Report: Oak Lawn negligent in tracking fees
BY BOB RAKOW Correspondent September 12, 2012 11:38PM
Oak Lawn Mayor Dave Heilmann and village manager Larry Deetjen are shown in this file photo.
Updated: October 15, 2012 9:30AM
Oak Lawn officials were negligent in tracking legal fees charged by its former law firm, which along with the village’s special legal counsel also made a variety of mistakes and did a poor job communicating with village officials while they represented Oak Lawn from 2005-09, according to a report released Wednesday.
The report also questions the connection between Mayor Dave Heilmann and a partner at the firm — now Tressler LLP — who ended up with billing responsibility for the Oak Lawn account, and it said Heilmann directed the village finance director to reject billing reductions suggested by a third-party administrator, CCMSI.
The report also suggests village board members had the opportunity to inspect legal bills paid through CCMSI before approving them, and there was no evidence that anyone from Tressler, CCMSI or the village purposely misled the board about attorney fees.
The report was prepared by a Wisconsin-based law firm, Godfrey and Kahn, and written by Eric Wilson. Wilson is a former fraternity brother of Oak Lawn Trustee Tom Phelan, a political opponent of Heilmann.
Much of what is included in the report first was uncovered in a previous report compiled by Evergreen Park-based attorney Burton Odelson. Both focused on alleged overbilling by Tressler LLP, and the role of Norm Chimenti, who served as special legal counsel.
“Many viewed the Odelson report, however, as too one-sided,” the Godfrey and Kahn report said. “Moreover, the report raised a lot of issues but did not provide the village with any solutions.”
The Godfrey and Kahn report became public one day after the village board voted unanimously to release the document, which included a confidentiality clause.
Godfrey and Kahn was hired in May 2011 to review the report by Odelson, who determined there was sloppy recordkeeping of legal expenses and excessive billing by the Tressler firm, which was hired by the village board at Heilmann’s recommendation.
Mayoral candidate Sandra Bury and some trustees sought release of the report, which was issued as part of a settlement of a village lawsuit against the Tressler firm for the alleged overbilling.
In addition to the village getting about $500,000 back, the settlement contained a confidentiality clause. But Bury, a community activist, on July 6 requested a copy of the report under Illinois’ freedom of information law, and the village and Tressler eventually agreed to release it.
“It’s a beautiful day for the taxpayers of Oak Lawn,” Bury said. “This report was paid for by residents’ tax dollars, and people have a right to know what is going on at village hall.”
Bury would not comment on the impact the report will have on her mayoral campaign.
“Anytime there’s more transparency in government, it’s a good thing,” she said.
The SouthtownStar acquired the first two parts of the four-part report Wednesday. Reached Wednesday evening, Heilmann said his responses were in the part of the report yet to be delivered, and he declined further comment.
The latest report focuses primarily on litigation involving Sharon Januszewski, an Oak Lawn firefighter who filed a sexual harassment suit against the village, and a lawsuit over the village’s creation of a Target special service area sales tax.
It supported Odelson’s findings that attorney fees paid by the village increased while the Tressler firm and Chimenti served as village counsel.
Odelson’s inquiry determined the village paid about $550,000 in legal fees in 2005 but more than $1 million in each of the next four years when Tressler was Oak Lawn’s law firm.
D.J. Sartorio, a member of the executive committee at Tressler, told the SouthtownStar in 2011 that Tressler’s fees for one “runaway” case — the sexual harassment lawsuit — skewed the average. The village spent $1 million to defend the lawsuit.
But Tressler’s billings were higher despite that case, the latest report found.
“Although Tressler promised that it would save the village at least 10 percent on its legal bills, its monthly retainer of $21,000 was significantly higher than the rate charged by Klein Thorpe, the previous village attorney,” the report said, adding there did not appear to be a written agreement specifying which services were covered by the retainer fee.
The report also criticized CCMSI, the third-party administrator hired by the village to manage legal fees, for failing to review Chementi’s work and allowing Tressler “to bill what it wanted with little rebuke.”
“When CCMSI did suggest some modest reductions, however, the village finance director rejected those reductions at the direction of the mayor. As a result, CCMSI stopped reviewing the bills,” the report said.
The report also said a partner in Tressler’s Chicago office, Robert Heyne, was a lifetime Oak Lawn resident who grew up near Heilmann and is good friends with Heilmann’s brother-in-law. He ultimately ended up with billing responsibility for the Oak Lawn account.
The report said, “Despite the connection between Mr. Heyne and Oak Lawn and the obvious personal benefit to Mr. Heyne, both Mayor Heilmann and Mr. Chimenti maintained that Mayor Heilmann had nothing to do with the selection of Tressler as village attorney. According to their accounts, it was a complete coincidence that Mr. Heyne happened to work at the firm.”
But the report said “credible information” contradicts those accounts, that the Tressler first discussed the possibility of becoming the village attorney in the spring of 2005, when Heyne called Heilmann to congratulate him on his election as mayor.
“This sequence of events seems more probable than the accounts related by Heilmann and Chimenti,” the report said. “Indeed, when trying to keep Tressler from getting fired four years later, Mayor Heilmann told at least two village trustees that the attorneys at Tressler were his friends.”
When presented with the information recently, Heilmann continued to insist Heyne’s presence at the Tressler firm was a complete coincidence and had nothing to do with the selection of Tressler, the report said.
The report also said the village’s method of tracking legal fees prevented the village board from having the necessary information needed to monitor costs. The system recorded legal fees in two budget categories: legal services and administrative services.
“Thus, when the finance director submitted budget updates to the board throughout the year, it looked like legal fees were actually on budget when in reality they were over budget,” the report said.
Additionally, trustees saw only legal invoices paid directly by the village, although they had the opportunity to inspect legal bills paid through CCMSI. Board members were not misled about the billing, the report said.
“The finance department simply stuck with a system that it had been using for years without complaint. And the checks and balances that should have been in place did not do the job,” the report said. “In the end, to say the least, the board had imperfect information.”
The report makes several recommendations designed to improve transparency and track legal expenses.
It suggests village officials understand their respective roles, recommends that the village track all legal fees in a single budget category, and says the board should review and authorize legal invoices.
The report also recommends that the village insist on written engagement agreements with legal counsel and hire a professional to manage litigation.
“Neither the village manager nor the finance director has the time or the expertise to manage outside attorneys,” according to the report.