Tuesday, October 11, 2011

More money down the rabbit hole

Read this article at the AJC:
Construction firm to ask judge to remove DeKalb schools' lawyers in $100 million suit

This article tells us that not only have we been in a lawsuit with Heery-Mitchell for over five years now over SPLOST II projects, we have spent a reported $17 million from our general operating fund (you know, the one that is supposed to run the schools) on attorneys. Not all that long ago, the board made a deal with King & Spalding (our $17 million law firm in this case) to continue the suit on a contingency basis, meaning that if they win, they get a portion of the reward on top of what they've already been paid.

If DeKalb loses the case, King & Spalding gets nothing. If DeKalb wins, the firm would get a percentage of the earnings, based on accrued work. Right now, that figure stands at $19 million.

In Heery’s motion, the contingency fees give King & Spalding a financial stake in the case, and should disqualify the firm.

Heery-Mitchell's attorneys are claiming that King & Spalding had prior knowledge of the criminal activities of former superintendent, Crawford Lewis and his construction manager, Patricia (Pope) Reid and have a financial stake in the outcome of the civil trial with Heery and should therefore be removed as counsel. I infer from this that the underlying assumption is that the criminal trials could have a serious negative effect on the school system's civil case, as Pope and Lewis are their star witnesses against Heery. It seems we're in a game of cat and mouse. The criminal trial is the linchpin. If it happens before the civil trial, it could be devastating to the school system's case. If the civil trial happens first, the school system will have a better chance, due to the fact that their key witnesses have not yet been convicted of anything. (BTW, the criminal trial is also costing us millions in legal fees both for school system and the county DA. Taxpayers are essentially paying for both the prosecution and the defense in this case.)

“The loss of King & Spalding, five years into the case, would be financially devastating to the district,” Bowen said. “The cost to bring another law firm up to speed would be staggering."

(Just curious Tom, do you not think the costs to date are already staggering?)

How much farther down this rabbit trail do we plan to hop? Are we really sure we want to hand this group hundreds of millions more in construction money? I think we may want to stop, assess the past, clean up the mess and then perhaps turn our attention to devising a new plan – a plan that has an educationally-driven vision.


Anonymous said...

If we are forced to find new lawyers, than I think the district should try to drop the case and get the case against them dropped. So much money has been spent already and we have nothing to show for it. Thinking about what could have happened with that money, and it saddens me that our children are the ones who are hurt by this misuse of tax payer dollars.

Cerebration said...

Whatever happened to this?

Judge orders mediation in DeKalb schools suit

Citing millions of dollars of legal fees, a judge ordered DeKalb County schools to mediate its case with construction giant Heery International.

From the AJC 5:17 p.m. Tuesday, March 22, 2011

Anonymous said...

If DCSS loses, K&S keeps the $17 million already paid.

Heery motion does not seem to have much substance. All contingency lawyers, like the ones that incessantly advertise on television, have a stake in the outcome of the case. Unless Heery has something in the prior knowledge of the criminal activities, they probably are only pulling the chain of K&S. Large law firms usually have no sense of humor when it comes to litigation. They are happier doing merger and acquisition deals. Maybe Heery wants to make K & S spend a little of its own money. lol

If by some strange chance K & S does get disqualified, then I think we should give Dr. Walker's diversity firm a chance at this. After all, the minority demographic has already made a lot of money out of this. Then the majority could make some. Share the wealth.

I look at the actions of DCSS and the County Government as being my personal entertainment paid for by my taxes. I've given up going to the movies and shifted the money saved on that over to paying my increased taxes. Just think, County and school taxes are deductible from your IRS 1040. Also, the popcorn at home is much less expensive.

To anon 4:26. Living in DeKalb County it really does not pay to waste your time thinking about such altruistic and worthy goals as efficient government and educating children. That just is not the game here. Think happy and more productive thoughts.

Cerebration said...

Not exactly. As far as I can tell, King & Spalding are in a Win/Win situation. It just "sounds" good right now that they are on contingency. BUT - apparently, if the contingency fee isn't pleasing to K&S, they can revert to billing time in hindsight.

If you would like to know more about how this contract was written and the contingency clause, read this blog post:

And the Winner Is...
Why - the lawyers, of course!

But the fee deal with King & Spalding, which is representing the district in the civil case, has taken center stage as it has become entangled in the criminal case.

The fee contract, inked in June 2008, allows King & Spalding to collect both its standard hourly rates and a contingency share of whatever damages the school district may collect-should it win its $100 million counterclaim.

If the case settles in a way the firm does not like, it can convert its contingency payment to hourly fees.

Anonymous said...

K&S has no compunction in taking fees, contingency or hourly or whatever, from a public school that they know is in financial distress. But then, they know that DCSS is free and loose with the money that it throws around, and they could profit handsomely such a system run by corrupt idiots.

Anonymous said...

