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Below the lush, windmill-dotted hills of the Altamont Pass stretches the Lawrence Livermore National Laboratory, where secrecy is as much a tradition as the blue radiation detectors dangling from employee badges. “The attorneys here are normally not seen in the press,” said Janet Tulk, who is both the laboratory’s chief counsel and an associate director of administration. These days, though, the lab’s in-house lawyers are finding that their decisions have high-profile interest and ramifications. President Bush wants the Livermore lab and similar facilities to be the scientific heart of the homeland security effort, and the lab announced in December that it would reorganize for the anti-terrorism effort. A spokeswoman said it’s too soon to tell what role the legal staff would play, but at the very least, lab attorneys — who already license lab scientific discoveries — would handle such deals for homeland defense technology. Achievements of the 12 in-house lawyers have made news lately: The team successfully defended the lab against a $40 million false claims suit and weakened a class action that could have cost the lab $250 million. But not all of the attention the legal department has received has been positive. Recently, a congressman asked a watchdog agency to probe whether contractors — including the University of California, which runs the laboratory — are squandering taxpayer dollars on legal expenses. Exhibit A is a $1 million jury verdict awarded to a Livermore lab whistle-blower who sued after she was fired. In November, an Alameda County judge awarded the plaintiff’s attorney $1 million in fees. Tulk and most lab attorneys spoke to The Recorder during three-way interviews that included lab spokeswoman Susan Houghton, who barred unsupervised interviews of most in-house attorneys. When Tulk, a former California Coastal Commission attorney, joined the office in 1985, there were just a handful of lawyers that the University of California had assigned to the lab, and she was hired to work on environmental cases. As the needs of the lab grew more complex, it developed an on-site legal corps that has grown specialized and more distinct from the rest of the University of California general counsel’s staff. Although the lab attorneys work at the Livermore facility, the division still reports to the general counsel’s office. SCIENTIFIC MINDS Tulk and other staff attorneys say they were attracted to the lab because they love science. While in-house attorneys at other technology businesses are narrowly focused, the lab’s hires — who go through an extensive security check that can take up to a year — deal with everything from genetic innovations to national defense research. “The scientists here are told to reach for the stars,” Tulk said. One rapidly expanding area of work for the department is helping the lab share its technology with the private sector for other types of uses. “The question of intellectual property will be increasingly important,” Tulk said. Licensing agreements generate millions for the University of California. According to figures supplied by the lab, the school pocketed about $2.3 million each year from such agreements from 1997 to 1999. Last year, the school raked in $3.5 million. Three or four of the lab’s in-house attorneys work on intellectual property issues, mainly writing patent applications and licensing agreements for companies that want to use the lab’s technology for business ventures. Over the past two years, the office has filed more than 100 applications for U.S. patents. Previously, that number had been in the 70s through 90s, said Alan Thompson, a lawyer who supervises the patent attorneys. “There is more technology evolving,” Thompson said. And while the attorneys work to defend the lab’s patents, litigation is rare, he said. Two years ago the lab licensed weapon research radiation technology that a business used to improve how doctors deliver radiation cancer treatments, Thompson said. More recently, the lab licensed a detection system to Environmental Technologies Group that may help law enforcement officials fight terrorism by identifying unknown substances through DNA analysis. On the litigation front, lab in-house attorney Kathryn Rauhut, along with outside counsel at Morrison & Foerster, successfully persuaded Alameda County Superior Court Judge Ronald Sabraw to dramatically reduce the class size of the gender discrimination class action Singleton v. University of California Regents.Early on, plaintiffs estimated that 10,000 past and present female employees — who claimed their pay and promotion was less than male colleagues — were part of the class. Now that number is down to about 3,200. That action reduced by millions the lab’s exposure, which was once estimated by plaintiff attorneys to be as high as $250 million. But the lab continues to battle the class in Alameda County Superior Court. Lead plaintiff attorney James Sturdevant said damages could be $100 million or more. The lab also won a significant victory in a federal lawsuit. This year U.S. District Judge Thelton Henderson dismissed the lab from a false claims suit that could have resulted in more than $40 million in damages against the lab and other defendants. In U.S. ex rel. Adrian v. The Regents of the University of California , C99-3864, businessman Donald Adrian alleged that the lab had diverted DOE money intended for a software project for other lab projects and lied about it. The suit also alleged that the lab engaged in a kickback scheme. Now that the lab isn’t a defendant, the case has been moved to a Shreveport, La., federal court where other defendants are based. Adrian’s attorney says he will appeal the ruling. Nonetheless, critics say, there are signs that the lab’s legal house is not in order. Dee Kotla, a woman who says she was fired shortly after she gave testimony to support another worker’s sexual harassment claim, won a $1 million jury verdict. Although a judge later reduced that amount to $745,000, she awarded Kotla’s attorneys $1 million in fees in November. The lab contends that Kotla misused her phone and computer to run a business. Houghton, the lab spokeswoman, has said the fees are not supported by case law and that the facility plans to appeal the verdict and the fee award. Whether the University of California or the feds foot the bill, these cases ultimately cost taxpayers, said Sturdevant, the lead plaintiffs lawyer in Singleton . Rep. Edward Markey, D-Mass., issued a press release in May that called for the congressional watchdog, the U.S. General