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6 A
JO NO1
MEMORANDUM
TO• Board of Selectmen
FROM. Legal Services Review Committee
DATE. February 28, 2003
SUBJECT Legal Services Review Committee Report
The Legal Services Review Committee is pleased to submit its findings. This report summarizes
the development of the committee,the process engaged to evaluate the Town's current legal
services, an analysis of alternative legal services available to the Town, a discussion in regards to
the issuance of an RFP and a final determination of findings.
Introduction: Creation,Role and Membership
The Legal Services Review Committee was created and appointed by the Board of Selectmen for
the primary purpose of reviewing legal services received by the Town. Formally,the
committee's charge was as follows:
The Board of Selectmen's Legal Service Review Committee will review and analyze the
Town s recent legal activities in order to develop and solicit requests for proposals for
legal services from legal service firms to conduct and manage the Town s legal efforts. In
addition the Committee should determine if it is in the best interest of the Town to move
forward with an effort to solicit requests for proposals for legal services. The committee
shall review proposals, interview selected qualifying firms and report their findings to the
Board of Selectmen with recommended steps for action.
The committee was created with the intention to analyze the Town's legal services in a timely
fashion and report back to the Board of Selectmen before March 1, 2003 Membership within the
committee consisted of a series of Lexington residents experienced in civic affairs, Selectmen
and School Committee matters, and the legal profession. Members included Selectmen Liaison
and committee Chairman Peter Enrich, School Committee Liaison Tom Griffiths, William
Dailey, Jeff Robbins, John Davies, Marge Battin, Mark Robinson, Phil Hamilton and John Rossi.
Palmer& Dodge and William Lahey, current Town Counsel,participated only so far as to
convey any information necessary to assist the committee in their decision-making.
Work Process
At the first meeting of the committee on November 7th, a work plan was proposed which focused
the efforts of the committee. The original work plan is provided below The tasks and the date
that they were considered are shown as follows:
ov t eview an na ze t e type o service current y prove e
by Town's legal counsel.
Nov 21st 2 1) Assess legal service analysis.
2) Determine need for RFP
Nov 21st 2 1) Inventory prospective firms to solicit proposals if
necessary
2)Review draft of RFP Determine if need exists to
interview town legal clients before analysis
Dec. 5th 3 I) Discuss need/focus if necessary for RIP
2) Develop response deadlines
3) Develop RFP schedule
N/A 4 1) Review proposals
2) Develop interview schedule
N/A 5 Conduct Interviews
N/A 6 I Report findings to Board of Selectmen
Evaluation of Legal Services
This section of the report summarizes the legal service needs of the Town of Lexington, billing
practices of Palmer& Dodge and the current service provided by Palmer& Dodge.
A. Overview of Lexington's legal service needs
Lexington legal service needs span a wide range of matters from construction contracts to first
amendment free speech disputes. Moreover,the Town demands sophisticated and responsive
counsel to maintain its high management standards and its ethic of continuous improvement and
innovation. The Town's need for legal services has increased substantially in recent years as
described below For example, Town Counsel had to devote an unprecedented number of hours
to Lexington matters during FY 2002. The Town's legal needs fall roughly into three large
categories: (i)Administrative and governance, (ii) land use and real estate, and(iii) litigation.
Town Counsel plays an important role in a wide array of administrative and governance matters.
This includes advising the Town on public bidding and contracting on all significant or unusual
procurement contracts, including construction, design services and software to name just a few
For example, Town counsel works closely with the Permanent Building Committee and Town
Manager on the Cary Memorial Library renovations. Town Meeting requires intensive
involvement from Town Counsel, including: drafting and reviewing warrant articles and
motions;responding to questions during Town Meeting; and post-Town meeting implementation
and follow-up (e.g. interacting with the Attorney General's office concerning review of zoning
bylaws articles). Town Counsel also advises the Town on employment and insurance matters as
well as a range of other fiscal and administrative matters.
The second broad category of legal services is land use and real estate. The Town's needs in this
area have increased substantially due in part to the hot real estate market and developers' efforts
to obtain Town approval to build on parcels previously viewed as undevelopable. Town counsel
advises town regulatory boards (especially the Conservation Commission,Zoning Board of
Appeals, Planning Board and Historic District Commission) on complex or controversial
pending development application to help ensure that the Boards comply with applicable laws and
issue decisions that are legally defensible. Town counsel also helps the regulatory boards revise
their rules and regulations.
