public Hearings. These are
typically scheduled on days other than regular City Council meetings (above). Attendance is
determined by the City, and is generally requested by the City if there are matters of concern
scheduled, which could benefit by the City Attorney’s attendance.

4.) The appointed City Attorney must be available by phone, cell phone, fax and e-mail.

5.) The appointed City Attorney must be available to the City at all reasonable times. Timeliness of
response and accessibility to the appointed City Attorney is an important aspect of the service.
Accessibility and responsiveness for the proposed designated City Attorney is of greatest
importance.

Contract Term
The City anticipates a two-year contract, with optional two-year renewals. Renewal will require
Mayor and Council reauthorization.

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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850
Recommended Actions:
• Confer with other local municipalities, such as Gaithersburg,
regarding methods of transition to In-House City Attorney
• Create and post RFP, which includes “Scope of Work” and
“Specifications” for City Attorney position (see sample)
• Hire one In-House Attorney
• Employment Contract Must Include a Non-Competitive
Clause for at least one year after termination of employment
• Start with small staff (administrative assistant and/or legal
assistant)
• Engage out-sourced attorney on an “as needed” basis
• Institute a formal audit and review process for the City
Attorney’s office for all legal actions by an outside agency
(Montgomery County Inspector General)
• Formalize structure in accordance with City Charter the
City Attorney reports to Rockville Mayor and Council,
NOT the City Manager (conflict of interest)
• Take Action NOW!

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Prepared by Drew Powell ● 1035 Carnation Drive ● Rockville, MD 20850