Hilton Head Town Council secretly hires law firm, pays $11.5K to discuss Steve Riley behind closed doors

Since last year, Hilton Head Town Council members have been privately consulting with one of the state’s most prominent law firms — hired behind closed doors and paid at least $11,500 so far — about the precarious employment situation of longtime town manager Steve Riley, records show.

The seven-member council, led by Mayor David Bennett, who has been at odds with Riley since his 2014 election, did not publicly vote to hire the Columbia-based McNair Law Firm, which has a Hilton Head Island office, to discuss matters involving Riley, according to council meeting minutes going back to last year. But council members in an open meeting in June this year agreed to retain the firm as the town’s bond counsel, minutes show.

McNair billing and town payment records obtained this week by The Island Packet and The Beaufort Gazette under the S.C. Freedom of Information Act show that the McNair firm was paid a total of $11,528.50 for “professional services rendered” regarding “Stephen G. Riley.” The town hired the McNair firm in August 2016, according to an “engagement” letter from McNair.

The town’s procurement code states that no contract “for the services of legal counsel or auditor may be awarded without the approval of the town council.” The state’s open-meetings law allows public bodies to meet in executive, or closed, sessions under certain circumstances but bans them from taking any action in the private meetings, except to adjourn or return to public session.

Taylor Smith, a Columbia attorney for the South Carolina Press Association, of which The Island Packet and The Beaufort Gazette is a member, said when contacted Friday that the town’s hiring of McNair to deal with matters involving Riley likely violated both the state’s open-meetings law and town ordinances.

“If there was no vote taken to enter into the memorandum of agreement, that likely was a violation of South Carolina Freedom of Information Act and town ordinances concerning the authority of the town to bind itself to such agreements,” he said.

“If no public vote was taken, then the town is not bound,” he continued. “If Town Council is not bound by the agreement, there is no attorney-client relationship as it relates to McNair’s consultation to continued employment of the town manager.”

Besides the Press Association, Smith represents Skip Hoagland, a frequent vocal critic of Town Council members and others, in a lawsuit that alleges the town violated its procurement code in allocating accommodation tax money to the Hilton Head Island-Bluffton Chamber of Commerce.

Contacted Friday, Bennett confirmed the hiring of the McNair firm related to Riley’s situation but denied that the action violated the town’s procurement code and said the town manager’s employment status is a legal “topic for executive session.” The town since June 14, 2016, has met at least five times in closed meetings about Riley’s situation, including twice this month, meeting minutes show.

An agenda released Friday for next Tuesday’s regular Town Council meeting lists another executive session dealing with Riley.

Bennett on Friday didn’t give a direct answer when asked specifically if the Town Council is trying to negotiate an exit strategy with Riley.

“I think it’s public knowledge that Steve is looking for employment elsewhere,” Bennett said. “My discussion with him indicates he continues to seek employment elsewhere.”

Riley didn’t respond to two calls by the newspapers seeking comment Friday about the hiring of McNair. He previously has declined to discuss specifics of his job search.

Bennett said the Town Council initially sought the services of McNair regarding Riley in August 2016 because it wanted to make sure the town manager position would remain filled if Riley took a job elsewhere. In June and July 2016, Riley was a finalist for a city administrator position in Davenport, Iowa, and city manager positions in Forney, Texas, and Savannah.

After Riley said he intended to remain in Hilton Head, Town Council members put their employment discussions on hold but restarted the process this month after being notified by Riley that he was a finalist for a position in San Marcos, Texas, Bennett said.

“That caught many people on the council by surprise and has prompted us to pick up the process to make sure that position is staffed at all times,” Bennett said.

In a five-page “engagement” letter, dated Aug. 18, 2016, to Town Council member Kim Likins, McNair attorney Melissa Azallion, who works in the firm’s Hilton Head office, said, “This letter will confirm our mutual understanding related to the retention of McNair Law Firm, P.A. … to render legal services on behalf of The Town of Hilton Head Island …”

The letter, a copy of which was provided Friday to The Island Packet and The Beaufort Gazette by town staff attorney Brian Hulbert under the Freedom of Information Act, indicates it was sent to Likins through a private email account. Azallion in her letter said her hourly rate at that time was $365, adding the rates of other McNair lawyers “who are likely to be involved with this matter” would range from $210 to $500 per hour, with paralegal rates ranging from $150 to $165 per hour.

Part of the sentence in the letter describing the nature of the firm’s representation was blacked out by Hulbert, who told the newspapers he did so to protect attorney-client privilege.

Still, Hulbert on Thursday provided the newspapers, under the Freedom of Information Act, with McNair invoice records from 2016 sent to Bennett’s attention regarding “Stephen G. Riley.” The total bill for Azallion and three other McNair attorneys came to $11,528.50, or an average of $606.76 per day for 19 listed days, from Aug. 21, 2016, through Oct. 31, 2016.

The bill was paid with town general funds and “charged to the Town Council authorized legal fees line item,” according to John Troyer, the town’s finance director, who also noted in an email Friday in response to the newspapers’ open-records request, “This payment was made by indication from the Mayor that these services were provided to the Town and payment was due.”

The McNair invoice records list a total of 30 entries, though Hulbert said he redacted details after each entry of what services were provided, citing attorney-client privilege.

The Island Packet and The Beaufort Gazette sought comment this week from Likins, the current mayor pro-tem, who issued the following email statement Friday:

“It was public knowledge last summer that our Town Manager, Steve Riley, had sought other employment and was a finalist for City Manager positions in several of his job searches. Upon learning this knowledge it was prudent that the Town seek legal advice from an attorney. I was selected by Town Council and the Mayor to reach out to Melissa Azallion of McNair for this purpose.”

Likins, who has sued Skip Hoagland alleging defamation, which prompted a countersuit by Hoagland against the town, said in her email that she could not “share information about the scope or content of the engagement” with Azallion, citing attorney-client privilege.

In an email response Thursday to the newspapers Azallion said, “Please be advised that I am not authorized by the Town of Hilton Head to speak with you concerning any legal matters. I am not able to share any information at this time.”

Town Council meeting minutes from Sept. 20, 2016, show that councilman John McCann moved to go into executive session for “the purpose of contract negotiations and receipt of legal advice related to the agreement between Town Council and the Town Manager.” In the minutes, Bennett said McCann was “trying to move one of the Executive Session agenda items listed below forward to accommodate the presence of Council’s attorney,” though the lawyer wasn’t identified.

According to council minutes, there were at least three instances last year of Town Council members discussing the town manager position in executive session, though the Sept. 20, 2016, meeting was the only session that matched with dates listed in invoices from the McNair Law Firm.

McCann said Friday he could not comment on the closed meetings. Several other council members did not return calls from the newspapers this week.

This story was originally published July 28, 2017 at 6:09 PM with the headline "Hilton Head Town Council secretly hires law firm, pays $11.5K to discuss Steve Riley behind closed doors."