Reeling from DWP scandal, L.A. City Atty. Feuer tightens oversight of outside contracts

Los Angeles City Atty. Mike Feuer this week announced new oversight rules for the city’s use of private law firms following a legal scandal that has engulfed his office and the Department of Water and Power.

In a three-page statement, Feuer laid out his new policies, which require more stringent reviews of contracts given by his office to private law firms and stronger oversight of lawyers from such firms. He also said he would prohibit such attorneys from entering into separate city contracts for nonlegal services, unless given special approval.

Also this week, the city attorney’s office released a 150-page ethics report. Commissioned by the office, it focused on the conduct of outside attorneys working for the city on litigation stemming from the 2013 DWP billing debacle, in which hundreds of thousands of customers were overcharged after the utility rolled out a new billing system.

The FBI raided the city attorney’s office in July, seeking information about the city’s settlement of a class-action lawsuit filed by DWP customers and a related lawsuit brought by the city against a consulting firm that implemented the billing system.

Court documents and testimony show that two outside attorneys, Paul Kiesel and Paul Paradis, who were awarded a contract by Feuer’s office to work on the DWP billing litigation, helped coordinate the filing of the class-action lawsuit against the city.

Feuer’s office has accused the pair of breaching their ethical duties. Kiesel has said his work was done at the direction of the City Attorney’s Office, which Feuer’s aides have denied.

The new rules on reviewing contracts address a number of issues, including the consideration of existing professional relationships when awarding contracts. Feuer’s memo notes that Kiesel was a former law partner of Thom Peters, who served as the chief of the civil branch in the City Attorney’s Office before he resigned in March on an unrelated issue.

The relationship between Kiesel and Peters “engendered trust by our office in outside counsel, including both Mr. Kiesel and by association, his proposed co-outside counsel, Mr. Paradis,” according to the memo. “It also could have created the appearance of favoritism. By intention or inadvertence, our office must never allow even that appearance.”

The ethics report, which was conducted by attorney Ellen Pansky, who was paid $176,195 for her work, found that the City Attorney’s Office and its outside counsel violated “no ethical duties in seeking to obtain the most favorable” terms to settle the class-action litigation over the DWP billing debacle.

Pansky reviewed court depositions, city documents and more, but didn’t conduct independent discovery, including interviewing witnesses.

The report also found no evidence that suing DWP customers were denied a “fair and reasonable recovery.” But at the same time, Pansky didn’t analyze the adequacy of the 2017 settlement, a deal that’s now under scrutiny by a new law firm representing the class of customers.

Separately, her report also raises new questions about Paradis’ relationship with the court-appointed independent monitor of the settlement, Paul Bender. Pansky wrote that “it seems clear that Paradis worked with Bender to finalize Bender’s final report to the court” and that it appears that Paradis “concealed” his involvement.

Asked about Pansky’s statements, Bender referred to court declarations he has submitted and declined to comment further.

The report also concluded that both Kiesel and Paradis repeatedly “violated their ethical and fiduciary duties” to the city of Los Angeles.

In response, Kiesel said the report “fails to acknowledge facts that contradict its conclusions.” An attorney for Paradis didn’t respond to a request for comment.

Pansky’s report ultimately concludes that the DWP board was within its rights to approve Paradis as project manager to fix the billing issues at the utility.