Since July 2012, Hilton Head taxpayers have shelled out $2.4 million to 11 law firms, with more than $2 million going to three firms connected to the town’s main outside attorney.
Records show that for all but one of the last five fiscal years, the town increased its annual spending on outside law firms, from over $331,000 in fiscal 2013 to more than $778,000 last fiscal year — at the same time the town was draining its reserves to recover from one of the worst hurricanes in decades.
When compared to South Carolina’s largest city — Charleston — and two similarly sized cities — Myrtle Beach and Spartanburg — Hilton Head spent more on outside legal services in recent fiscal years. The fiscal year runs from July 1 to June 30.
And the $2.4 million tab for Hilton Head’s taxpayers doesn’t include the $113,182 annual salary for the town’s in-house staff attorney.
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“I’m shocked,” said Town Council member Marc Grant when told of the findings by The Island Packet and The Beaufort Gazette. “I think we need to look at this. We need to be fiscally responsible with our money.”
Grant said he would be asking for more information from the town about its legal expenses.
Council member John McCann said the newspapers’ findings surprised him, but noted although legal expenses involving certain property purchases were large, the town ultimately benefited.
“I’m not uncomfortable with the (Island) Packet doing a story on our legal expenses,” said McCann, who in August announced his candidacy for mayor. “From a transparency perspective, the public should know about it.”
Council member Bill Harkins said because some legal expenses can save money in the long run, they can’t be “lumped together.”
“The last thing we should do is become defensive. I think we should look at it critically,” he said, adding he would support an annual review of legal costs.
The last thing we should do is become defensive. I think we should look at it critically.
Bill Harkins, Town Council member
In July, the Packet and Gazette revealed that the town last year secretly hired the Columbia-based McNair Law Firm regarding the employment situation of longtime town manager Steve Riley, who has been at odds with mayor David Bennett and had been conducting personal job searches as recently as September.
Records show that to date, the town has paid the McNair firm, which also provides legal services to the town related to public bonds, $29,068 in connection with the Riley matter — more than double what the newspapers reported initially in July. Riley said last month he was no longer looking for another job after he reportedly withdrew as a candidate for the position of Beaufort County administrator.
After the Packet and Gazette’s coverage on the secret hiring, Town Council voted openly to hire the McNair firm to deal with the Riley matter, then later voted in public to cancel those services.
Besides McNair’s legal costs, the town has spent, according to records, $198,938 on a defamation lawsuit brought by council member and mayor pro tem Kim Likins against vocal government critic Skip Hoagland, who later filed a $10 million countersuit against the town.
Town Council recently voted to change its payment method to the outside law firm representing Likins, going from hourly billing to a contingency-fee arrangement.
The Packet and Gazette recently reviewed dozens of pages of records, obtained from the town through the state Freedom of Information Act, of outside legal expenses from June 30, 2012, through June 30 of this year.
“It does seem like an excessive amount,” said John Crangle, an attorney and longtime government watchdog in Columbia, when informed about the $2.4 million paid to outside law firms over the five-year period.
Still, Crangle, government relations director for the South Carolina Progressive Network, said the legal field is increasingly complicated and specialized, which he contended makes it hard to conclusively say whether Hilton Head’s legal costs are excessive.
$2 million and counting
Over the past five fiscal years, Hilton Head taxpayers covered $2,047,626 in collective legal costs from three law Hilton Head firms connected to the town’s main outside attorney, Greg Alford, records show.
That amount represents 82 percent of the total $2,487,056 spent by the town on all 11 past or present law firms during the period.
Last fiscal year, which ended June 30, Alford’s firm, now known as the Alford Law Firm, received a total of $504,916 from the town, records show. In prior years, payments by the town have also gone to firms under the names of Alford and Thoreson, and Alford, Wilkins and Coltrane.
Alford and four other attorneys who worked for at least one of the three firms provided legal services to the town over the five-year period, according to records.
Alford, the town’s main outside attorney since 2003, primarily handles real estate matters and civil litigation, and advises Town Council, according to the town’s only on-staff lawyer, Brian Hulbert. Under town code, Alford was appointed and can be fired by the council.
Over the last five fiscal years, Alford’s various firms submitted 1,869 invoices to the town for services ranging from “general business” to specific projects, such as “Leg O Mutton Rd pathway project” and “Cordillo tennis courts,” records show.
According to a contract signed last December, the firm bills the town from $145 to $195 an hour per attorney, depending on which attorney is doing the work, and $85 an hour for work done by paralegals.
Alford did not respond to multiple requests by the Packet and Gazette for comment.
Hulbert, whose annual salary is $113,182, said he serves as town prosecutor in municipal court, reviews subpoenas, handles contracts, works with Freedom of Information Act requests, and handles other staff matters. He reports to Riley, the town manager.