Lexington is a leader in the development of affordable housing projects(e.g. Hancock and
Muzzy conversions) and Town Counsel plays an invaluable role in developing innovative legal
approaches to affordable housing as well as advising the Town on the regulatory review of
private proposals. Town Counsel also routinely represents the Town on real estate matters,
ranging from routine projects like drafting easements to negotiating complex reuse agreements
with six other public instrumentalities for the 300-acre Metropolitan State Hospital site. Finally,
Town Counsel assists Lexington on an array of environmental matters, such as compliance with
state regulations regarding remediation of Hartwell Road landfill.
Litigation is the third, and during the past few years has been the largest,category of legal
services for the Town. During 2002 there were nearly thirty pending cases involving Lexington,
of which about 15 were active during the past fiscal year. The vast majority of the cases were
brought against the Town and over half involved land use matters (e.g. lawsuits challenging
decisions by the Zoning Board, Planning Board or Conservation Commission). Most of these
cases are in Middlesex Superior Court although occasionally the Town is a party to a federal
district court case. Also, Town Counsel routinely represents the Town on complex Appellate
Tax Board matters or in other administrative forums. The increase in the number and complexity
of lawsuits involving the Town is due largely to growing real estate development pressure and
the general trend in society toward increased litigiousness.
B. Examined billing practices and form
The Committee reviewed Town Counsel billing practices including the recent reforms requested
by the Selectmen and Town Manager. Balancing the numerous complexities and factors
involved with ongoing litigation,the current billing format used by Palmer& Dodge gives the
Town sufficient information to evaluate the reasonableness of the bill without creating a risk of
disclosing sensitive strategy or confidential attorney-client communications to the public.
Up until FY2002 Town Counsel's bills contained only a short statement with a total owed
without any information about the nature and extent of the work performed. The rationale for
this simple billing statement was that the bill itself would become a public record available to
anyone, including parties that were in litigation with the Town. To avoid inadvertently
disclosing confidential or litigation sensitive information, the Town and Town Counsel agreed to
a minimalist billing statement. However, during 2002 the Selectmen and Town Manager
concluded that they need more information on Town Counsel's activities in the bill to better
manage the growing legal services without prejudicing the Town's litigation strategy and
position. In response to the Town's request, Town Counsel developed a new detailed billing
format that provides a useful two page summary of the work that was performed during the
billing period (an example of one of these new bills is attached). This new bill format was
instituted in October 2002. Upon review,the Committee recommends continuing the past policy
of disclosure of legal fees and costs in specific legal matters after litigation has concluded. The
Committee commends the Town and Town Counsel for the new billing format and believes that
it strikes the right balance between adequate disclosure for management purposes and caution.
C. Palmer&Dodge efficiency/efficacy examples
Current litigation culture in Lexington, Massachusetts and the country requires that every effort
be made to be efficient and effective in use of legal resources. Balancing the need to be thrifty
while at the same time insuring that the Town's legal interests are more than competently
represented requires diligence and the periodic and prescriptive development of management
techniques in order to be successful and to consistently communicate results and performance to
the general public. Palmer&Dodge has consistently worked with the Town making adjustments
and making strategic and innovative investments in the Town's work.
Here are a few quick recent examples that we found that were noteworthy, demonstrating that the
Town has an unusual and productive partnership with its attorneys:
. Palmer& Dodge designed an alternative regulatory process for the remediation of the
Hartwell Road Landfill that will save the Town over$4 million dollars. Palmer&
Dodge, Town staff and the Selectmen convinced the Massachusetts Department of
Environmental Protection(after going directly to the Governor with the help of
Massachusetts Municipal Association)to allow Lexington to be the first community in
the State to close its landfill under the new regulatory process.
. In litigation for the Town, Palmer& Dodge looks for early settlements and quick judicial
resolutions. Palmer&Dodge actively tries to resolve litigation against the Town quickly
and favorably For example, a number of cases were settled during fiscal year 2002, and
only one case involving the Town went to trial.
