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D.C. Council Chairman Vincent Gray calls it one of the worst-managed contracts he’s ever seen. What was supposed to be an $800,000-per-year project to secure property for the District’s new baseball stadium has ballooned to more than $2 million and counting — costs that could push the District past its $611 million budget cap for the stadium. At the center of it all is Venable, one of the city’s largest and most profitable law firms. An investigation by D.C. Auditor Deborah Nichols found that the firm, which a year and a half ago was selected to litigate eminent domain cases for land in Southeast Washington along the Anacostia River, overcharged the city more than $250,000 by consistently billing at higher rates than the contract called for and by charging for items not covered by the contract. She also found that Venable didn’t follow proper procedures in dealing with city contracts, such as substituting personnel without notice and initiating litigation without a work order. Everyone involved admits that there were mistakes in the handling of the contract, with most of the blame falling on two D.C. Attorney General’s Office employees, who have since left that office. But the auditor’s report raises questions about whether Venable was taking advantage of a broken system and the rush to build a baseball stadium, or whether the firm merely had its own problems managing a government contract. Neither scenario is ideal for a firm that has done work for the District and other government entities in the area and plans to keep doing so. For its part, Venable says it acted quickly to correct any errors — agreeing to slice around $300,000 off its bill. Karl Racine, Venable’s managing partner, says the firm also appointed a contract administrator in response to concerns raised by the Attorney General’s Office. “We take responsibility for these errors, which have all been corrected to the full satisfaction of all parties involved,” Racine says. “The bottom line is that by everyone’s account, our firm is doing excellent work for the city.” But the firm refused to provide to Legal Times a copy of its contract with the city, would not give written documentation of its dealings with officials in the Attorney General’s Office, and would not supply the name of its new contract administrator, citing an inability to discuss “personnel matters.” The firm answered few questions about the situation, such as how and why it overbilled for more than a year and which attorneys — other than partner J. Douglas Baldridge — worked on the litigation. Racine wouldn’t comment on whether any attorneys had been removed from the case after the problems came to light. At a June 5 meeting, the D.C. Council approved emergency legislation authorizing additional funds to pay Venable for its work and agreeing to a new contract that would allow Venable to continue litigating the eminent domain cases for another year. The District didn’t have much choice. At the Council meeting, D.C. Attorney General Linda Singer said it would be too costly to bring in a new firm at this point. “I think if we didn’t keep this firm we would be in much worse shape, for two reasons,” Singer said. “One, Venable, in the substance of their work, has done an excellent job in litigating for the District; and two, the cost of bringing in new counsel. We would be paying for them to get up to speed, which would be a significant additional investment for us.” FASTBALL SPECIAL After a tense battle between the Mayor’s Office and the D.C. Council to bring baseball back to the District, the Council in March 2006 approved $611 million for the project, which was slated for completion by Opening Day 2008. The city had identified at least 26 parcels of land that it would need to develop for the stadium. The previous summer, the D.C. Office of Contracts and Procurement identified a dozen law firms that it believed could handle the eminent domain work — estimated to cost about $800,000 a year. At the time, city officials expected to farm out the work among three or four firms, but only three applied for the project. One, Holland & Knight, dropped out quickly due to a conflict of interest. The two left were Venable and Leftwich & Ludaway, a small boutique firm with just a handful of partners on staff. Jerry Moore III, a partner with experience in real estate law specific to the District, submitted Venable’s proposal for the job in August. According to the proposal, Moore was to be one of the main attorneys on the litigation team. He would also be the primary contact with the D.C. government. Venable outlined its experience working with city governments and on eminent domain cases. The firm pointed out that it had represented the city in several matters over the years, including work for the D.C. Public School System and the University of the District of Columbia. The firm touted having a cadre of attorneys adept at handling complicated real estate, eminent domain, and business litigation. In its bid, the firm cited several other eminent domain cases, such as those involving the city of Rockville, Md., and the Falls Church, Va., school board. According to the firm’s proposal, Venable’s stadium team would include Baldridge, one of the firm’s litigation stars; Paul Glasgow, a partner with real estate and litigation experience; and Robert Wilkins, a white-collar litigator and former D.C. public defender. Two other partners mentioned in the bid were David Lasso, who practices state and municipal law, and John Cooney, an administrative law attorney. The associates named in the bid were Kristin Koger, Danielle Foley, and Ronald Jacobs. The District’s decision was made easier when Leftwich & Ludaway also revealed a conflict of interest and dropped out. On Oct. 17, 2005, Venable was awarded the contract. The D.C. Attorney General’s Office was in charge of coordinating outside legal services for the city as well as monitoring the contract. It assigned longtime employee Charles Barbera as its point man on the contract. The 39-page contract set the budget at $800,000 for the first year — which subsequently increased to $950,000 after a contract modification — and a billing rate schedule in which partners would be paid $390 an hour, associates $260 an hour, and paralegals and investigators $150 an hour. Those rates were increased slightly for the second year of the contract. Within a week of being hired, Venable filed in D.C. Superior Court for the Attorney General’s Office a complaint of condemnation, one of the first steps in eminent domain disputes, against 16 parcels of land. Another case was filed in December 2005 against one more parcel. But there were already problems. For one, the firm had yet to receive a work order. In fact, the money, in the form of