Reba Campbell with the Municipal Association of South Carolina said it is “fairly common” for larger cities to have both an in-house and a contracted attorney.
“The bigger the city, the more likely they are to have (an outside attorney),” she said. “Then there’s subject matter expertise, such as bond attorneys. There’s very few on-staff attorneys with that expertise.”
Based on Hilton Head’s spending on outside law firms and Hulbert’s annual salary, the town could have cut outside spending and hired three more in-house attorneys in 2016, and five more this year.
“I think you can always step back and figure out if there’s a way you could do better,” Riley said when contacted recently by the newspapers. “But I haven’t studied it to know what we could do differently.”
I think you can always step back and figure out if there’s a way you could do better. But I haven’t studied it to know what we could do differently.
Steve Riley, town manager
Riley said he’s not sure hiring another on-staff attorney would drastically change the amount the town spends on outside legal services each year. It might cut down on some fees, but “one more person would not get rid of the extra lawyers” because specialized services are still needed, he said.
In a follow-up written statement, Riley said increasing in-house attorneys “represents a permanent and ongoing annual cost,” while using outside counsel is “driven by actual demand.” There currently is no room for another attorney on staff, he said.
Riley’s statement also said: “Over time, there has developed on the island a notion that the interests of the Town Council, the staff and/or the boards and commissions may differ. Thus at times we find the town attorney representing one set of interests and staff attorney another, resulting in dueling town-paid attorneys at appeals and hearings. In South Carolina, at least, this is unique.”
Mayor David Bennett said he has “wondered” if contracting with two attorneys instead of just Alford might save money. One of the town attorneys could handle litigation only, and the other lawyer could handle different tasks, he said, adding he has made the suggestion to Town Council several times.
In the end, Bennett said he trusts Riley — with whom he has clashed behind the scenes since becoming mayor in December 2014 — to “review the expenditures to ensure the town’s — the public’s — dollars are being well spent.”
If Alford doesn’t think he has the expertise in a particular area, or if Town Council thinks it’s necessary, the town hires outside law firms, Riley said.
Hulbert said the town manager can enter into any contract under the town’s procurement code, which requires competitive bids. The mayor can enter into contracts if approved by Town Council.
Besides the Columbia-based McNair Law Firm and the present and former firms connected to Alford, the town over the past five fiscal years hired the following outside firms: Hilton Head-based Coltrane and Wilkins; Cleveland and Conley; and Walker, Gressette, Freeman and Linton, based in Charleston; Gignilliat, Savitz and Bettis; and Robinson, McFadden and Moore, based in Columbia; and Minnesota-based Hitesman and Wold.
Here is what those firms did for the town, according to records reviewed by the Packet and Gazette:
▪ Coltrane and Wilkins worked with the town from fiscal 2013 through fiscal 2015, assisting with real estate transactions, including purchases at Pope Avenue, Gum Tree Road and the Port Royal Planters Row Golf Course; and rewriting the town’s land management ordinance. Curtis Coltrane billed the town $195 an hour. He told the newspapers that rate was a discount from his usual rate. Records show the town worked with two attorneys at the firm.
▪ Cleveland and Conley provided employment-related services to the town during the five-year period, charging $195 to $235 an hour for work done by attorneys. The firm did not return a call seeking comment.
▪ Gignilliat, Savitz and Bettis was hired to provide the same types of services as Cleveland and Conley, as well as “any other related matters as needed and requested by the town,” according to a 2015 agreement. The firm charged the town between $150 and $225 an hour for work done by attorneys.
Linda Pearce Edwards, an attorney with the firm, told the newspapers she typically has done employee training for the town. She is the only attorney from the firm the town worked with during the five-year period, records show.
Nancy Gasen, the town’s director of human resources, said the firm dealt with personnel issues, while Cleveland and Conley provide expertise in employee benefits.
▪ Hitesman and Wold was used only in fiscal 2017 for services related to employee benefits and to evaluate a new retirement health savings plan design, charging the town $150 to $400 an hour. The town worked with two attorneys from the firm.
▪ McNair has been working with the town since fiscal 2014, providing services related to bonds issued by the town — besides giving advice to Town Council behind closed doors on Riley’s employment situation at a $29,068 cost to taxpayers. The firm did not return a call seeking comment. For bond services, the town paid a total of $220,000 from fiscal 2014 through fiscal 2017. The town has worked with four attorneys from the firm.
▪ Robinson, McFadden and Moore in fiscal 2017 provided services pertaining to lock-out housing units — a controversial subject. There was no hourly rate listed in documents provided by the town, but a reference was made to a discussion with the mayor and a flat fee of $7,500, with an additional $4,000 requested for travel. The firm did not return a call seeking comment. The town worked with three attorneys from the firm, records show.
