Senate Vice President, Former Attorney General, Critical of Millions of Dollars the University Spends on Legal Counsel

BY MALIA ZIMMERMAN – University of Hawaii management has been under fire in recent months for wasting millions of dollars on outside law firms and public relations agencies while also having a plethora of attorneys and public relations personnel on staff.

Now a former attorney general and high-ranking state Senator are questioning the University’s practice, specifically related to legal counsel.

Senate Vice President Donna Mercado Kim said the budget for the University’s Office of General Counsel is $1.2 million a year. The University also spent over $2.2 million from March 2011 through May 2012 for outside legal counsel.

The issue was highlighted in a series of recent Senate investigative hearings, during which lawmakers looked into spending and management practices at the state University.

Kim organized the hearings at the request of Senate leadership, after University President MRC Greenwood admitted the institution was scammed out of a $200,000 deposit on what turned out to be a fake Stevie Wonder concert. The public – and senators – questioned why the many attorneys and administrators did not scrutinize the deal before wiring the money.

Michael Lilly, former Hawaii attorney general, said part of the reason the University has “lost its way” is it no longer has the benefit of independent oversight by the Attorney General’s office.

In the past, the attorney general’s office provided the University with independent legal advice, but now the institution relies on nine staff attorneys.

One problem with in-house counsel, Lilly argues, is “they tend to provide the advice the organization wants to hear – not necessarily the advice it needs to hear.”

In addition, he said it is “troubling” that the University’s 9-member law firm “is not enough” resulting in the University contracting with private law firms “to help with UH missteps.”

Lilly, who is now in private practice, said Hawaii taxpayers will save millions of dollars if the University goes back to relying on the Attorney General.

Kim noted the $3.4 million the University spent on legal expenses over the last year does not include additional legal contracts for the failed “Wonder Blunder” concert.

The University retained former Attorney General Mark Bennett at $75,000; Cades Shutte at $50,000 and Torkidson Katz at $25,000, to manage the Wonder Blunder fiasco, the subsequent suspension of two employees including Athletic Director Jim Donovan, and Donovan’s reassignment, as well as representation in subsequent Senate investigative hearings.

Kim notes it was in 1998, through Act 115, that the University was allowed – but not mandated – to retain its own counsel.

Like Lilly, Kim is critical of the practice. “It seems as though they have duplicated the state AG’s office with an office of their own with little oversight from the Board of Regents,” Kim said.

“Why would they prefer to spend more money on legal counsel instead of going to the AG? They could have used the AG for the Stevie Wonder Concert since their General Counsel was conflicted out,” Kim said.

“While I was not in the Senate when Act 115 passed, I don’t believe that the legislature at the time envisioned the University to have their own Office of General Counsel at a cost of $1.2M a year plus all the outside counsel,” Kim added.

The Senate Investigative committee questioned who the Office of General Counsel reports to – the Board of Regents or the University administration.

“It appears that it is to both,” Kim said, “so there is an inherent conflict.”

The Senate committee recommended in a report issued November 19 that Regents provide guidelines for reviewing all outside legal counsel and public relations contracts to determine whether the contracts were fulfilled.

Kim said lawmakers could consider a change next session.

“I believe the Legislature should take a close look at this and consider whether ACT 115 should be amended as it relates to allowing UH to retain its own counsel,” Kim said.

University of Hawaii spokespeople Lynne Waters and Jodi Leong did not respond to an email sent Monday morning seeking comment on this story.

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Specific Language in Act 115:

[§304A-1005] University general counsel. (a) The board of regents may appoint or retain by contract one or more attorneys who are independent of the attorney general, to provide legal services for the university, including:

(1) Representation of the university in civil actions to which the university is a party, either directly or through the acts or omissions of its officers or employees;
(2) Advice and assistance to ensure the lawful and efficient administration and operation of the university;
(3) Review and approval of documents relating to the acquisition of land or interest in land by the university; and
(4) Any other legal service specified by the board of regents.
The board of regents may fix the compensation of the attorneys appointed pursuant to this section. Attorneys appointed or retained by contract shall be exempt from chapters 76 and 89.

(b) Nothing in this section precludes the board of regents from requesting and securing legal services from the department of the attorney general, for the university, the board of regents or its members, or the university’s officers and employees, upon mutual agreement. [L 2006, c 75, pt of §2]

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