The Omaha school district is hoping to cut its overall legal costs in the long run by spending more money upfront.
In a narrow 5-4 vote, the Omaha Public Schools board last week approved plans to hire a second in-house attorney and nearly double its upfront payments to its longtime outside legal counsel, Baird Holm. The two moves together will cost roughly $250,000.
School officials hope that investment will eventually yield bigger savings by reducing the number of billable hours from Baird Holm, which charged OPS $1.22 million last year.
“At initial glance you may think ‘Oh, my gosh, the fees are increasing, it’s doubling,’ but that is in fact not true,” the district’s current in-house attorney, Megan Neiles-Brasch, told the board last Monday. “Basically what we’re doing is taking many things that were on an hourly basis and making them a fixed-fee.”
Under the new contract the Omaha law firm will take on additional duties without hourly charges. Those include handling day-to-day employment matters and employee training, attending human resources briefings and doing legal work related to the federal student privacy law, as well as open records and open meetings laws.
The retainer payment will total $264,000 in the coming school year, compared with $138,000 in previous years. Meanwhile, the salary for a second attorney could fall between $80,000 and $135,000, plus benefits.
OPS legal fees have long been a source of concern for the district and school board, though spending has been trending mostly downward for years after peaking at $4.3 million in 2005-06, a particularly litigious year.
Predicting future savings is difficult and depends partly on how many lawsuits are filed in a given year.
If a similar agreement had been in place in 2014-15, the district would have trimmed more than $38,000 from its total $1.36 million legal bill (billable hours plus retainer) from Baird Holm, Neiles-Brasch said.
Several board members balked at spending more money upfront on legal services when the district faces funding uncertainties and the loss of the Learning Community common levy. They questioned whether hiring a second in-house attorney was a priority right now.
“While we’re in this uncertain time, it seems risky to take on that extra person,” board member Marian Fey said.
The new Baird Holm contract would start in July. In the first year, OPS would pay the law firm $22,000 a month for legal services that fall outside the scope or workload of Neiles-Brasch. By restructuring the agreement, more work that traditionally has been billed on an hourly basis would be covered by the flat fee, Neiles-Brasch said.
The district’s legal costs have dropped since 2005-06, when the district was involved in several legal battles, including the “one city, one school district” fight and a challenge to the state’s school funding formula.
Officials chalk up the reduction to fewer lawsuits, more employee training on what situations require legal advice and the flat-fee retainer with Baird Holm that has helped rein in costs.
The board signed a one-year retainer agreement with Baird Holm in December 2012. The board let that yearly contract lapse at the end of 2013, and the agreement has been month-to-month since.
Previously OPS paid all of Baird Holm’s billable hours.
Final numbers for this school year won’t be available until fall, but spending is projected to be similar to last year, Neiles-Brasch said.
Eager to see more savings, the board hired Neiles-Brasch in 2013 to serve as the district’s in-house attorney and chief negotiator, at a salary of $132,000. She handles much of the district’s day-to-day legal work and negotiates contracts with the district’s bargaining units, among other responsibilities.
A second attorney could take on work that has been outsourced in the past, including matters related to labor and employment, special education or construction contracts that have been multiplying due to the bond issue approved by voters in 2014, Neiles-Brasch said.
An extra lawyer won’t immediately translate to savings but could save the district money down the line, she said.
“It’s a long-term investment I’m asking the board to make,” she said.
The board also agreed to bid out its workers’ compensation legal work, which falls outside the Baird Holm retainer and is billed hourly. The district’s annual legal costs for workers’ comp cases have ranged from $70,000 to $120,000 in past years.
The district’s workers’ compensation cases do not require any specialized knowledge of OPS or school law, so soliciting quotes from other law firms could translate to further savings, Neiles-Brasch said.
Board member Marque Snow said there are preliminary signs that OPS could run into budget trouble and questioned whether now was the time to add another administrative employee and restructure the Baird Holm contract.
OPS officials are worried that the district could lose money once the common levy is eliminated as part of the Learning Community changes, and that other expenses, including a new busing plan, could strain the district’s finances.
“Before we double a department inside the (Teacher Administrative Center) building, we need to make sure schools and programs are taken care of,” board member Justin Wayne said.
Others said they supported the Baird Holm agreement and bringing on another attorney who could lighten Neiles-Brasch’s workload.
“I never want to walk away from savings and I see that opportunity there,” board President Lou Ann Goding said.
Board member Katie Underwood said she understood the hesitancy over the additional costs but said the current status of the Baird Holm contract didn’t sit right with her.
“I don’t think it’s very responsible to continue on a month-to-month basis,” she said. “I feel like we really have to get this contract figured out.”
OPS Superintendent Mark Evans said he understood the angst over the additional costs but said the Baird Holm agreement in particular should help the district come out ahead.
“I think in the long term we’re going to see dollars saved on that, and to me that’s easy to support,” he said.
Goding, Underwood, Yolanda Williams, Lacey Merica and Matt Scanlan voted to move forward on all three recommendations. The dissenting votes were from Snow, Wayne, Fey and Tony Vargas.
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OPS OUTSIDE LEGAL FEES
’10-’11: $2.12 million
’11-’12: $1.95 million
’12-’13: $1.42 million
’13-’14: $1.24 million
’14-’15: $1.36 million