In a confidential three-page memo intended for use only behind closed doors, City Attorney Mike Aguirre has asked the City Council to give him a blank check to hire an outside law firm on a contingency-fee basis to sue San Diego Gas & Electric for losses suffered by the city in last year's wildfires. Aguirre's request is fraught with consequences that should be weighed carefully before the City Council votes on the matter.
For starters, this issue must be considered in an open City Council meeting, where the public can assess the situation on its merits. Earlier this week, the City Council at Aguirre's request was to take it up in closed session, where the press and public were barred. At the last minute, though, the City Attorney's Office abruptly asked for a two-week postponement.
At stake in the lawsuit is potentially millions of dollars that could be awarded to taxpayers or instead funneled to the San Diego law firm of Levine, Steinberg, Miller & Huver, which Aguirre wants to take over the city's case. For this reason alone, the City Council should hold its deliberations in public, not behind locked doors. The decision whether to farm out the lawsuit to contingency-fee lawyers has nothing to do with legal strategy or other confidential matters. Therefore, there is absolutely no justification for dealing with this question in closed session – other than to keep the public in the dark.
City Councilwoman Donna Frye, who has championed open government and recently announced a new initiative to make City Hall more transparent, certainly should not look the other way on this crucial matter. Frye should be true to her word and take the lead in opening it up to public scrutiny.
Several red flags flutter from the pages of the city attorney's confidential memo, which was authored by two of his top deputies, Donald McGrath and R. Clayton Welch, and obtained by the Union-Tribune.
For instance, lawyers who take a case on a contingency basis typically absorb whatever costs they incur, subject to being reimbursed if they reach a cash settlement or prevail at trial. In this case, however, Aguirre is asking that Mayor Jerry Sanders “designate a funding source to pay litigation-related costs that ... could total over $100,000.” In other words, taxpayers rather than Levine, Steinberg, Miller & Huver would be on the hook for the law firm's expenses, regardless of whether the city won a penny from SDG&E.
Even more important, from the standpoint of taxpayers, is that Aguirre proposes no limits on his contingency-fee arrangement with Levine, Steinberg, Miller & Huver, which says on its Web site that it handles cases involving “insurance bad faith,” “personal injury/wrongful death” and “class actions.” A standard contingency arrangement would award the law firm fully one-third of any settlement obtained from SDG&E. The confidential memo from the City Attorney's Office declares that the city's damages “could easily exceed $20 million.” Aguirre has said they could total $45 million, meaning the outside lawyers under a standard contingency arrangement would walk away with a whopping $15 million of any settlement of that amount.
If the City Council decides to farm out this lawsuit, it certainly should impose some limits on what the outside lawyers can collect, such as a declining scale for a contingency payment or simply an hourly rate for the firm's work. Above all, the City Council must protect the interests of taxpayers in the face of an avaricious plaintiffs' bar.