bonds put out by the District, wasn’t available until mid-2006. But the work had already begun, according to the auditor’s report. Venable submitted its first invoice at the end of December 2005. By then, it had already billed more than $213,000. Its next invoice, for $74,000, submitted in February 2006, included billing rates for associates and others that exceeded the cap in the contract. In that invoice, one associate billed 68 hours at $285; another person, whose job description isn’t detailed, billed 25 hours at the same rate; and a third billed 4.9 hours at $190. According to the auditor’s report, the firm had overbilled the city $3,273.50 that month. (The auditor’s report does not name the attorneys on the invoices.) Such billing continued throughout the year, and by October 2006 — the end of the first year of the contract — the firm, according to the auditor, had overcharged the District by nearly $60,000 in legal work alone. Venable’s Oct. 6 invoice, according to the auditor, contained more than $22,000 in overbilled work by two associates and three unidentified people. During the first year of the contract, Venable submitted invoices totaling nearly $1.2 million — $250,000 more than the contract called for. By that point, the District had paid the firm $945,000, raising no questions about the invoices. There is no evidence that Barbera, the attorney general’s contracting officer, ever reviewed the bills before forwarding them on to the Office of the Chief Financial Officer for payment. Barbera left the Attorney General’s Office in October 2006 to join the office of D.C. Chief Financial Officer Natwar Gandhi. He was replaced by Bruce Brennan, who was then an acting deputy attorney general after two decades at the Attorney General’s Office. Under Brennan’s watch, the overbilling continued and intensified. Despite a contract-approved increase in billing rates for the second year, associates and others whose jobs weren’t disclosed were billed out at even higher rates. According to the contract, in the second year Venable associate billing rates were capped at $268 an hour, yet they were billing between $285 and $310 an hour. With associates billing hundreds of hours, the additional fees quickly added up. From November 2006 until March 2007, Venable overbilled the city more than $200,000, according to the auditor’s report. The firm also billed for meals that were not covered by the contract, but those expenses were minimal compared with the hourly fees. Yet the city kept paying — no questions asked. That is, until the money ran out and D.C. auditor Nichols got involved. NO HARM, NO FOUL? Nichols began her investigation early this year as part of a larger audit on all of the spending for the baseball stadium. It wasn’t easy. According to her report, “Very little creditable written pre-decisional documentation was made available” by the AG’s office for the review. That could be because the Attorney General’s Office didn’t have much to show. The city’s contract with Venable states that all correspondence, invoices, and modifications should be kept in a central file, but neither Singer nor David Fisher, the new manager for the Venable contract, has any knowledge of the file. “Our focus, once Ms. Singer became aware of these irregularities, was not only finding out what happened but also fixing it and making sure it didn’t happen again,” says Deputy Attorney General Eugene Adams. Brennan, who took over management of the contract from Barbera in October, retired in April. He did not return calls for comment. After learning of the errors, Singer and other officials in the Attorney General’s Office negotiated with the firm to correct the billing problems and to amend the contract. Singer also appointed Fisher as the new contract manager. Nichols released her preliminary report on June 1. A final report is expected to be completed in July. She declined to comment for this story. Mayor Adrian Fenty proposed emergency legislation in early May to approve a new contract for legal services, which then went to the D.C. Council for approval. During the June 5 meeting, Council members grilled Singer for close to an hour about how the billing mistakes occurred and who was responsible. But ultimately, and with “great reluctance” from Gray, the Council voted to approve a new contract with Venable — one that paid the firm for busting the budget on the first one. The new contract capped the legal fees at $2.2 million for the current year and $1.6 million for the third. The Council seemed divided as to where the money would come from to pay for the new contract and whether it would push the city beyond its $611 million cap for the stadium. Venable was not called to testify, and Racine says that in fact, the firm was never contacted for the auditor’s report. Racine is also keeping quiet on exactly how the firm consistently overbilled the city for more than a year without anyone at the firm noticing. He says all billing and invoice issues were “communicated with the relevant individuals at the OAG.” Racine won’t say whether the billing fiasco led to personnel changes at the firm, beyond saying that Venable has now appointed a contract administrator to oversee the city project. He says Baldridge is the lead attorney on the eminent domain litigation. In April, the firm hired Claude Bailey, the former general counsel of the D.C. Sports and Entertainment Commission, as a partner. On Venable’s Web site, Bailey, a former official at the D.C. Attorney General’s Office, is touted as being the “principal legal adviser” for the construction of the baseball stadium and having experience with eminent domain cases. Racine says Bailey is playing no role in the firm’s eminent domain contract with the city. “From Venable’s perspective, what we did in this matter is consistent with what we do in all matters, and that is communicate with our clients, seek direction and instruction as to what we are doing, and proceed accordingly,” Racine says. He adds that even though under D.C. regulations, Venable was not allowed to begin work without a task order, the firm was directed to do so by its client. “We have no doubt we were authorized and indeed instructed to begin work immediately, and that’s what we did,” Racine says. Currently, the fight over how much the District will pay landowners is about to go into the mediation process, which will last until the end of July. From there, if not every party is satisfied, the cases will go to trial. And despite the billing errors, Singer says she still has faith in Venable. Says Singer, “The firm has done excellent legal work and, with a properly negotiated and managed contract, I would have no hesitation in using them.”
Attila Berry can be contacted at [email protected].

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