The Office of School Improvement must change. Many of the federal dollars not being misspent by this office could be used in areas that SPLOST addresses. The Office of School Improvement MUST have new leadership.

We have the least percentage of Title 1 schools making AYP in the metro area and every year this gets worse. That's why we are now spending tens of millions to transfer students into the few overcrowded schools that made AYP and offer offiste tutoring rather than make real and lasting Classroom improvements that have proven educationally beneficial for students. Much of these wasted funds could go projects that we are told SPLOST funds.

The Office of School Improvement is probably the most egregious as this Department has had the same director for 7 years while less and less schools have made Adequate Yearly Progress yet almost a half a billions in federal funds have passed through its doors.

Straighten out this department and replace the existing director who has held this position for 7 years with some leadership that can produce a good ROI for these hundreds and hundreds of millions of dollars. This BOE rubber-stamps every expensive and ineffective program or personnel group the Executive Director of the Office of School Improvement recommends.

The BOE should not be handling SPLOST IV funds while they do such a poor job with the general fund, past SPLOST funds, and federal funds flowing through the Office of School Improvement.





Get the Cell Out - ATL said...

Everyone should watch this report from 20/20 that shows that more money is not the solution to the problems plauging our public schools. In fact, money has never been proven to help our schools and has been called "the biggest lie in America."


We are providing money for the exteriors of buildings to give the illusion that learning is taking place. Meanwhile, we are not investing in quality education programs. We are not investing in teacher salaries and are continuing to give furlough days which reduce the actual amount of education our children receive and create more anger and resentment in our teachers who have their own families to worry about when their salaries are impacted by unpaid days.

Anonymous said...

Cere, is this money in addition to the already spent $15.5 million for the Crawford Lewis defense team that you have reported?

Anonymous said...

@ Get the cell. You correctly say "We are providing money for the exteriors of buildings to give the illusion that learning is taking place. Meanwhile, we are not investing in quality education programs. We are not investing in teacher salaries and are continuing to give furlough days which reduce the actual amount of education our children receive and create more anger and resentment in our teachers who have their own families to worry about when their salaries are impacted by unpaid days."

You have to get over thinking about all of those practical things that are supposed to be done in a good, even mediocre, educational system. You really have to come to grips with the basic fact that the main purpose of DCSS is to to distribute as much money as possible, in the form of pay, perks and pensions, to people in the administration to elevate them into the upper middle class. They have found a convenient source of money in the form of taxes that are supposed to be used to educate children. They have the perfect cover "but it is for the children" and their continued protestations that they could achieve better results if they only had more money.

Sorry to have to break this to you. If you are a taxpayer, you are being used. Get over it.

Anonymous said...

I agree with the posts re: the $ spent on this case. Anyone remotely close to the legal community knows...no lawyer worth his/her weight in salt would allow a $500,000.00 claim to tumble into a multi-million dollar counterclaim that would cost the client millions to pursue. This alone makes me call into question the ethics of the firm involved--and any other counsel who actually approved of the new, mid-case fee structure.

But, even more troubling...the allegations by the HM attorneys that DCSS attorneys, King and Spalding, had knowledge of the criminal or potentially criminal actions of Pat Reid/Pope and Lewis--and either did nothing or helped cover it up.

If there is ANY credibility to these allegations (and, there must be for another firm to make them...unless HM's attorneys are as crooked as they are alleging DCSS' attorneys to be), this is REALLY bad. It also makes me question who at DCSS knew this situation was brewing and just looked the other way.

IF this is any truth to it at all--the corruption (and the incompetency) in DeKalb Co. runs so much deeper than any of us can really imagine--or ever uncover.

We plan to put our home up for sale in the next year--moving to City of Decatur. I will not go down with this sinking ship with my kids being the primary victims.

Cerebration said...

Actually, it's worse. Crawford Lewis first spent over $3.6 million on a STUDY conducted by Neilsen-Wurster/Marsh to investigate whether or not to countersue HM's $1.5 million claim. That in itself makes a person wonder...

Check out one of our original posts on the subject:
And the Winner Is...
Why - the lawyers, of course!"

The post above is a recap of an article from the "Daily" - a highly respected legal publication in metro Atlanta.


• After paying $8.7 million to King & Spalding, $3.6 million for a study conducted by Neilsen-Wurster/Marsh, and millions more for other experts, the school system ratcheted up their countersuit to include racketeering and boosting damages to $100 million.

• In a big twist, last May a DeKalb County grand jury charged Lewis, Pat (Pope) Reid and her secretary Cointa Moody along with Pope's then husband Tony Pope with racketeering and public corruption associated with school construction contracts.

• The new "break even sum" is a formula that includes three elements: Recovering the $8.7 million K&S billed and DCSS paid for defending the original $17 million counterclaim, plus more than $11 million K&S contracted for experts and consultants, also already paid by DCSS, and all attorney fees that the firm has incurred since June 1, 2008 through the end of the case.

