Legal fees going up for developers and others doing business with the city of Poulsbo

POULSBO —The Poulsbo City Council renewed its contract this week with the law firm of Ogden Murphy Wallace Attorneys to serve as the city’s attorney, but not before some concerns were voiced.

Councilman David Musgrove was the only council member to vote against the contract, after he noted that no survey had been done to compare the new rate to existing rates for comparable legal services.

Councilwoman Connie Lord agreed that such a survey needed to be done, “down the road,” but argued the contract should be renewed because “Ogden Murphy Wallace has so much historical knowledge that you can’t put a price on.”

The Seattle firm has served as city attorney for 18 years.

Under the 2017 contract, the firm has a 1.8 percent cost-of-living rate increase from $200 an hour for routine services to $204 an hour. Rates for non-routine services (labor negotiations, litigation, personnel, tax) also went up 1.8 percent.

What is new about the contract is that the firm will bill outside organizations a significantly higher hourly rate — $300-350 per hour — for their services when negotiating on behalf of the city. That is to say, the outside organization — not the city — is responsible for paying the firm’s services once an agreement is signed.

“We would like to propose a higher rate when our work is to be reimbursed by developers or telecommunications companies with whom we are negotiating franchises,” James E. Haney wrote in the firm’s Dec. 16 proposal letter to Mayor Becky Erickson. “For this work we propose a rate of $350 for members and $300 per hour for associates. These rates are more in line with what we charge our private clients for similar services, and we believe when private parties are reimbursing the City for our fees, it is appropriate for us to charge the higher rate.”

That statement met with at least one councilmember commenting against the higher rates.

“The idea is (that) automatically the rates get jacked if it’s a citizen, local developer, or a national corporation [doing business with the city],” Musgrove said.

But there is an out, according to one city official.

If, after negotiations, no agreement is reached, then the firm will bill the city for its unreimbursed services at the city’s lower rate, Finance Director Debbie Booher said.

At least one local business group also expressed concern.

“We were not aware of this [proposal]; this is news to me,” said Teresa Osinski, executive vice president of the Kitsap Building Association (previously known as the Kitsap Home Builders Association). “I think this is gouging. These fees will only cause the cost of building to go up.”

Osinski argued that the fact the city had hired an outside law firm, rather than doing it in house, did not change the fact that the firm was acting as an arm of the city and should not be charging the higher private law firm rates.

“At the end of the day, builders are a significant economic catalyst for Poulsbo,” Osinski said. “This is not intuitive to me.”