GOVERNANCE AND LEADERSHIP
This chapter reviews the governance and leadership functions of the Alamo Community College District (ACCD) in the following sections:
- A. Governance and Board Policies
- B. Management and Organization
- C. Planning
- D. Institutional Policies
- E. Legal Services
E. LEGAL SERVICES
ACCD contracted with Langley & Banack, Inc. in August 2002, to provide the college with legal representation in specific matters related to personnel, students, real estate, construction and facilities, intellectual property, elections and redistricting. The original agreement negotiated by ACCD contains the hourly billing rates charged by principle attorneys, staff attorneys and paralegals as follows:
- Paralegals
- Staff Attorneys
- Principal Attorneys
$100
$125
$170 for litigation, testimony and contract review
$160 for telephone conversations exceeding five minutes and training sessions
$160 for appearance at board meetingsACCD also has an educators' legal liability insurance policy underwritten by Royal Indemnity. This policy carries a $100,000 deductible and an $85,000 premium. The policy provides $4,000,000 of coverage to the district and expires in September 2003. ACCD also maintains a secondary educator's legal liability insurance, which is underwritten by National Union Fund and provides an additional $4,000,000 in coverage after a $25,000 deductible and a $24,864 premium. This policy also expires in September 2003.
FINDING
ACCD is defending itself against numerous lawsuits and official grievances, and has changed outside law firms four times from 1996 through June 2002. The district spends an average of $583,163 annually in routine legal expenses. Additionally, according to a current legal services contract, either the law firm or the district can terminate the contract upon written notification to the other.
In a June 2000 letter from a current board member to several state officials, the district's Fiscal Affairs Department reported that legal costs rose from $200,000 in 1996 to $560,940 in 2000, an increase of 180 percent. In 1998-99, ACCD incurred $719,501 in legal expenses and according to board members, the district has continually struggled in its efforts to control legal costs. As depicted in Exhibit 1-10, the district paid more than $2.3 million in outside legal fees for the period from 1998 through June 2002 alone.
Exhibit 1-10 Source: ACCD, chancellor's Office.
Annual Legal Costs Incurred by ACCD
1998-99 through June 2002
Year Cost 1998-99 $719,501 1999-2000 $538,859 2000-01 $560,940 2001-June 2002 $513,349 Total $2,332,649 Average Annual Cost $583,163 At the request of the board's Legal Affairs Committee in spring 2002, ACCD's director of Audits conducted a review of paid legal expenses in August 2002 for the fiscal years 1998-99 through
2001-June 2002. Exhibit 1-11 details the total number of hours logged for annual legal services and the average hourly costs per year. At a total of 19,158 hours of legal services for 1998-99 through
2001-June 2002, the average annual number of hours is 4,790.Exhibit 1-11 Source: ACCD, chancellor's Office.
ACCD Annual Legal Hours and Legal Costs Per Hour
1998 through June 2002
Year Total Legal
Hours UsedAverage Cost
Per Hour1998-99 6,100 $118 1999-00 4,551 $118 2000-01 4,345 $129 2001-02 4,162 $123 This audit request came at the heels of a May 2002 board election. The selection of legal firms has historically been a major point of contention between board members from 1996 through the present. The two-year tenures of law firms employed by the district are in direct correlation with the changes in board makeup, which has been the primary impetus for frequent changing of firms according to board member interviews. One board member said, "Changes in law firms were due to shift in boards. A group came in and felt that they needed to get rid of the previous group's firm." Exhibit 1-12 depicts the tenure of ACCD's law firms from 1996 through May 2003.
Exhibit 1-12 Source: ACCD, chancellor's Office.
ACCD Legal Representation
1996 - May 2003
Firm Years
Employed
by DistrictWalsh, Anderson, Brown, Schulze, & Aldridge, P.C. 1996 - 1998 Salas, Herrera, & Villarreal, PLLC and Wickliff & Hall 1998 - 2000 Gale Wilson & Sanchez and Shelton and Valadez 2000 - 2002 Langley and Banack, Inc. 2002 - present Goode, Casseb, Jones, Riklin, Choate, and Watson, PC 2002 - present In a proactive move after review team meetings with the district in May 2003, HR Department staff conducted a cursory study on salary costs of in-house legal counsel and supporting staff. A survey conducted by the College and University professional Association for Human Resources (CUPA-HR) reports that 11 of the 80 largest community colleges in the nation employ in-house general counsel. The median salary for these institutions was $104,552. Using this data, HR Department staff used weighted averages to calculate the midpoint of a range for use as a reference point. To check these calculations, the district also obtained and used legal counsel salary range information from Dallas County Community College District (DCCCD) of $64,884 - $99,828 and from Maricopa County Community College District (MCCCD) of $80,892 - $121,338.
