DWP Legal-Contracting Process: Review Finds No Conflicts but Questionable Decision-Making

Los Angeles Department of Water and Power DWP
Los Angeles Department of Water and Power DWP

In releasing its review of how the City of Los Angeles contracts outside legal counsel, the City Attorney’s Office announced that legal ethicist Ellen Pansky found no conflict-of-interest issues in the often-bizarre Department of Water and Power overbilling case that has been in the headlines for most of 2019.

But there clearly was an overabundance of decision-making issues.

Pansky’s ethics review is the latest installment in the complex – and, at times, comical – soap opera that began in 2013 when DWP launched a new and ultimately flawed $59 million billing system. The result: hundreds of thousands of DWP customers receiving inaccurate bills, some significantly inflated.

Her 172-page report is filled with examples of decision-making at its worst.

That was 2013 and the immediate aftermath. More recently, in 2019 we’ve had:

  • Lawsuits and countersuits.  Angry ratepayers sued DWP and DWP and the city sued PricewaterhouseCoopers (PwC), the global consulting firm that oversaw launch of the new billing software.
  • Allegations. PwC said it found massive conflict-of-interest issues at City Hall.
  • Feds. FBI agents swarmed all over four downtown locations, including DWP headquarters on Hope Street and the offices of City Attorney Mike Feuer a few blocks away at City Hall.
  • Deals. We found out that Feuer’s office had engaged outside counsel Paul Paradis of New York to help in the suit against PwC and granted more than $36 million in no-bid DWP contracts to companies (Paradis Law Group, Aventador and Ardent) affiliated with Paradis.
  • Head-shaking moments. We learned that Paradis also served at one point as the lawyer for Antwon Jones, the Van Nuys rate payer who was the lead plaintiff in the class-action lawsuit against DWP.
  • Settlement. DWP agreed to pay a $67.5 million settlement to overcharged rate payers and …

… as noted above: questionable decisions.

Scope of the review

Ethicist Pansky (who, herself, charged the city $700 an hour to conduct the review – a discount from her normal $895 rate) worked at the request of the City Attorney’s Office. Her 172-page report is filled with examples of decision-making at its worst.

(Interesting statistic – Pansky’s document review is detailed in her report. A simple listing of the categories of documents required nearly six pages.  The number of titles totaled 56 and required an outline that began at A. and extended through DDD. )

Decisions and decision-making

Featured in a leading role in the story is attorney Paradis.

In representing lead plaintiff Jones and the city of Los Angeles at the same time (without either party receiving written consent or knowing), Pansky says, Paradis violated his ethical and fiduciary duties to both Jones and the city.

“This is about effective leadership” – Garcetti

Pansky apparently didn’t stop there, however.

Pansky notes that while serving as Special Counsel for Los Angeles, Paradis secretly drafted (or took part in the drafting of) Jones’ complaint against the city and failed to reveal his actions to and/or get approval from the city and Jones.

Her take: Paradis breached his ethical duties to both the city and Jones. Paradis’ direct representation of Jones against the city, she concluded, “could very well be found by a court or the State Bar to constitute an unwaivable conflict of interest.”

And there’s more: Paradis violated his duty of candor to refrain from misleading his client, the court and opposing counsel.

Similar findings also were regularly cited for Kiesel.

Moreover, Pansky found that, by failing to advise the city they were continuing to assist Jones in bringing an action against Los Angeles, the two attorneys each violated their respective duties to the city to communicate significant events affecting the case.

As for the City Attorney, Pansky concluded that Feuer (and Paradis /Kiesel, for that matter) did not violate ethical duties in:

  • seeking to settle the class actions as soon as practicable
  • exploring ways to expeditiously reduce the city’s exposure to civil liabilities
  • seeking to obtain the most favorable settlement terms to resolve all of the class claims

For its part, the City Attorney’s office said it will make changes in the way it contracts outside legal counsel.

The politics of the matter

The DWP commission, the five-member panel appointed by Mayor Garcetti, quickly voted after the raids to appoint DWP Chief Operating Officer Marty Adams as interim general manager (paying him about $400,000 annually) replacing David Wright. Now, to be fair, Garcetti had announced his intentions regarding Wright and Adams a month before the raids – but the change was seen by many as purely cosmetic.

(Wright was named DWP general manager in 2016; it was at his recommendation, in fact, that DWP approved the no-bid contract in 2017 to Aventador. Prior to the DWP commission approving the contract, a senior manager at the utility apparently warned Wright that Paradis’ proposed rates would be significantly higher than those of other companies.)

Couple of sidebar items:

  • Adams’ elevation makes him the fourth general manager at the utility since Garcetti became mayor in 2013.
  • In taking office in 2013, Garcetti promised to reform the DWP’s billing practices and customer service.

“I’m not speaking to anyone’s innocence or guilt. This is about effective leadership,” Garcetti said in an interview. “It seemed clear to me that the cleanest slate we can give our [new] general manager is to make sure he’s the only general manager, past or present, in the building.”

It goes to the Mayor’s leadership as well.

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