There are no confidentiality claims attached to the following communications, and they are about city business, so I’m going to assume that there will be no objections to my posting these e-mails that have been making the rounds.

On January 6 at 4:43 p.m., Mr. Cooper sent an e-mail to the city council, mayor and finance director, instructing them to look in their mailboxes for documents related to the upcoming budget meeting. His explanation of budget variances included this section about the budget of the city attorney:

Department 229: Legal
Line Item Title: Professional Services
Line Item Number: 101-229-801.000
% of Budget Used: 42.35%
Explanation: This item has been added [to the variance report] due to bills for November and December not being processed due to the retirement of Pat Swider. With the inclusion of these two monthly bills this line item will total $219,057.27, a total budget used of 79%. With all of the services being provided this line item may end up approximately $160,000 over budget based on current usage. The budget for this line item is $275,000 for the fiscal year.

At 9:11 p.m. the same night, Jim Allen sent the following to the city clerk, the mayor, and city council by replying to a notice for the upcoming budget meeting:

To the Mayor and Council:

It has come to my attention that, earlier today, Mr. Cooper provided the members of this body with some information relative to the legal department’s budget. I had been anticipating such an inquiry and, in fact, I welcome it. My staff does periodically track our firm’s financial perfomance, not just for Hamtramck, but for all of our clients. Our intent is to insure that, before the questions are even posed that we can provide our clients with the data that they need to evaluate whether we are meeting their expectations. The attached charts, which are continuations of charts that we have previously provided to Mr. Cooper, rather comprehensively give you just the raw numbers. The context for those numbers was supposed to come from a report I had been drafting until I had to respond to some intervening requests for information that should have been readily accessible to those requesting it. While I hope to have that report completed for you on Tuesday, I received a last minute brief from the city of Detroit late yesterday to which I must reply by Monday for a hearing I will be having for the city of Hamtramck on Wednesday. I thought that a quick summary of the information I had hoped to present on Tuesday was in order in the interim. Let me say first that, in the time that I have been your city attorney, the legal department is the only department in the city that has, for every year, performed under budget.

Since I have very limited to no involvement in putting together your annual general fund budget, I am not quite sure what numbers Mr. Cooper’s prior e-mail referenced when he said that we have expended 79% of our departmental budget through 12/31/11. The best I can figure from this number is that the general fund allocation for the current FY under this analysis is $275,000. This appears to be at odds with the number set forth in Ordinance 2011-2, the budget ordinance that this council passed on May 24, 2011 in which the Legal Department’s allocation from the general fund was $425,000. As you will plainly see, my firm has received a grand total of $114,987 for through the first half of the fiscal year out of the Legal Department’s allocated portion of the general fund budget. By my math, the budget to actual expenditure on legal services for the first half of the current fiscal year stands at a hair over 27%, which on an annualized basis would leave the legal department utilizing about 54% of the budgeted amount.

Mr. Cooper is correct that my firm did not receive its regular payment in November and December. The firm has worked with the city during the transition of which Mr. Cooper spoke and has done so patiently and without complaint. The firm is owed $60,531.49 for those two months and those months are up for approval at Tuesday’s Council meeting. If those numbers are added into the above figure on an accrual basis, that would mean that the city has incurred 175,518.49 out of its general fund for the first half of FY 2011-2012. While it remains unclear to me exactly how, in spite of the language set forth in Ordinance 2011-2, Mr. Cooper now appears to be allocating only $275,000 for legal services this year, the firm has utilized only 63.8% of the allocated annual general fund expenditure of the legal budget. If the figures in the Ordinance 2011-2 are used however, the firm has utilized only 41.3% of the annualized general fund allocation for legal services. In either case, even assuming an overage of 13.8% at this point in the fiscal year, that would not be an uncommon occurrence because the city has never utilized our time and expense on a roughly similar month to month basis. Some seasons are busier than others. One phase of one case going to trial during a given month can easily spike the city’s legal budget. If 12 month projections are made based on that one month, the annualized prediction will bear no resemblance to where the budget to actual actually ends up. If you take the prior calandar year as an example, you will see that we had a high months in October and March where fees climbed near 50,000 and months like May and July where they hovered around 20,000. If you took the months of October and March as predictors of the entire year, you would project a cost near $600,000. If you extrapolated from May and July, the number would be closer to $240,000. As it turned out, 2011 was a pretty good year considering the width and bredth of issues in which the firm was involved. The general fund expended 340,000 for legal expense with about 11,000 of that figure merely being costs which I pass through to the city with no mark up. The point is that the annualized figure was much closer to the predicted minimum than to the predicted maximum in my scenario.

I want to make a couple of other salient points about this discussion that I hope will save us all a lot of time.

