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Water Authority mum on what it got for $129,000 in legal advice

The Erie County Water Authority last year declared a purchasing “emergency” so it could hire a law firm and then racked up more than $129,500 in legal fees.

But agency officials won’t say what kind of legal work $129,500 buys.

They also won’t precisely explain why they hired Phillips Lytle last November or what the lawyers are doing.

The legal expenses started after Investigative Post, a nonprofit investigative journalism organization, published a story Nov. 7, which aired on WGRZ, that accused the authority of cutting corners in its water testing for lead. One of its reporters, Dan Telvock, also showed up at an agency board meeting and attempted to confront commissioners about the lead testing.

At the board’s next meeting in December, the commissioners approved funding for a “state of emergency” and agreed to hire a politically connected lawyer at Phillips Lytle at a rate of $400 per hour “to represent the Erie County Water Authority in action against Investigative Post for improper conduct,” according to documents The Buffalo News received from the authority in response to Freedom of Information Law request.

The Buffalo News began looking into the legal expenses after making a routine inquiry about the broadly worded emergency purchasing resolution “to provide expert advice and representation and review legal and potential environmental issues.”

When no one with the authority would offer even a minimal explanation, The News filed two FOIL requests.

In response to The News’s most recent FOIL request from June, the authority responded by providing heavily redacted invoices from Phillips Lytle that cover professional services from Nov. 15 through May 16. Those invoices totaled $129,507.

The News has filed an appeal, asserting that the redactions exceeded what is allowed under attorney-client privilege. Even though the FOIL request sought all invoices related to the Investigative Post matter, no mention of  “Investigative Post” can be found anywhere on the 30 pages of redacted invoices.

[See for yourself: Redacted Phillips Lytle invoices]

The authority stated the redactions were made to protect attorney-client privilege. Attorney-client privilege relates to legal strategy and advice, not a general description of services, said Robert Freeman, executive director of the New York State Committee on Open Government.

The News also challenged the refusal of the authority to provide any documents stating the reasons, subject and purpose for hiring an outside firm to address the Investigative Post matter. Authority officials said they will not provide any kind of explanation.

Conflicting advice

Chairman Robert Anderson and Michael Caputo, the PR spokesman for the authority, said they have been advised that if the authority waives attorney-client privilege to discuss the reasons for hiring Phillips Lytle, the agency will permanently weaken its attorney-client privilege rights related to this matter.

This position represents a clear misunderstanding of attorney-client privilege, according to legal experts with both the Committee on Open Government and the University at Buffalo School of Law.

Freeman said the authority would be free to state why they wished to hire Phillips Lytle without harming their attorney-client privilege rights. In addition, even if the authority chose to waive some elements of attorney-client privilege to discuss in broad terms the purpose of Phillips Lytle's work on behalf of the authority, that waiver would only apply to those elements they wished to share.

"The fact that something is disclosed does not require the disclosure of everything related to that subject," Freeman said.

Jonathan Manes, a UB law professor and director of the school's Civil Liberties and Transparency Clinic, concurred. If the water authority chooses to waive some element of attorney-client privilege, then that privilege is waived not just for The Buffalo News, but for everyone. But only the information the authority chooses to share is subsequently exempt from secrecy protections.

"They could probably discuss the issue that they're dealing without waiving attorney client privilege over truly sensitive information," Manes said.

The only time that wouldn't be true is if the Water Authority faces some potential legal liability, such as if a person hired a lawyer to discuss the fact that he or she committed a crime, he said.

"It strikes me as especially troubling if they're investigating what a news organization is doing to hold them accountable," Manes said. "I just am not sure what the authority is doing hiring a lot of lawyers to investigate what a media organization is doing, if that's what it is."

Water Authority hires lawyers at $400 an hour but won't say why

A couple of representatives for the water authority have informally suggested that the $129,508 spent with Phillips Lytle is for work much broader and far reaching than any perceived misconduct by Investigative Post.

In fact, many of the Phillips Lytle invoices refer to work done by “MGG,” the initials for Morgan G. Graham, a partner at the firm who charges $435 an hour and specializes in environmental law. Since no authority officials will speak on the matter, there’s no way to know for sure.

The main Phillips Lytle lawyer hired by the authority was John G. Schmidt Jr. He serves as vice chairman of the Erie County Republican Party, which currently controls the water authority.

That appears to be part of a political hiring pattern with the water authority. The water authority also signed a legal retainer agreement in 2015 with James P. Domagalski, a partner with the Barclay Damon law firm and former chairman of the Erie County Republican Party. His firm was hired for bond transactions and general litigation services.

The authority spent $344,670 last year on all legal expenses and legal services, according to budget documents  the authority provided. The agency budgets more than twice that amount in legal costs each year.

Need for transparency

Both Manes and Freeman said that as a public agency, the water authority bears a greater burden for transparency and would be better served by meeting that responsibility.

“They don’t have to talk to you, but they can,” Freeman said. “And in all likelihood, it would be wise, wouldn’t it? Even the minimal disclosure of the basic information, which would not reveal legal strategy, tends to clear the air just a bit.”

Manes said the public has a right to know what public money is being spent on.

“All these exemptions are at their discretion,” he said. “The wiser course is often to choose to disclose even if they have an argument not to. The secrecy itself raises questions about the propriety of what’s going on. It’s hard for the public to have confidence in an organization that is operating in secret, especially if the agency is racking up large legal bills.”

Erie County Legislature Majority Leader Joseph Lorigo, C-West Seneca, said that he intends to ask water authority officials to appear before the Legislature in September to address a variety of concerns, including lack of transparency, that have cropped up in recent months.

“I think it’s a good idea to bring them in and see what’s going on, and why things have been the way they are,” he said. “We’re talking about everything, transparency issues, rate issues, everything under the sun.”

Jim Heaney, editor and executive director of Investigative Post, also urged the agency to explain how and why it is spending its money on legal advice.

“The water authority should be transparent in how it spent public funds in apparent response to that reporting,” he said.

[Investigative Post: Water Authority cut corners in lead program]

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