GOVERNANCE AND LEADERSHIP
This chapter reviews Austin Community College's (ACC) governance and leadership in the following sections.
- A. Governance and Board Policies
- B. Management and Organization
- C. Planning
- D. Institutional Policies and Procedures
- E. Legal Services
E. LEGAL SERVICES
ACC contracted with Bickerstaff, Heath & Smiley, L.L.P. (BHS) in April 1995 to provide the college with legal representation in specific matters related to personnel, students, real estate, construction and facilities, intellectual property, elections and redistricting. The original agreement negotiated by ACC contains the hourly billing rates charged by BHS for partners, associates, briefing clerks and paralegals as follows:
- Paralegals
$60
- Briefing Clerks
$50
- Associates, Routine Matters
$115 - $140
- Partners, Non-Routine Matters and Litigation
$160 - $175
- Partners, Routine Matters
$150 - $160 Hourly billing rates have not increased over the life of the agreement and BHS continues to represent the college during 2002-03 and provides legal counsel that attends each regular board meeting and work session.
Since 1998, plaintiffs filed only three major lawsuits against the board, president or key administrators. Exhibit 1-17 presents the major lawsuits filed from 1998-99 to 2001-02 and the associated costs and status of each.
Exhibit 1-17 Source: Bickerstaff, Heath & Smiley, L.L.P.
Major Lawsuits Filed Against the Board,
President or Key Administrators
1998-99 through 2001-02
Year Lawsuit Complaint Costs Status 1998-99 Larry V. Franklin v. Austin Community College, Janis Anderson, Royger Harris, Tony Vela, Albert Olguine, Earl Dunagan, Larry Sullivan, Geraldine Tucker and Sandy Wolfwinkle Retaliation for filing racial and sexual discrimination charges Legal Fees and expenses: $11,155 Suit dismissed 1998-99 Sally Faye McCarty v. Austin Community College, Barbara Bolen and Deborah Iversen Copyright infringement and defamation Legal fees and expenses: $20,626; Settlement paid: $20,000 Settled out of court 1998-99 Riad Hamad v. Austin Community College Breach of contract Legal fees and expenses: $33,714 Summary judgment granted for ACC, affirmed on appeal 1999-2000 One suit in filed in Small Claims Court N/A None Suit dismissed 2000-01 No suits filed N/A None N/A 2001-02 No suits filed N/A None N/A Total Cost of Major Lawsuits $85,495 Exhibit 1-17 shows that, since 1998-99, ACC incurred $65,495 in legal fees and paid a $20,000 settlement in connection with lawsuits filed against the college and administrators for $85,495. ACC also paid BHS $462,160 in legal fees from 1998-99 through 2000-01, for an average of $175,885 in legal fees per year.
ACC also has educators' legal liability insurance with the Texas Association of Public Schools Property and Liability Fund, which covers errors and omissions, non-monetary claims expense and breach of contract claims expense. Errors and omissions coverage is $1 million per claim, with an annual aggregate of $1 million. Non-pecuniary claims expense coverage is $10,000 per claim, with an annual total of $50,000. Breach of contract claim expense coverage is $25,000 per claim, with an annual total of $100,000. Each type of coverage has a basic $2,500 deductible and ACC pays an annual premium of $9,990 for the coverage. The current policy expires September 1, 2003.
FINDING
ACC controls its legal costs by requiring requests for institutional legal counsel to be routed through designated college administrators. For example, the communication protocol established in "ACC Internal Communication Structure, 2001-02," requires administrative staff or faculty throughout ACC to route all requests for legal counsel regarding college activities as follows:
- personnel-related matters - associate vice president, Human Resources;
- finance-related matters - vice president, Business Services;
- facilities-related matters - associate vice president, Facilities and Operations; and
- all other matters - executive vice president.
The president also has directed BHS not to provide any legal advice to district employees unless the firm is specifically contacted by one of the four administrators designated as the legal contact.
COMMENDATION
ACC controls its legal costs by establishing designated administrators who determine which matters are brought to the district's law firm.
FINDING
The ACC personnel responsible for requesting legal services do not review monthly invoices from BHS to monitor the nature of the work performed, the billing rates or the lawyer working on the matter in question. Members of the review team reviewed the current rates billed by BHS and noted instances in which partners and associates billed ACC more than the hourly rates in effect for 2001-02 for non-routine legal services and litigation. For example, the 2000-01 billing rates for partners performing non-routine matters and litigation for non-routine legal matters ranges from $160-$175 per hour. Non-routine matters include negotiating settlements related to real estate matters, advice regarding condemnation proceedings and mediations. Three separate invoices paid by ACC during 2000-01 contained hourly billing rates of $210 and $250 for non-routine legal services. Although the hours billed to ACC totaled less than 12 hours, the hourly billing rates exceeded those in effect for 2000-01.
The vice president of Business Services reviews all legal invoices based on the billing descriptions, classification of the attorney performing the work and the hourly rates. The vice president of Business Services approves the invoices even though ACC is routinely billed for general representation and representation related to personnel, real estate, facilities and construction and students-all of which are not within his area of responsibility. Without the appropriate administrative review of legal invoices for the work requested, ACC could be overcharged.
Recommendation 11:
Implement an administrative rule requiring the administrator requesting legal services to review and sign off on all legal invoices before they are approved for payment.
Requiring the initiator of legal services to review and sign-off on all legal services related to each request will ensure that ACC is paying for the appropriate legal services at the appropriate rate and limit the risk of inaccurate invoices. The vice president of Business Services will approve the invoices for payment only after the initiator of the request for legal services has approved the legal services rendered by outside counsel.
IMPLEMENTATION STRATEGIES AND TIMELINE
1. The president directs the vice president, Business Services to develop an administrative rule requiring administrators requesting legal services to review and sign-off on all legal invoices before they are approved for payment. January 2003 2. The vice president, Business Services develops the administrative rule and posts it on the Intranet for comment. February 2003 3. The vice president, Business Services receives comments and approval from the shared governance groups and submits the administrative rule to the president for approval. March 2003 4. The president approves the administrative rule and administrators begin reviewing and signing off on legal invoices. March 2003 FISCAL IMPACT
This recommendation can be implemented with existing resources.