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Oakland City Attorney John Russo has saved money by beefing up his staff and slashing how much work he assigns to outside law firms. After climbing to a high of $2.6 million in 2001, Oakland’s outside legal costs dropped to $1.5 million for fiscal year 2002-03. Russo predicts that number to tumble even more next year. But a short list of firms still does brisk business handling city cases. The biggest winner since Russo took office three years ago appears to be his ex-campaign treasurer, Clinton Killian. He and his former firm have billed the city $784,000 for collections and other work. Some firms, like Erickson, Beasley, Hewitt & Wilson, have seen their work hold steady under Russo, while others have seen it drop dramatically from the era of former City Attorney Jayne Williams, an analysis of seven years of city data shows. After doing $1.3 million worth of work from 1996 to 2000 under Williams, Wendel, Rosen, Black & Dean has seen its billings drop to about $300,000 during Russo’s reign, for example. In an interview, Russo took credit for lowering Oakland’s legal bills by $1 million and defended his law firm choices. “We want to minimize outside counsel costs,” Russo said, later adding that he sticks with the local firms he knows best. “The law is a personal business,” the city attorney said. “It’s about who you trust.” $1 MILLION SAVED Russo swept into office in September 2000 pledging to drastically reduce what the city spent on outside counsel. At the time, the city attorney’s office was spending just over $2 million a year for outside counsel. The “Riders” police scandal helped spike Oakland’s legal tab to its highest level �� $2.6 million �� during Russo’s first year in office, city figures show. But since then, Russo has managed to push costs lower, near where they were about six years ago. Russo attributes the drop to key hires in the real estate and employment areas, as well as procedural changes. In particular, the city does better work at the front end of land use and labor disputes, which reduces the likelihood of litigation, he said. “We used to pretty much use outside counsel for every [land use] dispute,” Russo said. Since he was elected, he’s hired real estate experts such as John Truxaw and Dianne Millner and labor attorneys such as Vicki Laden, Claudia Madrigal and April Madison-Ramsey. Even with the new hires, the city attorney’s office is only slightly larger than it was under Williams. It had 34 attorneys then and a total of 68 employees. Before the economic downturn, Russo had plans to boost his payroll to 98 employees. But he was forced to scale back those plans and lay off a handful of lawyers. Now he has 36 attorneys and 74 total employees. The in-house staff can handle a range of issues, from civil rights to inverse condemnation, said Randolph Hall, Russo’s litigation chief. “We are a full-service law firm,” Hall said. “We handle 99 percent of non-conflict-of-interest cases in house.” There are still a few areas where the city consistently turns to outside firms, he said. Those include police misconduct cases and suits where the city has a conflict, like the Riders case, in which police officers and the city needed separate counsel. The city also seeks outside help for highly specialized areas or cases that will require a massive amount of time or staff. SEVEN-DIGIT FEES The amount of outside counsel work up for grabs is shrinking, but a few firms have managed to rake in tens of thousands of dollars in fees each year. Two firms have earned more than $1 million during the past seven years . Oakland’s Erickson, Beasley and Wendel, Rosen both netted seven-digit fees over that period. Twelve-attorney Erickson, Beasley handles the bulk of eminent domain work that is farmed out by the city. The relationship stretches back so far that name partner Alice Beasley had trouble recalling when the firm first began working for the city. “It’s been at least 10 years,” Beasley said, adding that her firm has also represented the city’s redevelopment department and done some police cases. But land issues “are a principal area for us,” she said. And unlike some firms whose flow of work from the city has fluctuated over the years, Oakland’s relationship with the 25-year-old Erickson, Beasley has remained steady. The firm, which recently handled issues that sprung from the 98th Avenue construction near Oakland’s airport, has billed the city $1.5 million in the past seven years and has remained among the most-used outside firms under both Williams and Russo. Wendel, Rosen’s $1.7 million legal tab is more a testament to the real estate and other work that it did under Williams �� such as issues surrounding development of Oakland’s City Center area �� than its current relationship with the city attorney’s office. “Wendel, Rosen has such a well-developed reputation in real estate,” said David Alexander, a former Wendel, Rosen attorney who now works for the Port of Oakland. Wendel, Rosen has recently picked up general litigation work for the port, which is funded separately from other Oakland legal costs, Alexander said. Several other firms that did a lot of work under Williams have done little under Russo. Evelio Grillo, an Oakland lawyer who handled police cases for the city under Williams, says he hasn’t done Oakland work in years. Much of that type of work was taken in house, he said. Crosby, Heafey, Roach & May also lost city work. Crosby, Heafey, which merged with Reed Smith in January, billed the city a total of $260,000 from 1996 to 1999, but has done virtually no work for the city since Russo took office. The former managing partner for Crosby’s Oakland office, John Lynn Smith, says