Houston Community College System (HCCS) reduced the amount it spends in legal services fees by creating an in-house general counsel position. HCCS reduced its legal expenditures by over 40 percent from $808,145 in 1998-99 to $482,580 in 2001-02. HCCS subsequently budgeted $500,000 for legal expenses in 2002-03. The in-house counsel resulted in significant savings for the system because the position was charged with reviewing and monitoring legal work that outside attorneys performed. In addition, the in-house counsel position performs many of the routine legal functions that HCCS formerly sent to outside attorneys.
Many colleges and large school districts that employ in-house legal staff also understand that litigation and certain other issues require outside legal expertise due to the complexity and diversity of some issues. Like HCCS, many of these entities use the in-house counsel to monitor outside legal work and frequently factor legal staff and necessary legal services and library access into annual budgeted amounts for legal services.
Prior to any decision, many of these colleges and districts examine actual expenditures, current year's budget and invoices for legal services to detail the nature of the work performed by firm and according to hourly and total fees. Since costs in one year could be an anomaly, cost trends are also routinely performed to ensure that costs can actually be avoided by hiring an in-house attorney. These reviews also include legal issues that cause the most difficulty or most frequently arise such as governance, open meetings, contracts and purchasing, personnel and special programs.
In addition, these colleges and districts also scrutinize any major lawsuits, judgments or litigation and determine historical and projected associated costs. Careful consideration is given to the decision surrounding the possibility that a staff attorney may provide preventive measures to help the college or district avoid costly problems in the future. The State Bar of Texas or its local affiliates are also available to provide assistance to colleges and districts in the process of determining available attorneys for identified areas of specialization and to identify firms that may handle a broad spectrum of issues.
Recommendation 8:
Reduce costs by bringing routine legal matters in-house.
The district should hire two attorneys and a legal secretary who will allow them to avoid the costs associated with changing law firms and reduce their exposure to hourly rates. In addition, having dedicated staff attorneys working for the district will improve the district's ability to quickly gather information or receive counsel thereby avoiding certain internal practices or procedures that could turn litigious. Bringing the legal services in-house will also reduce the district's annual legal service costs. The two attorneys will allow the district to receive the services of both an employee grievance specialist and a general counsel. This is needed due to the high volume of employee grievances the district has faced since 1996.
IMPLEMENTATION STRATEGIES AND TIMELINE
1. The board directs the interim chancellor to hire one attorney with a specialization in employee grievances and another general practice attorney in addition to a legal secretary. September 2003 2. The chancellor directs the director of Human Resources to draft job descriptions for the attorneys and a legal secretary and to appropriately post the job listings. October 2003 3. The director of Human Resources screens applicants and presents those meeting minimum qualifications to the interim chancellor for review and presentation to the board for approval. November -
December 20034. Board chairman provides Langley and Banack with written notification of the termination of the legal services retainer agreement, to take effect January 1, 2004 as stipulated according to present contract terms. November 2003 5. The interim chancellor hires the attorneys and the legal secretary to begin work as in-house legal counsel. January 2004 FISCAL IMPACT
Using an average of 4,790 for annual legal hours, this usage warrants the hiring of two FTE attorneys and a legal secretary working a standard 40-hour week. This fiscal impact is based upon the district hiring one attorney with a specialization in employee grievances at a salary of $100,000 and an additional attorney with general skills at an annual salary of $75,000, plus benefits at a rate of 9.4 percent for each ($100.000 x 1.094 = $109,400 and $75,000 x 1.094 = $82,050). In addition, the secretary will receive $30,000 per year plus benefits of 9.4 percent for a total of $32,820 ($30,000 x 1.094). Together, the salaries for these positions equal $224,270 ($109,400 + $82,050 + $32,820). This fiscal impact further assumes the district will allocate $5,000 for initial one-time equipment purchases and $5,000 for the first year of legal books, Lexus/Nexus and legal update services during the first year of implementation and $10,000 annually thereafter.
During the first year of implementation, the district will only pay salaries for eight months equating to $149,513 ($224,270 x 8 months / 12 months = $149,513). Similarly, during the first year, the district will also only realize savings calculated from eight months of the $583,163 average annual legal expenses ($583,163 x 8 months / 12 months = $388,775) for a total first year savings of $234,262 ($388,775 - $149,513 - $5,000). Savings each year thereafter should equal $348,893 annually, which is the cost of the legal staff and services ($224,270 + $10,000 = $234,270) deducted from the $583,163 average annual legal expenses ($583,163 - $234,270 = $348,893).
Recommendation 2003-04 2004-05 2005-06 2006-07 2007-08 Initial purchase of computers and office equipment. ($5,000) $0 $0 $0 $0 Reduce costs by bringing routine legal matters in-house. $239,262 $348,893 $348,893 $348,893 $348,893 Net Savings/(Costs) $234,262 $348,893 $348,893 $348,893 $348,893