Sep 152011
 

According to a recent report, Iowa has spent nearly six million dollars for outside counsel over the last five years. The majority of these fees resulted from attorneys charging an hourly rate of $200 or more, which is 2 ½ times the state’s intended rate. 

This issue arose when Gov. Terry Branstad requested that the state’s Executive Committee hire outside counsel to represent him in a lawsuit challenging his line-item budget veto and consequent closure of unemployment offices. Although the state Attorney General’s Office admitted that its staff attorneys could have handled the case, it advised the Executive Council to grant Gov. Branstad’s request. The state hired the Nyemaster Law Firm, which charges the state $275 an hour for its services.  

Treasurer Michael Fitzgerald voted against Gov. Branstad’s request and publicly criticized the rates charged by Nyemaster. In response, Branstad’s staff asserted that Fitzgerald recently approved a rate of $440 an hour for outside counsel. Fitzgerald noted that the Attorney General’s Office did not have the expertise to handle Fitzgerald’s bond-related legal matters. However, both Branstad and Fitzgerald agree that the total amount paid to outside counsel over the past five years is high and are concerned about these costs. 

The Executive Council has capped outside counsel hourly rates at $80. However, the Executive Council routinely consents to higher rates where it is necessary to do so. In the last five years, the Council approved rates in excess of the cap at least 18 times. In 14 of these instances, law firms were paid $200 or more per hour for their services, costing nearly $4.8 million.

Other states have also recently dealt with the high costs of outside counsel fees. Rhode Island reduced fees paid to outside attorneys performing contract work by 15%, which will save the state approximately $445,000 per year. Additionally, Glendale, Arizona, city officials were required to justify spending $23.3 million in outside legal fees over the past five years.