Tuesday, May 5, 2009 | For years, when attorney Royce Jones needed to make the 124-mile trip from his firm’s Los Angeles office to the Southeastern Economic Development Corp. in San Diego, he flew — and billed taxpayers.
Jones is a redevelopment attorney with Kane Ballmer Berkman, a Los Angeles-based law firm that advises SEDC, the Centre City Development Corp. and the San Diego Redevelopment Agency about revitalization efforts in the city’s most blighted neighborhoods.
Jones spent more on travel than all of his colleagues. Ten attorneys from Kane Ballmer Berkman billed the city for $24,000 in travel between 2006 and 2008, invoices show. Jones was responsible for $18,896 of that. SEDC no longer allows him to fly.
His travel was sometimes luxurious, his receipts show. He drove to San Diego twice in a rented Hummer 3 and once rented a Mitsubishi Spyder convertible.
The reimbursements and air travel were revealed in a voiceofsandiego.org review of hundreds of pages of legal invoices submitted between January 2006 and November 2008. The review also shows the firm has been reimbursed for erroneous and poorly documented expenses and has inconsistently billed for travel time. The firm has since refunded the city $826 for errors identified by voiceofsandiego.org.
Jones said he flew because of an agreement with Carolyn Smith, the former SEDC president. Instead of taking the train or driving — cheaper options — Jones said he and Smith agreed that he wouldn’t bill his $200 hourly rate for travel time if he took the 50-minute flight from Los Angeles International Airport, near his home in western Los Angeles. “If I had driven, I would’ve charged for travel,” Jones said.
But Jones repeatedly didn’t bill for travel time when he drove or took the train. In a subsequent interview, he said his firm agreed not to bill the city for travel time in exchange for being reimbursed for travel expenses. He said his partners used to fly down regularly.
‘That was part of what we agreed on,” Jones said. “It’s in the contract.”
It’s not. Kane Ballmer Berkman’s contract with the city is seven pages long. While it authorizes the firm to perform $4 million in legal services for the city — the contract’s value was increased by $1 million on April 28 — the document says nothing about whether the out-of-town firm will be repaid for travel time. The firm’s attorneys have been paid for travel time at least twice in the last three years.
Those now dealing with the contract, drafted by the City Attorney’s Office and signed in 2007, say its lack of detail is unusual.
“In the real world, with a contract dealing with counsel from outside the area, almost every contract speaks specifically to travel reimbursement — hours, expenses, first-class and coach,” said Brian Trotier, SEDC’s interim chief. “They can get very specific. This one’s not.”
When the firm inked a separate contract last autumn with CCDC after the agency’s corporate attorneys resigned, CCDC wrote the contract — not the City Attorney’s Office.
The $100,000 contract specifically addresses travel time: Attorneys can bill 50 percent of their hourly rate for travel; they can bill their full rate for working while traveling.
The firm’s $4 million contract with the city, however, doesn’t include those provisions.
Jones said he flew round-trip for a number of years, but began flying down and driving back in a rental car when airfares grew “outrageous.” That cost the city as much as $475 per trip. He said he didn’t want to drive down because of concerns that traffic jams would make him late. The train became unreliable, he said, because of a spate of suicides on rail lines.
Jones said he rented Hummers when no other cars were available or when he received upgrades or special rates. But one 2006 rental, a gray Hummer 3 picked up at LAX, cost $118 — double the normal rate he paid. Other rentals would have cost upwards of $150, Jones said, because it was last-minute.
More than once, Jones billed travel to meetings but didn’t charge for attending them. In May 2008, he took the train to San Diego, rented a convertible and spent the night. His bills show only that he had an hour-long phone conversation with Smith and another with a colleague. Jones said his bills should’ve included time worked for a meeting in San Diego. “If we didn’t bill them, we should’ve billed them,” he said. Trip cost: $256.
At least twice, Jones and another attorney have traveled separately to San Diego for the same meeting. On Jan. 18, 2008, Jones and his colleague, Bruce Gridley, came to San Diego for a hearing. Gridley drove and stayed at a Mission Valley hotel. Jones flew United and stayed at the downtown Westin.
On the first trip, Gridley charged the city $800 for four hours of work that was described in an invoice as “non-billable travel.” The firm refunded the cost after being notified by voiceofsandiego.org. He didn’t bill for travel on the second trip.
Jones and Gridley said they traveled together as often as possible and occasionally traveled from different locations, making a ride share impossible.
