Spending on legal matters for the DeKalb County School District is expected to more than double in the current fiscal year, as the school board has approved a $10.5 million legal budget compared with payouts of $4.7 million to law firms last year.
Much of the money—which includes both attorney fees and expenses—is projected to be paid to three firms: Sutherland Asbill & Brennan, Alexander & Associates and King & Spalding, according to a document showing legal expenditures obtained through a Georgia Open Records Act request by the Daily Report.
The expected increase stems in large part from the upcoming trial against DeKalb schools’ former construction contractor, Heery International, said school district spokesman Jeff Dickerson. The trial, in which the school district is seeking $120 million, is scheduled for February, six years after each side accused the other of wrongdoing.
Unrelated litigation and settlements involving former school system employees also are driving up costs, said Chief Financial Officer Michael Perrone.
In August, a DeKalb grand jury recommended that a special grand jury be convened to review the school system and its finances, including legal costs. In its recommendation, the grand jurors said school Superintendent Cheryl Atkinson told them on Aug. 21 that legal costs for the 2012 fiscal year exceeded $3 million, and she said they would rise to more than $6 million in the current fiscal year.
The document provided to the Daily Report last week showed that 2012 legal spending was $4.7 million. The school board later passed an amended budget that raised the amount of expected legal spending in the 2013 fiscal year to $10.5 million.
Erik Burton, a spokesman for the DeKalb district attorney’s office, said if DA Robert James were considering empaneling a special grand jury, it would not be public information.
The school district’s legal spending in the current fiscal year, which lasts until June 30, 2013, is budgeted to reach levels last seen in the 2008 and 2009 fiscal years, shortly after the Heery case metastasized. Heery initially sued for $1.5 million, claiming it was fired unfairly, and the school district responded with $120 million in counterclaims accusing the contractor of overbilling and fraud.
The school district spent a total of $10.4 million on legal matters in 2008 and $11.6 million in 2009 before the costs dropped off in the next three years, the school district’s document shows.
Costs are increasing again because of expenses associated with the Heery trial, such as taking depositions and hiring expert witnesses, Dickerson said.
“The Heery attorneys told us we should expect some additional expenses heading into trial,” Dickerson said. “It’s primarily the complex litigation, and a desire on the part of the school board to anticipate and budget legal expenses.”
Over the past three years since Sutherland became the school district’s general counsel, the firm has usually collected the most from the DeKalb schools, including $2.5 million in 2012. Sutherland spokeswoman Andrea Christman said the firm declined to comment in order to protect client confidentiality.
Alexander, which acts as employment counsel, took in nearly $1.5 million in 2012. The firm didn’t respond to a request for comment.
King & Spalding’s share of legal expenses by DeKalb schools have fluctuated because its work for the school district is focused on the Heery litigation.
King & Spalding has been paid $18.2 million for its work on the case since 2007, according to the school district’s document.
King & Spalding collected $1.6 million in the 2007 fiscal year, $6.1 million in 2008, $4.4 million in 2009, $3.1 million in 2010, $1.7 million in 2011 and $714,000 in 2012.
According to a fee agreement signed in 2008, the firm has been mostly working on a contingency basis for the case. While the firm isn’t being paid attorney fees, it’s still entitled to other costs incurred in preparation for trial, Dickerson said.
Most of those payments are for depositions and experts, said King & Spalding attorney Robert Khayat. The experts include computer analysts who have looked through tens of thousands of files, backup tapes and hard drives in search of relevant emails.
“There are still expenses being paid, but I don’t know to what extent,” Khayat said during a break in a hearing on the case earlier this month. “It’s the normal kind of expenses being incurred in preparation for trial.”
The school district’s defense in the Heery case goes beyond King & Spalding.
Elarbee, Thompson, Sapp & Wilson is representing six former Board of Education members and one current member named by Heery as individual defendants in its 2010 amended claim against the school district. Elarbee Thompson was paid more than $555,000 by the DeKalb school district last fiscal year, $327,000 the year before and $305,000 so far this fiscal year.
“My clients deserve a full and vigorous defense,” said attorney Brent Wilson. “Unfortunately, their legal defense is costing the board some money, but I would think any elected official who acted in the best interest of the taxpayers and acted based upon information that was brought to them in their capacity as an elected official would hopefully be defended.”
He said he will seek to have his clients dismissed from the litigation after discovery concludes.
The civil defense of former school administrators also is costing the school district money. Heery has claimed that former Superintendent Crawford Lewis and former Chief Operations Officer Pat Pope (who now goes by Pat Reid) helped get the contractor fired so that they could steer school construction contracts to family and associates. They also face similar criminal accusations.
Goodman, McGuffey, Lindsey & Johnson, which represents Lewis in the civil suit, has been paid more than $66,000 in connection with the Heery litigation. The school board, on a 5-3 vote Oct. 8, waived a $100,000 cap on legal expenses for Lewis.
“We have tried—and I believe succeeded—in being good stewards of the funds that would be made available to us,” said Judy Farrington Aust of Goodman McGuffey. “We will certainly pursue every option that is available to us in resolving this case in Dr. Lewis’ favor.”
C.F. Brock and Associates, which represents Reid, has received about $72,000 from the school district for her defense in the suit.
An additional legal expense to the school district became clear when the Board of Education voted Oct. 8 to settle a lawsuit by a former employee for $300,000. James Crowe, a supervisor in the Graphic Arts Department, claimed he was fired for his public comments to the Board of Education in opposition to eliminating the department and outsourcing its work.
So far in the current fiscal year, the school district reported spending more than $2.3 million on legal expenses. Projected over the full year, the school district is spending at a slightly slower pace than its $10.5 million legal fee budget.
“Our legal experts have told us to expect expenses of a certain amount. We’re hoping that we don’t actually have to spend those amounts of money,” Dickerson said.