Omaha Public Schools’ outside legal fees crept up last year, an uptick officials attributed in part to the district’s passage of a $421 million bond program.
School board members studied a spending breakdown and rekindled discussions over the best way to pay for outside legal work at their Sept. 9 meeting.
A review of 2014-15 legal bills showed about a 9.7 percent net increase, from $1.24 million in the 2013-14 fiscal year to $1.36 million last year, according to an update by in-house attorney Megan Neiles-Brasch.
“I’m not going to sugarcoat it,” Neiles-Brasch said. “Our fees have gone up this year.”
Legal spending related to the district’s passage of a $421 million bond program, worker’s compensation, general litigation and employment litigation was up, while fees tied to retirement, employment and buildings and operations decreased.
The bond was a huge driver of costs, Neiles-Brasch said.
The district awarded a $50,000 bond counsel contract to outside legal firm Baird Holm and spent more than $131,000 on construction-related legal fees. If the district hadn’t put the bond up for a vote, legal spending would have dropped roughly 6 percent, she said.
“We had a successful passage of a bond last year, and that’s a very good thing for our district,” she said. “But we have lots of contracts, lots of zoning, lots of compliance issues, negotiating real estate contracts on behalf of the district, so there’s a lot of reasons why those costs would go up.”
OPS legal fees have been a point of contention for the school board for years, though spending has declined significantly in recent years after peaking in 2005-06.
That year, spending hit $4.3 million, the result of a particularly litigious year that included the One City, One School District fight and a challenge to the state’s school funding formula.
Since then, such costs have fallen, through a combination of fewer lawsuits, more employee training and a flat-flee monthly retainer agreement with Baird Holm. Previously, OPS paid all of Baird Holm’s billable hours.
The district also hired Neiles-Brasch in 2013 to serve as in-house counsel and chief negotiator, at a salary of $132,000. She handles much of the district’s day-to-day legal work; negotiates contracts with bargaining units, including a new teacher’s contract this spring; updates board policies; attends board meetings; and conducts training seminars on topics such as sexual misconduct and students’ legal rights.
Work or litigation outside her purview or workload is distributed to outside attorneys, though Neiles-Brasch said all legal questions or cases are routed through her first.
“Nothing goes to Baird Holm without me knowing about it,” she said.
The board signed a one-year retainer agreement with Baird Holm in December 2012 to pay a flat monthly fee of $11,500 for routine legal services. The board let that yearly contract lapse at the end of 2013 in favor of extending the Baird Holm agreement on a month-to-month basis.
The month-to-month agreement still stands, though several board members said it’s time to either negotiate a new contract or bid out the district’s legal services.
“I would say that I’m definitely in favor of renegotiating the current contract,” board member Katie Underwood said. “I don’t know that there’s really a good reason for us to be on month to month right now. It just creates a little bit of uncertainty for everyone.”
The board has talked multiple times about bidding out its outside legal work since going month to month, board member Marian Fey said.
“It bothers me that we don’t have a contract,” Fey said. “We haven’t looked at it again, and we haven’t tried to restructure or renegotiate the contract and see if there’s savings there.”
Neiles-Brasch recommended that the board maintain its current relationship with Baird Holm and consider bidding out two specialty areas of legal work, worker’s compensation and immigration, by the end of December. Immigration legal work relates to visas the district sometimes helps foreign teachers or other staff procure, such as dual-language teachers from Spain, Neiles-Brasch said.
She told the board that OPS is getting a good deal with Baird Holm, whose effective hourly rates are cheaper than other law firms in Nebraska. For litigation, the hourly rate is about $206 per hour and $235 an hour for non-bond, non-litigation work. Other firms charge close to $280 an hour, she said.
“You will spend more money if you do an RFQ (request for quotation), and that’s the bottom line,” Neiles-Brasch said.
Several board members said there’s only one way to find out if OPS is truly getting the best bang for its buck: by going out to bid and soliciting quotes from other firms.
“I do believe that the longer you stay with an entity, the costs go down, but I do believe that Omaha Public Schools is a high-profile client and there are other law firms in Omaha that would probably want our business and would compete for that,” board member Marque Snow said.
Board member Yolanda Williams asked whether hiring more staff would lessen Neiles-Brasch’s workload and potentially save money.
Last year, Neiles-Brasch argued that OPS’s legal workload is large enough to justify hiring an additional attorney and a paralegal. A survey last year of other urban Midwestern districts showed that the much-larger Denver school district has seven attorneys and three paralegals on staff. Tulsa, Oklahoma, had one attorney, and Wichita, Kansas, and St. Paul, Minnesota, each employed two attorneys and one paralegal.
“For the record, I’m in favor of additional staff,” board member Justin Wayne said. “I think she’s short-staffed.”
The board didn’t take any action at the meeting.
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