A friend with long experience in the legal realm called Tuesday to say she had heard the Legislature is paying more than $1,000 an hour to lawyers from the Washington, D.C., law firm handling the Medicaid lawsuit against Gov. Bill Walker.
For Alaska lawyers whose clients find it hard to part with $300 or $400 an hour, that is a shocking statistic, she said.
How much is the state actually paying? It could be $1,000 per hour or more. There is a chance it could be less. It all depends on how much time the Bancroft PLLC lawyers end up putting into the case over the next two years.
The $400,000 flat-fee contract approved by the Legislative Council, the committee that handles legislative business between sessions, does not require a minimum number of hours, though the Bancroft lawyers must keep time sheets available for inspection under the contract.
I'd be surprised if the per hour rate ends up getting close to what is customarily charged in Alaska. Two of the Bancroft lawyers named in the Medicaid case have had customary rates from $575 an hour to more than $1,350 per hour in the recent past on other matters, according to the New York Law Journal. We have no reason to believe they gave the state a big discount on the $400,000 contract.
Add to this the decision to avoid local hire and you have the makings of a dubious decision, set up in a fashion that avoids the disclosure of a hefty cost-per-hour.
Are we to interpret this to mean that the Legislative Council concluded this straightforward case is beyond the reach of Alaska lawyers who don't charge as much? In a word, yes.
The only hourly legal fees in the case that we know of are from $165 to $400, charged by the other firm hired by the Legislative Council. Holmes Weddle & Barcott, which has offices in Seattle, Anacortes and Anchorage, is assisting the experts from D.C. Anchorage attorney Tim McKeever is to receive $290 per hour under that separate $50,000 contract, while associate attorney Stacey Stone is to receive $220 an hour.
In addition, we know the rate charged by the Anchorage firm Dillon & Findley, which is zero dollars per hour. The company approached Gov. Bill Walker and offered its services to defend against the lawsuit after reading about the $400,000 contract approved by legislators.
"I was greatly offended by it and I talked to my partners and we agreed that given the current budgetary crisis in Alaska, the state could ill afford to hire a private law firm to go up against this national firm. And we agreed to do it pro bono -- we've litigated against large national law firms on numerous occasions," Anchorage attorney Ray Brown of Dillon & Findley told the Alaska Public Radio Network.
After seeing a copy of the Bancroft contract Wednesday, Brown said it appears to be structured so that if the Supreme Court had sided with the state and Bancroft during recent proceedings and ordered a briefing, Bancroft "could have been paid 100 percent of their $400,000 with one court appearance," but the court did not accept its arguments.
He said he is not suggesting that either law firm representing the Legislative Council has done anything unethical or inappropriate. "They certainly negotiated a very favorable contract, but the contract terms were agreed upon by the council," he said. He warned, however, that there are potential problems with a flat fee arrangement and that the Alaska Bar Association's rules stipulate that fees must be reasonable.
Anchorage Rep. Les Gara said if the final signatures have not been placed on the Bancroft contract, it should be renegotiated or the council should withdraw from the contract and seek volunteer attorneys to match those from Dillon & Findley, "who are among the best in the state." Dropping the lawsuit entirely and putting Medicaid expansion to a legislative vote would be the best approach, allowing the $450,000 to be spent elsewhere.
So far, the state attorneys and Dillon & Findley are winning the early legal battle. An Anchorage Superior Court judge and the Alaska Supreme Court refused to stop the Medicaid expansion Sept. 1 through an injunction, but the lawsuit continues and could be a long-lasting affair.
What's clear is that the services of Bancroft PLLC , a high-profile D.C. firm that specializes in U.S. Supreme Court and other appeal cases, do not come cheap.
The legal documents filed in Alaska courts include the names of three Bancroft attorneys, including Paul Clement, former solicitor general of the United States, and Erin Murphy, who appeared in the recent court proceedings via Skype. The Legislative Council is not paying for expenses.
Clement had a customary hourly rate of $1,100 per hour in 2011 and charged $1,350 an hour in 2014, according to an April 6 article in the New York Law Journal.
The subject came up when a judge in the Northern District of New York cut Clement's fee from $1,100 an hour to $330 an hour in a civil case, saying the lower number was reasonable, while reducing Murphy's fee from $575 an hour to $200 an hour. The $1,100 per hour sought by Clement was the "actual market rate" that the lawyer collects, court documents asserted.
Based on the two-year Alaska contract, we don't know if legislators calculated the work load in this case, a vital technique in deciding whether money is well spent, but they certainly should have. We can be confident that the owners of the law firm would never have gotten to their station in life without keeping track of such details.
Sen. Gary Stevens, the chairman of the Legislative Council, said he opposed the lawsuit from the start and was out of the country when the Legislative Council voted 10-1 to file suit.
He asked the Legislative Affairs Agency to publicly release the draft contract and it did so early Wednesday. The Legislative Council has a policy of keeping draft contracts secret, but it is not a law.
The project director for the contract is attorney Chad Hutchison, who is on Sen. John Coghill's staff. Hutchison and Coghill have argued that what the governor did on Medicaid is unconstitutional. Others have said that Hutchison and Coghill have it wrong.
Rep. Sam Kito, the only member of the Legislative Council to vote against the lawsuit, said he has been unable to find out why Bancroft was chosen and how the fee was negotiated.
"The only discussion we had was the question of approval of the overall amounts, $400,000 for Bancroft and $50,000 for the Anchorage firm, and these were the only firms presented to the Legislative Council," he said.
"Much of the information and commentary on the issue came from Sen. (John) Coghill's office in advance of the meeting and subsequent to the meeting, so his office might be another place to look for information."
Hutchison defended the lack of a minimum work-hour commitment in the contract. "The total number of hours required cannot be known. All litigation is different. We can say, much like what was said at the preliminary injunction hearing, that the parties don't anticipate a long discovery process because the case largely revolves around statutory interpretation."
Bancroft is set to collect $250,000 for the Superior Court portion of the litigation. If legislators approve a Supreme Court appeal, the company would collect up to $150,000 more. The contract can be terminated at any time with or without cause.
Perhaps there is still time for the Legislative Council to renegotiate or take other steps to salvage some of the $400,000. At this stage, that may be as close as it gets to a legal victory.
The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)alaskadispatch.com.
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