The Peoria Unified School District is paying attorneys directly with taxpayer funds. The school board had ample opportunity to talk to Tim McKee and come to an amicable agreement rather than fire him and litigate.

Instead, with advice of counsel Mary Ellen Simonson,  of the law firm Lewis and Roca, the board opposed Tim McKee at every step, running up massive legal fees of more than $400,000 from June 30, 2010 through February 2, 2012. The Peoria school district was advised by other attorneys, as well. Plus, the district's self-insured trust paid a settlement to the Prado family following their Notice of Claim for more than $26 Million.

Extrapolating current costs to Peoria (which are incomplete, as Tim McKee has appealed his firing and filed a lawsuit in Maricopa County Court), we arrived at a total of

$5,505,000.00

• Denise Lowell-Britt of Udall, Shumway & Lyons
• Matthew W. Wright of Holm Wright Hyde & Hays
• Donald Peder Johnsen, Gallagher & Kennedy

How does it cost more than a quarter of a million dollars for an administrative hearing? Gilbert Public Schools will have to pay a hearing officer, a court reporter, and their own lawyers.

A hearing officer typically charges $475.00 per hour. That fee applies to time spent preparing for the hearing (attorneys usually submit preliminary materials) and time spent preparing the report and recommendations.

Tim McKee's hearing lasted three days and included testimony from about 10 people. Sarah's hearing must cover each of the 20 charges adopted by the board. Expected witnesses include Superintendent Dave Allison, Associate Superintendent Nikki Blanchard and her successor Jeffrey Filloon, Assistant Superintendent Shane McCord, General Counsel Clyde Dangerfield, principals Vicki Hester and Jason Martin, speech pathologist Melissa Stombaugh, parents Ted and Kelly *****, and parent Heather Adams, Highland Park Elementary School teachers Donna Compton, Amy Burk, Desiree Anderson and Rebecca Riddell. Substitute teacher Renee Kelly can expect to testify about how and when she was hired to replace Sarah (Bad Karma, Renee!).  Attorneys Denise Lowell Britt and Matthew W. Wright also will be witnesses to testify about the investigations they conducted for the district. Expect witnesses contacted by Denise Lowell-Britt to be called to testify, plus Gilbert Education Association president Diane Drazinski, