Iowa senators seek to bring state's legal costs under control

'It's a red flag when legal fees exceed the amount at issue'

Rod Boshart
Published: February 6 2014 | 11:14 am - Updated: 29 March 2014 | 3:16 am in
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A Democratic state senator says he wants to “rein in excessive legal costs” being incurred by Republican Gov. Terry Branstad and the Iowa Executive Council in hiring outside counsel to defend the state against litigation.

Sen. Rob Hogg, D-Cedar Rapids, chairman of the Senate Judiciary Committee, cited the $484,124 the Executive Council had paid through last October to a private law firm to defend Branstad in an employment discrimination suit brought by state worker compensation Commissioner Christopher Godfrey.

In 2011, Branstad cut Godfrey's yearly salary by $36,000 after he refused the governor's request to resign. Godfrey in turn filed a lawsuit against Branstad and members of his administration for alleged discrimination, extortion, harassment and defamation.

The Iowa Executive Council -- a five-member panel made up of the governor, secretary of state, state treasurer, state auditor and secretary of agriculture – decided in 2012 to hire Des Moines attorney George LaMarca as outside counsel for $325 an hour. LaMarca, rather than Iowa Attorney General Tom Miller, represented the governor because it was possible someone in the AG's office might be called as a witness in the case.

“It’s a red flag when legal fees exceed the amount at issue, as they do in the Godfrey case,” said Hogg.

“I really thought that was an outrageous amount of legal fees,” added Hogg, who called the costs “excessive and grossly disproportionate.”

He proposed legislation that would require the Executive Council to establish a litigation budget for outside legal assistance rather than have a standing unlimited appropriation for legal costs. Legal costs established for litigation could not exceed the estimate without prior approval of the Executive Council.

The governor’s office did not immediately reply to a request for comment.

Sen. Tom Courtney, D-Burlington, who voted with Hogg to move Senate Study Bill 3078 to the full Senate Judiciary Committee, said he was concerned that the Executive Council is paying legal clerks highly hourly rates that the $75 an hour that public defender’s receive to represent indigent clients.

However, Republican Sen. Charles Schneider, a West Des Moines attorney, said he agreed it was good to have checks on legal expenditures, but he noted that “it would be impossible to predict” how much a litigation might cost overall at the beginning of the process. He said he was satisfied the current system whereby the AG’s office reviews costs that are then approved by the Executive Council is working and should not be changed.

“I’m not sure this is the best way to manage legal expenses,” Schneider said.

Hogg disagreed, saying the state needs a cost-control mechanism when it hires outside counsel to defend lawsuits.

“If we want to run state government like a business, we need a process for controlling litigation costs,” Hogg said. “Many businesses require counsel to provide litigation budgets and use other cost control mechanisms to avoid unnecessary litigation costs.”

With state government being a large and varied enterprise, Eric Tabor, chief of staff in Iowa Attorney General Tom Miller's Office, said outside counsel with special expertise has been used to handle a wide-range of issues dealing with bankruptcies, trademarks, federal communications, unclaimed properties, bonding, collections, and banking and finance cases.

Tabor said the current process the state uses is transparent and accountable. There is no budget “per se,” he noted, but legal fees are reviewed monthly and submitted to the council for periodic approval. “We don’t have any huge heartburn with this,” he told subcommittee members.

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