conflicts of interest with other Crosby clients prevent his firm from doing Oakland work. Other firms that have earned top dollar have handled relatively short-term projects. Ronald McClain, an Oakland solo, has been paid more than $300,000 to help the city prepare contracts for technological upgrades. San Francisco’s Bertrand, Fox & Elliot hadn’t done city work in several years before it was tapped to handle the massive Riders litigation. City figures show that it has billed the city $461,000 since Russo took office, although the city’s insurers paid $371,000. Bertrand, Fox will also handle federal suits that have sprung from an April 7 police clash with anti-war demonstrators, Russo says. KILLIAN’S LOAN WORK One of the attorneys who has received the most city work under Russo is his friend and campaign worker, Killian. Since 2000, Killian and his former firm Strickland, Haapala, Altura, Thompson & Abern have billed the city a total of $784,000. Russo and Killian say they have known each other since the 1980s. The two became close over the years as they took opposing sides on local political issues such as the Nuclear Free Zone and the PG&E utility tax. Killian, the chairman of Oakland’s planning commission, is a well-known figure in Oakland politics. He recently used his office as the mailing address for the political action committee that pushed Mayor Jerry Brown’s unsuccessful proposal to put 100 new police officers in Oakland. During Russo’s campaign, Killian acted as his treasurer and was a vocal supporter who accompanied Russo to campaign appearances. “We were adversaries for 10 years when I was told he would be running for city attorney,” Killian said. “I said that I would support him.” Killian joined Strickland, Haapala in 1999. Soon after Russo was elected in 2000, Killian and Strickland partner Clyde Thompson expressed interest in the city council’s renewed effort to recover millions in unpaid loans, business taxes and other debts, Russo said. “The city had a pile of uncollected loans. Most of them dated back to the Elihu Harris administration,” Russo said, referring to the former mayor. One high-profile example was a $2 million loan made to Women’s Economic Agenda Project, which provides outreach to the poor. WEAP used the money to buy and renovate the downtown Atrium Building, but failed to make debt payments. Killian and other lawyers took the nonprofit to court, and the city ultimately foreclosed on the property and sold it for $3 million, covering the principal, interest and loan fees. After Killian left Strickland in 2002, all of Strickland’s loan work shifted to him. Killian has billed the city $300,000 since leaving the firm, and Strickland, Haapala had billed the city $480,000 for such work while Killian was still there, city figures show. Russo said there was no quid pro quo in the assignment of the work to his former campaign worker. Strickland is a venerable Oakland firm “that would not over-bill,” Russo said. Killian’s civil background and political resume made him a good choice, the city attorney said. Killian, who now heads a three-lawyer Oakland firm, also bristled when questioned about his political ties to Russo. Killian said he has been a civil litigator for 18 years and is qualified for the job. “After the election my firm did what every other firm in the city did. We sent a letter of solicitation to the city,” the lawyer said. “We do quality legal service at a reasonable cost.” Not all firms that supported Russo’s campaign have prospered. Wendel, Rosen and Crosby, Heafey — whose partners contributed substantial sums to Russo — have seen declines in the amount of work they do for the city attorney, not increases. Russo and Rosemarie Sanchez, an official in Russo’s office who helps track outside counsel costs, said a combination of factors led to the surge in collection work the past few years. The city wanted to aggressively pursue uncollected business taxes and bad loans. More than 150 cases — most of them tax matters �� were passed on to outside attorneys, including Strickland, Killian and bankruptcy boutique Kornfield, Paul & Nyberg. At the time, “we did not have the expertise in house,” Sanchez said. “After we looked at it more closely, we decided to bring it back because they could be done in house with a non-attorney in small claims court.” “We have cleaned out his book of loans,” Russo said, referring to Killian. BRINGING IN THE WORK Scoring city work isn’t easy. Less work is less available, and the city attorney’s office stresses that it plans to drive down outside counsel costs even further. Procedures for hiring firms vary widely depending on the case, Russo says. A few projects, such as bond work, go through a traditional request-for-proposal process, much like any other city contract. For other matters, such as police suits, the city rotates work among a short list of specialists, Hall said. Russo said the political players involved in a case may dictate which firm is chosen. Mayor Jerry Brown, for example, likes to use San Francisco’s Lafayette & Kumagai. In general, Russo and his litigation chief Hall said they expect a prospective firm to meet certain criteria. They like to hire local whenever possible. They like firms that provide a high level of service and provide a good value for the city. There should be no surprises on legal bills. The city is open to using small and lesser-known firms, Russo said. He and Hall said interested firms should contact his office. “There is no lock-up here on who gets the work,” he said. “We try lots of little firms.” That said, Russo added: “I know who has conflicts. I know who is available in the East Bay.”

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