When the city of Springfield bought the loan for the historic Heer’s Tower from Great Southern Bank late last year, the city also acquired a year’s worth of Lathrop & Gage’s legal fees.
The city foreclosed on the downtown building, pushed out Jefferson City builder Vaughn Prost as the redeveloper, and reimbursed Great Southern for Lathrop & Gage’s fees. Lathrop, which had been Great Southern’s foreclosure counsel, continued in that role for the city through the negotiations with Prost.
The reimbursement and subsequent Heer’s project work helped to make Lathrop the recipient of the largest amount of the more than $1 million the city spent on outside law firms in 2005 and 2006. Springfield paid the firm $235,000, more than twice the amount the city’s legal department paid to any other law firm in the same period, according to city records.
The information provided as a response to a Missouri Lawyers Weekly’s Sunshine request showed that bad news and good news for fast-growing Springfield like lawsuits and complicated development deals provided fodder for 15 other law firms who count the municipality as a client.
In addition to Lathrop, four of the firms and attorneys – Evans & Green, former Springfield city attorney Howard Wright, Kansas City-based White Goss Bowers March Schulte & Weisenfels and Lowther Johnson – earned in the six figures for their foreclosure and development work and defense of police against civil rights lawsuits.
The top nine earners were a mix of locally headquartered firms and large St. Louis- and Kansas City-based firms, reflecting the advanced entry of the large firms into the Springfield market and the city’s increasingly sophisticated legal needs as it runs into complex development projects such as Heer’s.
“You have to look at what you get in return,” when considering the spending on outside counsel, said city attorney Dan Wichmer.
For example, Evans & Green, which specializes in collections, brings in as much as the nearly $114,000 spent on their services. And some of Lathrop & Gage’s work – helping the city in complying with a more than 10-year-old U.S. Environmental Protection Agency consent decree on storm water cleanliness – prevents the EPA from fining the city $10,000 a day, Wichmer said.
Missouri Lawyers Weekly obtained the information on Springfield’s legal spending nine months after sending the Sunshine request. The information on which law firms got business from the city was not available until now because it was broken down by project instead of by law firm and couldn’t easily be compiled, Wichmer said.
Not included in the released information were the fees paid out of other city departments’ budgets or for bond issue or contingency fee work, such as that of Springfield-based Lowther Johnson, which has pursued to the Missouri Supreme Court a lawsuit filed by the city against Sprint Spectrum and other telecommunications companies over taxes.
The legal spending of Springfield, which adopted a budget of $93.7 million for fiscal 2007, is less than a quarter of that of Kansas City, whose 2007 budget was $1.1 billion. Kansas City’s legal department has 21 attorneys, not including prosecutors, according to the city’s Web site. Springfield has eight.
A city audit last year found Kansas City spent $2.1 million in fiscal 2005 and $2.2 million in fiscal 2006 in legal fees, with the city’s ambulance services, port authority and tax increment financing commission paying the largest bills.
Familiarity with the city and its requirements won some law firms work with the municipality; the need for specialty practices accounted for other selections.
Attorneys in the Springfield office of Lathrop & Gage have been doing work for the city since before the Kansas City firm acquired the then-Miller & Sanford firm in 2000 to start its Springfield office, said Frank Evans, partner in charge of the office.”(Springfield) is certainly a significant client.”
Springfield’s legal department can keep up with about anything a general practice firm would tackle, but the city will hire outside counsel for specialty work, and sometimes to put a third party between the city and the target of city actions, Wichmer said. For example, when Springfield was condemning property for flood control belonging to the family of Bass Pro Outdoor Shops founder Johnny Morris, it hired Lathrop in 2005 to help city staffers avoid political heat.
In that case, Lathrop was picked because the firm earlier had represented an opponent in a case against Morris, Wichmer said. “They didn’t have any bridge to burn with Morris. They got the project by default.”
Law firms used by the city, headquartered from Springfield to Minneapolis to Texas, usually are selected based on their specialties and the requests of the departments that used them. Individual lawyers’ skills are key, Wichmer said. “We hire mostly the attorney. We don’t go with the firm so much.”
That was the case with former city attorney Wright, who turned in the third-largest legal bill of more than $113,000, a few hundred dollars less than Evans & Green. Wright, who built up his bill the hard way by charging $55 an hour, was hired as outside counsel after he retired in 2005 after 33 years as city attorney. “I’m cheap but efficient,” Wright said jokingly.
Wright has helped mostly with major projects that were ongoing at the time of his retirement. “By the time I would have gotten up to speed, they’d have been done,” Wichmer said.
Springfield acquired Heer’s after developer Prost, who had proposed an office, retail and residential redevelopment of the seven-story former department store building, missed financing deadlines. Springfield issued a new request for proposals and is talking with St. Louis-based McGowan Walsh Historic Renovators about a condo redevelopment.
The Heer’s boondoggle generated fees for law firms in addition to Lathrop. All of White Goss’ $113,000 tab and most of Husch & Eppenberger’s $78,000 in fees over the two-year period were based on work on deals for the building’s redevelopment, such as the foreclosure and loan buyout, and Wright has devoted some of his time to Heer’s. Kansas City-based Gilmore & Bell has worked on new proposals for Heer’s.
The legal fees are worth it, Wichmer said. With a successful development, the city would recover its money after being “$1.5 million in the hole,” after getting the building back. “To get there took a lot of money, I agree, but in the end we get our money back,” Wichmer said.
Wright, who has been good friends with White Goss attorney Michael White “forever,” according to partner Aaron March, brought in the law firm to work on the Heer’s and other development projects about three years ago. March said that Wright called about the Heer’s project and others in Springfield, asking, “You eat and breathe this stuff. Would you all help out, and by the way, reduce your hourly rates?”
White Goss bills at about $265 an hour, not including a discount, which would be applied at the end of the bill, Wichmer said. “We pay whatever they say; there’s such a limited market in what they do.”
In town, Husch & Eppenberger’s office has the expertise to handle the complex real estate work, but has too many conflicts because the law firm has Hammons development companies as a client, Wichmer said.
The city’s bad news provided other sorts of work as well. Lathrop earned about $60,000 representing Springfield in a class-action lawsuit filed against it over police overtime. Lowther Johnson and Mann Walter Bishop & Sherman defended the city and police against civil rights violation claims. Turner Reid Duncan Loomer & Patton also handled one of those 11 claims. “I wanted to spread the business out to more firms, since I saw it was going pretty much to two (firms),” Wichmer said.
Springfield avoided a large legal bill in one of its biggest scandals in the past two years, however – the discovery of $1.3 million missing from the municipal court. Former municipal court employee Rhonda Bateman is scheduled to stand trial Aug. 6 for felony stealing.
Legal work on that case was handled in house, except for the city’s tapping of Evans & Green as a consultant on how to recover some of the money, Wichmer said. The consulting cost about $10,000.
Wichmer’s department did pay a six-figure tab for other professional services in the matter, however. An investigation by an auditor from Springfield-based BKD cost the city almost $110,000.