With Elon Musk and the Department of Government Efficiency committee ransacking through the Federal Government’s ledgers in a search of “waste, fraud and abuse,” the Estero Bay News decided to take a DOGE-like dive into the City of Morro Bay’s legal bills.
The Morro Bay City Council spent over $1.6 million in attorney fees over the past two years, according to records obtained by Estero Bay News.
EBN requested the monthly statements from the City’s contract law firm, Aleshire & Winder, LLP (A&W) from 2023 and 2024. A&W is the firm that was brought in to replace former in-house City Attorney Rob Schultz, when he was forced out in September 2013.
EBN requested the records after the City Council changed law firms last November just a few months after giving them a new contract and raise, and then in December, a new Council abruptly fired that second firm, choosing to seek new representation entirely.
Those moves raised the question of “why change after 10 years?” Given the monthly checks the City has been writing over just the past two years, the answer becomes apparent.
Legal Tumult
It’s the latest chapter in this tumultuous history. Schultz had been the in-house attorney, meaning that he was on the City payroll pulling a $150,000 annual salary plus benefits including a retirement plan, for over a decade.
He was in that job from 1998-2013, and within a week of being of being terminated in Morro Bay he was hired as town attorney in Los Gatos making significantly more money and overseeing an actual staff of in-house attorneys.
When Schultz was let go, the City hired A&W and their senior attorney Joe Pannone, became the lead city attorney until he retired in 2018 and was replaced by A&W’s Chris Neumeyer.
Last October, in large part due to criticism from Councilwoman Zara Landrum, the Council decided to go out for new bids when the contract ended.
Short Honeymoon
Neumeyer left A&W last November and went to work for Burke, Williams & Sorensen, LLP, bringing the Morro Bay contract with him.
But, after just over a month with BWS, the City Council ended that contract on Dec. 19 and re-hired Schultz on an interim basis, while they figure out how to proceed. Schultz had since retired from Los Gatos.
The Receipts
City Clerk Dana Swanson provided electronic copies of the statements and some of the numbers are frankly staggering.
The monthly bills from A&W in 2023 range from a low of $59,000 that February, to over $101,000 in October.
Month-by-month the 2023 bills were: January $63,988; February $59,084; March $65,768; April $93,629; May $94,496; June $85,573; July $73,455; August $93,736; September $72,222; October $101,444; Nov. 1-16 $39,780 and Nov. 17 to Dec. 31 $128,100.
The grand total for the monthly bills in 2023 was $971,302, an average of $80,941 a month.
The numbers in 2024 weren’t much better: January $99,701; February $99,281; March $68,214; April $74,494; May $67,365; June $78,675; July $70,584; August $81,820; September $59,731; October $49,701 and Nov. 1-14 $10,419.
The total for 2024 came to $692,985, an average of $65,999 a month (January to mid-November).
BWS, with Neumeyer had the contract from Nov. 15-30 and billed the City $11,576, according to the one statement provided by the City (it didn’t include the first couple of weeks from December 2024, while BWS still had the contract).
That statement contains a separate bill for “confidential” services, mainly going through and processing California Public Records Act requests presumably made by concerned residents. So BWS’ total bill for about two weeks of work in December came to $12,364.
It should be noted that BWS used three lawyers — Neumeyer, Lona Laymon and Christy Lopez — charging $219 per hour, to go over the public records requests. All three jumped ship from A&W to BWS at the same time.
For reference, the median annual income in Morro Bay is about $47,744 for individuals, according to Census data.
It Started Low
A&W’s tenure with the City became permanent in June 2014, and started out with fees that were the lowest among the six incorporated cities that used contract firms (City of SLO and SLO County have in-house attorneys).
According to a staff report from Rachael Hendricks, the City’s human resources/risk manager, and Emily Conrad, city finance director, dated June 3, 2024, A&W’s contract “does not automatically adjust rates based on the CPI or for a cost-of-living adjustment (COLA). Since retaining A&W in 2014, the Council has adjusted the A&W contract for rate increases only four times over the last 10 years.”
A&W’s rates as of July 1, 2024 were: $219 per hour for the “first 50 hours of general services;” $242/hour for everything over 50 hours; $294/hr. for “special services;” $201/hr. for insurance defense; $322/hr. for “private party reimbursement;” $167/hr. for paralegals/law clerks; and, $92/hr. for document clerks. Still the finance director and risk manager said it was beneficial.
“The benefits of the contract with Aleshire & Wynder, LLP,” the report said, “lies in the ten years of experience the firm has worked with the City of Morro Bay and the range of legal services the firm offers. This model provides comprehensive legal support tailored to the City’s diverse needs and is likely more cost-effective than maintaining an in-house attorney. By outsourcing legal services, the City avoids the substantial overhead costs associated with employing full-time legal staff and can instead benefit from competitive hourly rates, particularly as Aleshire & Wynder’s rates are significantly below the market average in San Luis Obispo County. This approach enables the City to manage legal expenses efficiently while ensuring high-quality legal representation.”
Morro Bay was getting the cheapest rates in the county. “A&W currently offers services to Morro Bay at hourly rates significantly below market in San Luis Obispo County. Specifically, the rates for special legal services are 27% below market, and the rates for general legal services are 16% below market. These rates are the lowest among the six of the seven cities in the county with a contract city attorney.”
They added, “For context, the average special services rate in the County for FY 2023-24 is $326/hour and with a 4% COLA is $339/hour. The average general services rate in the County for FY 2023-24 is $232/hour and with a 4% COLA is $241/hour.”
Something Soured
That final amendment to A&W’s contract was approved last June, and by October, with two new councilmen slated to take office (neither Jeff Eckles, Bill Luffee nor Mayor Carla Wixom were challenged in the November Election), the City Council was humming a different tune.
At the Nov. 12 meeting, acting City Manager Dan McCrain (filling in for City Manager Yvonne Kimball), brought forth a letter from Neumeyer regarding his impending departure from A&W and move to BWS.
It also said Assistant City Attorney, Laymen, and Legal Specialist Lopez were also leaving A&W for BWS, each also reportedly to be partners in the law firm.
Under the State Bar rules, a city attorney can lobby his old city to go with him or her when changing firms but must first notify their old firm of their imminent departure, in simple terms, you have to quit first before stealing clients.
In a personalized letter to the City Council dated Nov. 4, Neumeyer said, “State Bar Rules,” he wrote, “preclude me from providing notice to clients until I provide my current law firm Aleshire & Wynder, with a notice of resignation. I provided that notice today, Nov. 4, 2024, and informed my current law firm I intend for my last day with them to be Nov. 13, 2024.”
He goes on to assure the City Council that nothing has to change just because he’ll be leaving the law firm. “I hope the Council will grant me the privilege of continuing to serve as your City Attorney. My new law firm is ready to welcome the City of Morro Bay as a client.”
That lasted about a month, as at its Dec. 19 meeting, the Council fired Neumeyer and BWS and brought back Schultz making a straight $200/hr.
It’s expected to take as long as six months to finalize a contract for either a new law firm or a new in-house attorney.
In the near horizon, the City will have to reach agreement with the Cayucos Sanitary District on the decommissioning and disposition of the property on Atascadero Road, the site of the old jointly owned sewer treatment plant.
Also, the Battery Energy Storage System (BESS) Project being proposed by Vistra will travel through untested legal waters, as the company has paused its application with the City and said it intended to apply for permits from the Energy Commission under provisions of Assembly Bill 215.
Both of those issues could be expected to burn through a lot of lawyer time.