▪ Walker, Gressette, Freeman and Linton, formerly known as Pratt-Thomas Walker, was hired in 2016 to handle a defamation lawsuit filed by council member Likins against Skip Hoagland. The agreement initially set an hourly pay rate but in August was changed to a contingency-fee arrangement, which means the firm would be paid only if the suit is successful.
From December 2015 to July 2017, the town spent a total of $198,938 on the two firms and the Alford Law Firm, which worked on the case initially. The Walker firm did not return a call seeking comment. The town has worked with two attorneys from the two firms, records show.
Law firms that represent local and state governments have a duty to discount their fees to some extent.
Anthony Alfieri, law professor, University of Miami School of Law
Anthony Alfieri, a professor of law at the University of Miami School of Law and director of the school’s Center for Ethics and Public Service, told the Packet and Gazette it’s important that law firms have the taxpayers in mind when working with governments.
“Law firms that represent local and state governments have a duty to discount their fees to some extent,” he said.
When asked by the newspapers, only one outside law firm hired by the town of Hilton Head — Coltrane and Wilkins — would say whether its rates were discounted for the town.
Stacking up with Hilton Head
In recent years, Hilton Head has spent more on outside law firms compared to Charleston — the state’s largest city — and similarly sized Myrtle Beach and Spartanburg, according to spokesmen in those cities.
Charleston, for example, with a population of more than 134,000, spent $395,657 and $420,690 in fiscal years 2015 and 2016, respectively, according to communications coordinator Chloe Field.
In comparison, Hilton Head, which has a population of about 40,500, spent $531,889 and $465,217, respectively, in those years.
Charleston, however, has five in-house attorneys who earn between $88,000 and $146,880 annually, Field said, compared to Hilton Head’s one on-staff lawyer whose yearly salary is $113,182. Charleston’s annual budget for its legal department, including two prosecutors, totals $703,404, according to Field.
That means Charleston’s total yearly legal spending, including in-house and outside attorneys, was more than Hilton Head’s in recent years, though it was not proportionally higher relative to the size of their populations.
Like Charleston, Myrtle Beach and Spartanburg also spent less in recent years on outside law firms compared to Hilton Head.
Myrtle Beach, with a population of about 32,000, spent $300,761 in fiscal 2016 and $341,485 in fiscal 2017, said city spokesman Mark Kruea. The city has an on-staff attorney whose annual salary is $150,463, he said. There are also two assistant attorneys earning $88,424 and $79,476 annually. When factoring in the cost of in-house counsel, Myrtle Beach spent more than Hilton Head in fiscal 2016 but less in fiscal 2017.
Spartanburg, a city in the Upstate with a population of about 38,000, spent $184,716 and $159,640 on outside legal services in fiscal years 2016 and 2017, respectively, according to Christopher George, who works in the city communications department. Those amounts, however, includes property purchases, which means the law firms hired did not receive the full amounts, according to George. Spartanburg has an on-staff attorney whose annual salary is $87,448 and a paralegal who earns approximately $38,000 annually, he said.
Riley said the newspapers’ comparison of Hilton Head to the other cities “surprises me a little.”
“I’d have to understand what they do,” he added. “I’d want to know a whole lot more before I conclude anything.”
I’d have to understand what they do. I’d want to know a whole lot more before I conclude anything.
Steve Riley, town manager
In his follow-up written statement, Riley said the town has “long had a preference to seek specialized legal services in particular areas of the law when particular issues or needs arise,” adding the town has an “aggressive” land acquisition and capital improvements programs.
In fiscal year 2015, Riley wrote, the charges from Alford “took a significant jump and have remained higher than in earlier years,” because of increased litigation, right-of-way acquisitions, capital projects and special projects, including the Shelter Cove Towne Centre development agreement, among other things.
Town Council member Tom Lennox said the comparison between Hilton Head and other municipalities is “apples and oranges,” noting if a municipality has a smaller in-house legal department, it will likely need to seek more outside services, and vice versa. He added he is not worried as long as the town is within budget on those expenses.
Town director of finance John Troyer said over the last several years, the town has not been overbudget by year’s end.
Town Council member Likins said she would be surprised if Hilton Head was spending more than other municipalities for the same legal services.
Bennett said comparing Hilton Head to the other cities is not a “good comparison,” noting that “different projects have different levels of complexity and require different levels of expertise.”
He also said some legal expenses could save the town money in the long run. As an example, he said the savings from refinancing bonds could outweigh the cost of bond attorneys who handled those transactions.
Asked if the town could reduce its legal costs, Bennett replied: “It’s hard to answer in a vacuum. … I don’t have the resources here today to go through each one of those invoices.”
“That would be a substantial undertaking,” the mayor added.