. Developed models and forms that Town can reuse without extensive involvement by
lawyers (e.g. master design services contract).
. The Town Manager, in consultation with the Selectmen, brings Town Counsel into
matters strategically and surgically For example, Palmer& Dodge was effectively
brought in for just the last three months of an eight-year negotiation process over
redevelopment of Metropolitan State.
. Preventative lawyering. Palmer& Dodge routinely advises Boards about how to improve
procedures and how to avoid litigation(e.g. training of assessor's staff).
. Palmer&Dodge typically doesn't bill for attending Selectmen meetings and many other
meetings and calls. In other words, Palmer& Dodge provides many lawyer hours per
year at no charge to the Town.
. Quarterly billing and review meetings with the Board of Selectmen.
D Palmer&Dodge fee discussion
The Committee reviewed Palmer&Dodge s fees over the past few years and the level of legal
activity required and concludes that the Town is receiving effective and sophisticated legal
services at bargain prices. During fiscal year 2002, Town Counsel devoted over 3000 hours to
Lexington legal matters, excluding over 100 hours that were not even included in the billing
records. Moreover, Palmer&Dodge incurred thousands of dollars in disbursement costs for
photocopying,postage and court fees, among other things. The Town paid Palmer& Dodge a
total of$325,000 for FY2002 (the $225,000 budgeted amount plus the $100,000 reserve
transfer). Even without accounting for disbursement reimbursement,this is an effective billing
rate of$108/hour—far below industry standards. Although this rate is a one-time occurrence, it
is representative of the flexibility Palmer& Dodge has and will continue afford the Town of
Lexington.
To RFP or Not to RFP
The Committee's analysis of whether or not,balancing all of the factors, it was in the best
interests of the Town to undertake the process of soliciting bids from alternative law firms for
their legal services therefore began with a review of the Town's historical needs and its likely
future ones. Those needs have included a requirement for sophisticated legal expertise deployed
on the Town's behalf by attorneys with a high degree of commitment to the Town's welfare,
drawn from a variety of practice areas at a cost that is considerably below market rates, given the
Town's fiscal constraints. After considerable discussion the Committee concluded that, as a
practical matter, finding a legal services provider that meets each of those needs, and that can be
relied upon from Day 1 to do so, is a significant challenge at best.
The Committee then turned to the question of whether Palmer&Dodge had met those needs,
and was well positioned to continue to do so. The Committee concluded that it had done so to the
considerable benefit of the Town, and that it was in the clear interests of the Town to have
Palmer& Dodge continue to act as its counsel in the array of matters that are pending and in the
matters that can be expected to arise in the future.
First, Palmer&Dodge is one of the few Boston area law firms that provides a high degree of
sophistication in the breadth of specialized practice areas relevant to the Town. These include,
without limitation, municipal finance,public bidding and contracting, zoning and land use,
including environmental law, litigation, housing and local governance. The Committee
concluded that the ability to obtain counsel and representation from one law firm providing
expertise in these areas, rather than utilizing different lawyers from different law firms on
different matters, was of significant value to the Town in numerous different ways, and
maximized the Town's ability to ensure quality control, a high degree of commitment and the
conservation of Town's resources, both human and financial.
Second,the Committee concluded that the Town has greatly benefited in terms of quality,
responsiveness and cost savings from the personal commitment to the Town's welfare not only
of the Lexington residents who have been the"responsible attorneys" at Palmer&Dodge, first
Norman Cohen and now William Lahey,but from the institutional commitment to the Town that
Palmer&Dodge has demonstrated. The Committee discussed the related value added of Palmer
& Dodge's institutional knowledge of Lexington's needs, its practices and procedures, and its
legal requirements in general. The Committee regarded the conclusion as inescapable that the
Town benefits greatly from the institutional history that Palmer &Dodge has with the Town, in
terms of the creativity and insight of the legal advice that it receives, in terms of ongoing legal
cases and again in terms of cost savings.
Third, it appeared clear to the Committee that Palmer&Dodge has extended itself to the Town
by providing these varied and sophisticated legal services on a heavily discounted basis that has
been highly favorable to the Town. These discounts take two forms. Annually,Palmer &Dodge
has not billed the Town at all for considerable amounts of time expended on the Town's behalf.
