A report released Tuesday by the state comptroller found local governments are failing to control excessive and improper payments for legal services.
Comptroller A. Matthew Boxer scrutinized 2011 fiscal year expenditures for legal services by three towns and two school districts, identified as geographically representative of towns and districts with potentially deficient practices.
They are North Bergen in Hudson County, West New York in Hudson, Medford in Burlington, the Freehold Regional High School District in Monmouth and the Plainfield School District in Union.
The deficient practices included billing for services that should have been covered by a retainer, charging attorney rates for secretarial or administrative services and exceeding fee caps without formal authorization.
In North Bergen, problems include possible ethics violations by municipal attorney Herbert Klitzner, and a "no-work" job by an in-house attorney, Eric Bal, a matter that has been referred for criminal investigation.
Klitzner, the township's attorney since 1985, was paid $207,870 for 2011 plus $16,469 for unused vacation time, making him the highest-paid municipal lawyer in New Jersey. His pay exceeded that of counterparts employed by Newark, Jersey City and Paterson, who made $154,057, $124,032 and $92,721, respectively. North Bergen told Boxer's office that it had never compared Klitzner's salary with those paid by other towns or considered another compensation arrangement.
Klitzner is also of counsel with Chasan Leyner & Lamparello in Secaucus, which billed North Bergen $371,407 in 2011, the largest share of the $863,458 paid to the town's outside counsel for that year.
He keeps an office at the firm and is named on its letterhead and website but told Boxer's office all his work is now done for North Bergen.
The ethics questions concern his role in hiring outside counsel for the town.
North Bergen says he helped develop the specifications and takes part in picking the firms. Klitzner says he decides whether outside counsel is needed but does not evaluate proposals, though he does decide which outside firms should handle specific tasks.
Boxer found that Klitzner "routinely delegates the Township's legal matters to Chasan but is not responsible for reviewing and approving the resulting billings."
The report concluded that because of his dual positions, Klitzner apparently violated the Local Government Ethics Law, even though he cleared the arrangement with the Advisory Committee on Professional Ethics before going to Chasan Leyner. On Dec. 18, 1995, Israel Dubin, then the ACPE secretary, said "there would be nothing improper about the proposed association," so long as Chasan Leyner's vouchers were processed like Klitzner's — submitted to the township administrator, Department of Community Affairs and Board of Commissioners — and the firm had no conflict.
Government employees and lawyers operate under different ethics standards and thus, the report said, the matter was being referred to the Local Finance Board for review.
It also mentioned that Chasan Leyner billed $60,000 for landlord-tenant matters even though it was not hired to do that type of work, while firms that were hired for those services did not get to perform them, adding the "unauthorized delegation" highlighted the local government ethics concerns.
Bal was one of 10 in-house counsel for North Bergen, none of whom had a written job description, though he was the only one whose duties could not be ascertained.
North Bergen first thought he might work for its Alcoholic Beverage Control Board or as tenant advocate, but after an internal review, found he received a salary for unknown duties and without the town's consent.
Bal, who resigned during North Bergen's review, was paid $18,807 in 2011, received benefits that cost $26,206 and was enrolled in the pension system.
He claimed he was the housing attorney but, after falling out with a construction code official, was no longer sent legal work and had to create his own, with Klitzner more than once taking housing-related work from him and sending it to Chasan Leyner.
He also told Boxer's office he was routinely solicited for political contributions, at least once by Klitzner personally.
The report notes that North Bergen referred Bal's situation to the county prosecutor and that it would ask the Division of Criminal Justice to look at whether a crime was committed.
Neither Klitzner nor Bal returned a call.
A statement issued by North Bergen through spokesman Paul Swibinski objected to allegations that Klitzner violated the ethics law or had a conflict.
The statement noted that the county prosecutor found no wrongdoing regarding Bal and predicted that state prosecutors would reach the same conclusion.
Ralph Lamparello of the Chasan firm says Boxer's draft report made no mention of the 1995 ethics opinion and though it was added to the final version, it is only a passing reference.
He provided a copy of a June 5 report on Klitzner's conduct by former Justice Roberto Rivera-Soto, hired by North Bergen after the draft circulated.
Rivera-Soto, now with Ballard Spahr in Cherry Hill, found no breach of legal or government ethics rules.
Other significant findings by Boxer involved work done for the Freehold school district by Whippany's Schwartz Simon Edelstein & Celso, which was paid almost $500,000 in 2011 for its services as board counsel.
The report complained about block billing and $89,000 in fees charged above the $213,000 cap without the district's formal authorization.
Boxer was also concerned that 30 of the firm's 54 lawyers billed the district for services in 2011, with multiple attorneys sometimes showing up at one meeting. The report says the firm subsequently halted that practice at the district's request.
Schwartz Simon's Stephen Edelstein responded to the report, saying that the firm was authorized to go over the cap and used nondescriptive billings in sensitive cases to ensure that a public records request for its invoices would not expose litigation strategy.
In a press release accompanying the report, Boxer explained that it was meant "to develop guidance that local governments could consult when contracting with outside counsel and managing their legal departments."
He said the report found "repeated failures to review legal bills and manage legal contracts in a way that looks out for taxpayers."
He added, "Public officials need to scrutinize their legal bills as if they were paying for them out of their own pocket, otherwise taxpayers are going to get ripped off."
The report suggests that local bodies come up with policies and procedures for hiring counsel, including clearly defined job descriptions, and do so through a competitive procurement process.
In addition, they should use written contracts that specify the scope of services, billing rates and terms, staffing expectations and other aspects and should carefully manage compliance.
New Jersey State League of Municipalities staff attorney Ed Purcell says it "seems unfair and illogical to draw conclusions on how all 565 New Jersey municipalities do business from an audit of three municipalities and two school districts."
Freehold spokeswoman Nakell Williams issued a statement saying that the district cooperated with Boxer's office and that the concerns noted in the report have been addressed or are under consideration.