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Orrick, Herrington & Sutcliffe is voluntarily returning nearly $96,000 to the state of Nevada that it was accused of having been overpaid. But the firm is disputing the findings of a May 14 audit that concluded that Orrick profited from improperly handled state funds for its work on the state’s college savings program. In a response Tuesday sent to the state, Orrick partner James Houpt called contracts between the firm and the state “indisputably ambiguous.” They could be read to suggest that Orrick had actually been underpaid, or that if the firm had overcharged, it was far less than claimed, he wrote. “While [the state auditor's] findings are fundamentally flawed, Orrick sees no value in creating or maintaining an adversarial relationship with a valued client,” Houpt wrote. “In a show of good faith, we enclose a check in the amount of $95,862.62.” Although Orrick has opted not to pursue a new contract to work on the college savings program, the firm still does other work for the state, said Allan Whitescarver, a firm spokesman. Orrick has been paid nearly $1 million for its work on the Nevada College Savings Program since 2001, but auditors said that in some cases the firm exceeded the scope of its contracts � resulting in a $96,000 overage. In others, contracts had not been legitimately approved, they found. The audit found no wrongdoing on the part of Orrick, but criticized how work was given to the firm. The college savings program had been managed by then-state treasurer and current Republican Lt. Gov. Brian Krolicki � a recipient of $29,000 in campaign donations from Orrick and its lawyers. Auditors found that $6 million in earnings from the $3.3 billion fund was held outside the state system and used to pay for various legal, marketing and other services with contracts that were not always properly approved. Orrick had a contract with the treasurer’s office in 2000 to provide bond counsel or other legal services for $225 an hour, but instead charged a composite hourly rate of $428 during the term of the contract, which expired in 2002, resulting in the $96,000 overcharge, according to the audit. But in its response, Orrick said it didn’t bill for the work done for the college savings program before 2002 until the middle of 2003, when funds finally became available. By then, the firm was operating under a new contract that allowed it to charge $500 an hour, the firm said. “No contract makes clear whether the contract rate that applies for other state agency work is the rate under the contract in force at the time that Orrick performed the work � or the rate set by the contract in force at the time that Orrick earned the right to bill for the work,” Houpt wrote. New Democratic state treasurer Kate Marshall told The Recorder last month that she was considering asking for the money back. But Orrick returned the money without such a request after a letter from Marshal asked for a response to the audit. Renee Parker, Marshall’s chief of staff, said the treasurer’s office hadn’t yet reviewed a copy of the letter and check, which arrived by fax Tuesday. Orrick’s response will also be forwarded to the state attorney general, who has launched an investigation in the wake of the audit, she said. “From our perspective, returning these monies ends the matter and resolves the issues related to Orrick raised by the Legislative Counsel Bureau Audit,” Whitescarver said. Reporter Zusha Elinson’s e-mail address is [email protected]

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