• King & Spalding then stands to collect an additional 25% of the first $30 million collection, 20% of the second $30 million and 15% of any amount over $60 million.

• If the school district decides to settle with Heery/Mitchell for less than the break-even sum, "contrary to K&S's explicit advice," the firm is entitled to collect either 30 percent of the proposed settlement amount or its actual attorney fees at standard hourly rates - whichever is higher.
King & Spalding's published "Going Rate" ranges from $460 to $900 an hour.

• It was four months after signing this agreement, negotiated by Josie Alexander for DCSS, that King & Spalding amended the school district's counterclaim against Heery/Mitchell to include $100 million in damages for alleged racketeering, which also carries with it the possibility, if successful, of treble damages.

• Heery/Mitchell attorneys claim that K&S's interest in making sure the firm is eventually paid for what could be as much as an additional $10 million or more in unpaid fees gave it "an irresistible economic incentive" to tailor its legal advice to limit the scope of the criminal investigation or, at the very,least, keep it under wraps until after a trial in the civil case, which was originally scheduled to begin in March 2010.

• Heery/Mitchell attorneys claim that Dr Lewis alerted King & Spalding of a criminal investigation into Pat (Pope) Reid as early as November, 2008, 18 months before the indictments. King & Spalding partner Robert C. Khayat Jr. denies this claim, saying that they were not made aware of the investigation until as late as June, 2009.

Cerebration said...

Well at least taxpayers won't have to pay to start all over with a new law firm --

Judge rules DeKalb schools can retain attorneys in $100M suit

DeKalb Superior Court Judge Clarence Seeliger withdrew a motion to disqualify King & Spalding from the school district's suit against Heery International, concluding it would be too costly and time-consuming to replace the firm after nearly five years on the case.

“It is necessary for King & Spalding to continue, because the cost of replacing them is prohibitive,” Seeliger said in his final ruling.

Thank you Judge Seeliger.

Cerebration said...

@Anon: Your question is answered in today's article:

The school system already has paid King & Spalding $17 million in legal fees. An additional $19 million in billing has been accrued by the firm, which will be paid only if the case is won.

Cerebration said...

FWIW, it's interesting to note that these millions upon millions come from the school system's general operations fund (the fund we use for education)... not from the SPLOST fund. So actually, these lawsuits harm students more than anyone.

Anonymous said...

At the snail's pace of progress of this trial to reach the courtroom, I will be so feeble, that attending the proceedings will not be an option. My wife and I could even be so old that we could legally file for the school tax exemption. And, when the trial is over, one way or another there will be a winner. However, in most cases, there will probably be an appeal. So, win or lose, how much more money will be siphoned away from the students? The $17+ million to King and Spalding as well as the hundreds or thousands of DCSS man hours devoted to this endeavor are approaching $20+ million in raw expenses. How many workbooks, rolls of toilet paper, science lab materials, art supplies and musical instruments could we have purchased?

Dekalbparent said...

What caught my ey e in the AJC article was this:

"Grantham argued the contingency deal gives King & Spalding a financial stake in the outcome of the case.

Seeliger agreed with Grantham’s argument, but the judge said it was DeKalb’s issue to deal with, not Heery’s.

'The allegation they made is quite right; it is not a fair contract,” Seeliger said. “But they negotiated it.'"

The article states that Alexander & Alexander negotiated the deal...

Anonymous said...

All this stinks to high heaven. This countersuit was just a get-rich scheme cooked up by Lewis and his cronies, and I'm sure, Tom Bowen, was in this up to his nose. And it blew up when Lewis and Pope were indicted.

Utterly disgusting. Every one associated with Lewis' schemes, not just with the construction contracts, should be fired yesterday.

Dr. Atkinson, get the Lysol out and start cleaning house!!! (I don't think you're up to it. Not when many on the Board, including the chair, will do anything to protect themselves and theirs, and will barrel right over you.)

Cerebration said...

So, apparently we're approaching $40 million in legal fees, with no trial date on the horizon. The 'counter'suit is for somewhere in the range of $100 million. That puts us at gaining a dollar for every dollar spent. Invest $100 - get back $200. However, just how far are we from 'break-even'? What if they lose? What if they are awarded far less?

The 'Report' tells us that -

The fee contract, inked in June 2008, allows King & Spalding to collect both its standard hourly rates and a contingency share of whatever damages the school district may collect-should it win its $100 million counterclaim.

If the case settles in a way the firm does not like, it can convert its contingency payment to hourly fees.

We could end up spending over $50 million on absolutely nothing. I think we're in Las Vegas. This is an enormous risk.

Judge Seeliger practically demanded that they settle this. However, they have chosen to plod on...

Anonymous said...

I think that Seeliger realizes what a weak case Dekalb has, and what a moneypit the case is. That's why he commented in his ruling that the contract was unfair but it was up to to Dekalb to deal with it not Heery, and both parties should settle.

This will get uglier and uglier as each day goes by.