Those hours that it does bill are billed to the Town at rates that are very sharply discounted from
market rates. Indeed,the Committee found that Palmer&Dodge s institutional commitment to
the Town, and that of William Lahey who oversee the firm's services to the Town,was such that
it appeared that the firm has provided services to the Town at measurable financial sacrifice to
itself. The Committee concluded that the already unlikely prospect of replicating the legal
services that it receives from Palmer&Dodge with another firm or collection of firms is made
more unlikely when the effective hourly rates that Palmer& Dodge charges the Town are taken
into consideration.
Finally, and related to the foregoing,the Committee was presented with evidence that Palmer&
Dodge has been highly reliable and responsive in the manner in which it provides legal services.
It is the nature of the Town's legal needs that legal questions arise that need to be answered
quickly, and that issues emerge which require prompt attention. Palmer& Dodge has a long
history of responding quickly to pressing issues when they arise. In that regard,the committee
recognized the need for continued collaboration and communication with representatives from
Palmer& Dodge to establish and maintain mutually understood procedures for effectively and
efficiently serving the town's legal services needs. The Town's historical relationship with
Palmer& Dodge,the firm's historical commitment to the Town, the fact that Lexington residents
have been responsible for overseeing the firm's services to the Town and the quality of attorneys
at that firm are all factors in the level of responsiveness from which the Town has benefited.
Determination
After reviewing Palmer&Dodge's record and the list of pending matters requiring legal services
for the Town,the Committee considered the potential benefits and costs of undertaking an RFP
process for legal services for the Town at this time. The two benefits are (1)the chance of
locating a legal service provider, or a team of legal service providers, superior in all relevant
respects to Palmer& Dodge; and (2) satisfying the general concern that is frequently expressed
that the absence of RFPs creates the risk of stale or unsatisfactory relationships with vendors, and
the specific concern that has been expressed by some Town residents that Palmer & Dodge has
been Town counsel for"too long", or that the Town would otherwise benefit from opening our
legal services relationship to competitive bidding.
The Committee analyzed those potential benefits, and concluded that the first one was not likely
and the second one was not weighty For the reasons set forth above, and after discussion of the
legal marketplace,the Committee concluded that, while nothing was certain, it was highly
unlikely that an RFP process would result in the Town receiving a legal service provider or a
team of providers that could adequately substitute for Palmer& Dodge under the relevant
criteria. It concluded that the likely outcome of the RFP process was that the Town would
conclude as much, and that the process would consume considerable amounts of Town
resources, goodwill at Palmer& Dodge and goodwill at law firms that had participated in the
process, only to have the Town's relationship with Palmer&Dodge validated at the end of that
process,while injecting a measure of paralysis into the firm's current representation of the Town
on important ongoing matters. The Committee thus concluded that the RFP process would prove
costly to the Town and subject the Town to the risk of some detriment.
With respect to the so-called "optical benefit"of having an RFP process,this did not seem to the
Committee to be of great weight. The Committee concluded that concerns by residents with
positions taken by the Town were not validly directed at the Town's counsel,but rather with
those who in fact are elected by the Town,and that those concerns did not support subjecting the
Town to the costs of the RFP process,particularly when balanced against the absence of any
likelihood of a corresponding benefit. It appeared to the Committee that, far from being stale or
unfavorable from the Town's perspective,the Town's relationship with Palmer& Dodge is a
vigorous and favorable one,without any of the elements that seem to indicate that undergoing an
RFP process is warranted.Nor could the Committee conclude that undergoing an RFP process is
always desirable as a matter of principle. By that logic,the Committee concluded, the Town
would require constant RFPs across the board with all of its relationships,with the result that the
Town would be in the obviously untenable position of spending considerable amounts of its time
running and evaluating RFPs rather than actually providing Town services.
Conclusion
In summary, the Committee concluded that where RFPs are discretionary on the part of the
Town, the issue of whether or not to undertake them involves a balancing test. The Committee's
application of that test to the issue of whether an RFP is desirable with respect to its legal
services provider resulted in the strong conclusion that it is not.
G:A02.Legal Services Corn.Report