Accounting Office, to probe how much is spent on litigation costs by contractors such as the University of California Regents. “I am concerned that U.S. taxpayers may be paying for such legal costs, even when the legal activities undertaken by the DOE contractor are frivolous or unnecessary,” Markey said in a May 15 letter to the GAO. Markey said that between 1995 and 2001, the DOE paid $55 million in reimbursements for legal fees to the University of California, the contractor that runs both the Livermore lab and the Los Alamos National Laboratory. In a past interview, Houghton, the lab spokeswoman, said the lab pays outside counsel at Littler Mendelson $250 an hour, and has paid out $840,000 in court costs and fees so far in the Kotla case. In Markey’s May letter, he said court costs — which were then $400,000 — were “unnecessary waste,” especially if the plaintiff’s claim is true that Kotla misused her computer minimally and made $4.30 in local calls. When “DOE fails to assess the merits of the legal cases � contractor will have no incentive to settle cases,” the congressman wrote. In response to a Recorder Freedom of Information Act request, the Department of Energy released figures showing that the Livermore lab’s legal expenses are on the rise. The lab has spent more than $2 million on litigation for the past three fiscal years — and it may exceed 2001′s spending before the end of the year. There are fewer than 10 lab cases pending in court, a spokeswoman said. Although the 2002 fiscal year ended in October, a lab spokeswoman said the updated 2002 figure was not available. Attorney J. Gary Gwilliam has led the charge to increase public awareness about legal maneuvers that he said waste taxpayer money. DOE’s willingness to foot the lab’s legal bill has given the lab a “blank check” that it uses to wage courtroom battles that should settle out of court, Gwilliam contends. “If they will give homeland security to the lab, [the lab] should stand up for the right thing,” said Gwilliam. Gwilliam’s Oakland firm, Gwilliam, Ivary, Chiosso, Cavalli & Brewer, represents Kotla, and is one of the firms involved in the Singleton class action. It’s also part of other past and pending lab cases. So far, Gwilliam has written letters to University of California President Richard Atkinson and lawmakers such as Sen. Barbara Boxer and Rep. Ellen Tauscher, D-Walnut Creek. “They [the lab] should want � an organization of people who would stand up if something was wrong,” said Gwilliam, noting that a lab attorney, Gabriela Odell, led the charge to investigate Kotla after Kotla gave a deposition in the sexual harassment lawsuit that cost the lab worker her job. Gwilliam, a veteran trial attorney, said other institutional defendants — such as school districts and cities — make better use of mediation. “If this was a private company, that would be one thing, but this is the government,” Gwilliam said. While Tulk, the lab’s chief counsel, declined to comment on ongoing litigation, she and a DOE lawyer who helps monitor the lab’s litigation say that Gwilliam and Congressman Markey have mischaracterized the lab’s legal tab. The congressman’s questions about legal costs are nothing new, they said. Occasionally lawmakers inquire about attorney costs, but those internal questions rarely make news. Markey sent a press release, which generated headlines, they said. The lab has no “no-settle” policy, Tulk said. And, DOE lawyer Richard Vergas added, the Department of Energy does not blindly reimburse the lab for legal costs. The lab “doesn’t get extra money to pay for settlements or verdicts,” said Vergas, acting chief counsel at the DOE’s Oakland Operations Office. In reality, the system is more complicated, he argued. If the lab is sued in state court — even in a case such as Singleton,the massive gender discrimination class action — the DOE reimburses the lab as an “allowable cost” under the contract, whether it wins or loses. Those costs are paid by federal funds. However, if the lab is found liable under some federal statues, such as the dismissed false claims suit, the DOE won’t pay the full amount. If the lab wins or settles, it gets 80 percent reimbursement. If the lab loses, it gets nothing. Instead, the university would probably pay for the adverse judgment out of a fee given to the university by the DOE to run the lab, Vergas said. The Department of Energy, which oversees the lab via the National Nuclear Security Administration, gets monthly reports on how much contractors, like the University of California, are spending on legal bills, Vergas said. The agency also tracks all major litigation in state and in federal court, and scrutinizes what outside lawyers are paid. The DOE system isn’t “reimbursement” in the traditional sense, Vergas said. The agency reviews legal bills and pays them as they come in. However, since one pot of money is used to run the lab and pay “allowable costs,” a huge verdict in state or federal court would force the lab to trim costs in other areas — including scientific programs such as defense research — to cover the tab. “If we had a contractor with a lot of litigation, we would look at that,” Vergas said. More than half of the $55 million reimbursement figure that Markey cited was the total amount of legal costs run up by all labs that are run by the University of California, including Los Alamos, Livermore and the Lawrence Berkeley National Laboratory, he said. But he acknowledged that Markey’s figures were accurate. “It was a bad couple years,” Vergas said. No money has been paid out on the Kotla case because the jury verdict and the attorneys fees are being appealed, he said. The DOE gave the lab a green light to appeal the case, because the relative additional legal cost wasn’t that great, Vergas said. But if the lab loses the appeal, it and the DOE “would talk about” what more legal action would cost, Vergas said. Tulk said labor litigation is one of many routine parts of an in-house government lawyer’s job. And it’s a small percentage of the work that the lab’s legal staff does, she added. “There will always be employment litigation,” Tulk said. “There will always be contracts.”
On the Rise
Lawrence Livermore National Laboratory litigation expenses sharplyincreased in 2001. Lab officials said a final 2002 figure isn’tavailable yet.
Year Amount
FY 1999 $2,479,186
FY 2000 $2,083,676
FY 2001 $2,706,987
FY 2002* $2,461,281
*Figure includes costs through July 2002. The fiscal year runs from October through September. Source: Lawrence Livermore National Laboratory

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