1. The firm, at the city and MSHDA’s request, agreed to take on the rather complicated and technical work associated with the administration of the NSP-2 program. We are one of the few firms in the region with the expertise to do this work and we are paid for our time for this work, not out of the General Fund, but rather out of federal NSP-2 funds. Mr. Cooper knew this at the time he and the finance director put the general fund budget before council for approval. His communication to you earlier today about legal expenditures included, the best I can figure some $63,422.26, that we received of federal funds passed through MSHDA and Hamtramck as part of the additional work we have done, again at the request of the city, the state agency responsible for administering those funds, and AS AN EXPLICIT CONDITION TO THE FEDERAL REGULATIONS GOVERNING THE CITY’S RECEIPT OF OVER 13 million dollars of federal aid (which amounts to one half of one percent of those funds (.0048% to be precise). I should also hasten to point out that the firm financed out of its own pocket for a period of almost an entire year the first 30,751 worth of that work because the city did not have the systems in place to disburse the NSP2 funds that should have been paid out on a more or less even basis. That 30,751 which Mr. Cooper somehow attributes to FY 2011-2012 general fund allocations was incurred almost entirely in the prior fiscal year. Because we worked with the city and were patient about the receipt of funds, we are now subject to criticism?

2. Our work has been lauded by the statewide administrator of the NSP-2 program such that we were invited by the director of that agency and the state land bank to bid on more of this work. Our local team has been pleased with our work and I invite any of you to ask Alex, Jason, Susie or any of the other fine people that work on this with us whether the firm is performing or exceeding their expectations. The narrower point to be made is that Mr. Cooper’s numbers about our performance to budget are highly misleading because they add on to his budgetary assumptions about 10,000 of additional General Fund expenditure that does not exist and account for over $127,000 of his estimated $160,000 calculation. I can only assume that this was an honest, but rather large mistake, in calculating our budget to actual performance.

3. Everyone knows that legal fees are driven by time. Lawyers sell time. If you use more of our time, we have to fire other clients or hire more lawyers. It’s really that simple. Our hours have steadily increased along with our fees. We make risk management recommendations that are designed to reduce those hours, but we do not have any authority to implement them. We recommend that police officers be trained so that they do not use racial epithets and abuse suspects while in custody. We recommend that disciplinary action and performance reviews be used as a way to remind officers of their training. We recommend that police officers be properly supervised by people who manage by recognized national standards. But, if those recommendations are largely ignored (and perhaps even resented) and the city gets sued, how is it the city attorney’s fault that the city then requires a defense. If the city council decides to reduce expenditures on sidewalk repair and maintainance or the DPW hires third rate contractors, is it the city attorney’s fault that the city gets hit with a waive of slip and fall law suits that, again require a defense? If the city chooses to blindly neglect its sewer system for nearly 100 years and gets sued as a result, how is that the city attorney’s responsibility? If the city attorney warns a year in advance that we need to take an aggressive stance with another taxing authority that’s withholding millions of our tax dollars and nothing is done until the last minute, is it the city attorney’s fault that suit needs to be filed to dislodge a 3.2 million dollar payment that the city needs? And when the same city attorney secures that payment in a six month period of time with barely a word of thanks, should it be a surprise that the city might have to pay for those services? In 2011 this firm spent 3486 hours sorting through these and many many more similar issues. That represented a 31% increase over it six year average time expenditure. That represented a 28% increase in what our six year total average cost to the city. In other words, our work (to say nothing of our risks) increased in slightly greater proportion than our cost. Tell me how many of the other city departments can make that same claim and at the same time add 3.2 million dollars to your general fund.

4. In addition to taking on the added burden of assisting with the administration of the largest single grant ever received by the city, the city’s insurance carrier began assigning us the files that they had once sent to other firms, perhaps because they were tired of paying out on very winnable cases that law firms without a stake in the city’s success had previously handled. Our assignment was done on a pilot basis with one file. I am happy to report that people who actually know how to evaluate attorney performance (i.e., your insurance carrier) have since sent us the next four claims for processing. Clearly they see the value we bring in our work. And, while I take a certain pride in the fact that our people have earned that trust from the carrier, you all have to recognize that increasing our case load in these cases alone adds to the number of hours we must spend doing your work. It’s just simple math. It’s unavoidable physics.

5. I will get on the same page with Mr. Cooper as to what number he expects me and my people to hit. If it truly is 275,000, then I will hit it or die trying. But, the city has to understand what that means in real terms whether I do the work or someone else takes my place. I do this for a living and I know what comparable cities are paying for services that do not come close to matching those that my people have proudly provided to Hamtramck since 2005. We have given you good service and good value. I do not go out of my way to have people pat me or the good men and women on the back. This is what I signed up
for and like it or not those who choose to follow me sign up for. We do our job. We do it well. We carry ourselves with dignity and with honor. We give everything we have to represent the interests of this city well. If that is not enough, then it is your right to seek an alternative. But, I will not allow anyone to take unfair shots and play games with the serious work that I intend to do and want to do. I understand the importance of scrutiny and, like I said at the begining, I invite it. But I am also not deaf and blind. I know when legitimate scrutiny crosses the line into something much more ugly. I won’t have it and I won’t be used or allow my people to be used as cheap political fodder. The memorandum that circulated earlier today, sparsely supported as it was and sent without so much as the courtesy of a copy or the decency of some basic accuracy or context, is not befitting of the service of the many people in this firm who fight for you every day of the week.

I apologize to all of you in advance for the length of this memorandum. I felt that, given the stakes and the highly charged atmosphere that prompted it, that you all needed to know the numbers, the facts, and the context that I would have thought a fair-minded and careful analysis of the facts would have prompted without my direct involvement.

Very best—

Jim Allen