“We tried to do as much as we could coordinating this,” Gridley said. “I typically have been driving. Royce has typically not been driving.”
Unlike his colleagues working for the city’s other redevelopment agencies, Jones’ work at SEDC went beyond advising on the laws governing revitalization efforts.
He was a staunch defender of Smith, the former SEDC president. He traveled to San Diego to accompany her to meetings with the Mayor’s Office, City Attorney’s Office and voiceofsandiego.org reporters.
For example, Jones prepared for and sat in on a 2008 interview between a reporter and Smith about the agency’s clandestine bonus system, explaining in detail why unapproved bonuses were awarded and defending the practice. Smith was ultimately ousted after a story on the hidden bonuses was published.
Smith, who approved Jones’ bills and air travel, did not return a call for comment.
While the billing mistakes are a sliver of the law firm’s $4 million contract with the city, they raise questions about the city’s review of invoices from SEDC and CCDC as well as its ability to oversee spending and catch errors at the two independent nonprofits. While Mayor Jerry Sanders is proposing to increase the city’s authority over the two agencies in response to recent scandals, his proposal doesn’t boost oversight of the agencies’ bills.
Under Sanders’ proposal, employees at SEDC and CCDC will still be trusted to review bills submitted by Kane Ballmer Berkman and other contractors. The city comptroller, who pays the bills on behalf of the agencies, doesn’t review them line-by-line. The comptroller’s employees ensure the correct person has signed off and that the amount paid matches the invoice. They do not audit the bills for discrepancies.
The mayor’s proposal would allow Sanders to fire an agency executive if spending is revealed to be troublesome. “What we’re trying to do is find a way to lower the hammer when you find a problem,” said Rachel Laing, a Sanders spokeswoman, “not say you’re going to root out all dishonesty.”
Kane Ballmer Berkman has been challenged before on its work at SEDC. Herb Cawthorne, a former SEDC vice president fired in 2006, said he questioned Jones about items on his bills being too high on “several occasions.”
“A five-minute conversation could have come back involving several hours,” Cawthorne said. “The explanation was: I did work before we talked, I did work after we talked. It is a system that’s based on maximizing billing for their firm.”
Jones confirmed that billing changes were made “one or two times” after speaking with Cawthorne. “There was nothing inflated,” Jones said. “If there was a question, we made the adjustment. That was very uncommon.”
Trotier, the interim SEDC chief, said the agency has questioned Jones on two billing discrepancies on one bill in the last six months.
“We have challenged some of the charges and they’ve changed some of their bills,” Trotier said. “That’s typical of attorney-client relationships. It’s been insignificant amounts — a half-hour here, a half-hour there.”
Diane Karpman, a Beverly Hills-based legal ethics attorney, said such changes aren’t uncommon. Attorneys typically revise bills when questions arise, she said.
“Errors occur,” Karpman said. “That’s why a lawyer is open to a client asserting that you mis-billed this. Lawyers write down their time all the time. Billing errors occur.”
Trotier said he will not reimburse for flights or travel time. In the six months that Trotier has led SEDC, he said Jones has incurred $449 in expenses. Jones last flew in April 2008, while Smith was still SEDC’s leader.
“With the city’s budget crisis, if he needed to do something he should drive or take the train and work on his laptop on the train,” Trotier said.
The city has wrongly repaid the firm for other expenses both at CCDC and SEDC. Jones was reimbursed in 2007 for a flight to San Diego using a receipt from a flight to San Francisco. After a voiceofsandiego.org inquiry, the firm refunded the city $26.39 — the difference between Jones’ San Francisco fare and his actual fare to San Diego.
The city’s downtown revitalization agency repaid the firm in September 2008 for $44.89 in routine expenses such as copying costs, faxes, and postage, despite an explicit contractual prohibition against that. The agency has since stopped reimbursing for those costs, said Frank Alessi, CCDC’s chief financial officer.
CCDC also repaid the firm for $386 in hotel stays documented by e-mail confirmation letters, not itemized hotel receipts as required. Alessi said the agency believed the confirmations were sufficient. They include the hotel’s cost and tax but do not show that two stays actually occurred. CCDC will require hotel receipts in the future, Alessi said.
All contractors are trusted to submit accurate bills, Alessi said. Verifying legal bills can be hard.
“Attorneys are tough,” he said. “You have to look at it and say, ‘How much time are we spending on this stuff?’ Some are more difficult than others because of the magnitude of it.”