State Lawmaker Asks AG To Respond To Query About $6 Million In Outside Legal Fees In Freeway Dispute

CARSON CITY – State Sen. Greg Brower, R-Reno, has asked Attorney General Catherine Cortez Masto why an outside legal firm was retained to defend the state against a freeway construction dispute. Legal costs charged to the state will total $6 million by the end of an arbitration hearing set for next month.

The Jan. 12 letter asked Masto why her office retained, or advised the Nevada Department of Transportation to retain, an outside law firm to defend the state against a $40 million claim filed by Utah-based Ames Construction, which built the first phase of the 395 bypass in the capital that opened in February of 2006.

Carson City bypass. / Photo courtesy of NDOT.

Brower also asked about the process that led to the retention of the firm of Watt, Tieder, Hoffar & Fitzgerald to handle the case beginning in 2008. He also asks why a Nevada firm was not retained, and what controls are in place to monitor the fees being incurred.

Brower asked for a response within 30 days.

The attorney general’s office has not yet responded to Brower’s letter.

In a telephone interview, Brower said several constituents asked about the amount of fees incurred so far and why a Virginia law firm was retained to represent the state.

“Those two issues raised red flags with me, and so I thought it made sense to just ask a few questions of the attorney general’s office and ask her to clarify exactly, as I set forth in the letter, why the state has hired this out-of-state firm as opposed to an in-state firm or doing the litigation in the AG’s office,” he said.

“I think that some questions need to be answered, and I am frankly, concerned with the general management of litigation matters by the attorney general’s office,” Brower said. “And so here is another example that seems to raise some red flags.”

The concerns are strictly fiscal in nature, he said.

“We just don’t have money to waste,” Brower said. “At least this particular situation seems to suggest that maybe we are. Maybe there are good answers to all of these questions I raised in my letter but there is only one way to find out and that is to ask them.”

Scott Magruder, a spokesman for NDOT, said today the agency actually retained the firm, which is one of the leading construction litigation firms in the nation. The firm has an office in Las Vegas. The agency wanted quality representation because of the size of the claim, he said.

The $70 million contract for the first 3.5-miles of freeway bypass was awarded to Ames in 2003.

Gov. Brian Sandoval first raised concerns about the amount of legal fees at a meeting of the Board of Directors of the Department of Transportation earlier this month. He said he had not seen such costs for a legal challenge before.

“Because even at those rates, $6 million, I haven’t seen that before,” Sandoval said at the Jan. 9 meeting. “I mean this just gets us to the mediation, as you say, and then we don’t know what the outcome of the mediation is going to be after that.”

State Sen. Greg Brower, R-Reno. / Nevada News Bureau file photo.

The rates charged by the legal firm’s attorneys are as high as $340 an hour for the senior partner, but members of the board were told the rates are not excessive and have not changed since the dispute first began.

“That’s not an unreasonable fee,” Masto said at the meeting. Masto also serves as a member of the Transportation Board.

Dennis Gallagher, NDOT’s chief legal counsel with the attorney general’s office, told the board at the meeting that the legal fees also cover the experts hired to defend the state. He said the case is extremely complex and that Ames has not backed down from its $40 million claim.

“The state vigorously disputes this claim; has been defending it in court since 2008; we finally got it to a point where it will go to mediation the end of February and this latest amendment is to bring the fees current through the mediation, Gallagher said.

-

Audio clips:

Sen. Greg Brower says the legal costs have raised red flags:

012512Brower1 :23 the AG’s office.”

Brower says he is concerned with the general management of litigation matters by the attorney general’s office:

012512Brower2 :23 go from there.”

Brower says the state does not have money to waste:

012512Brower3 :31 to ask them.”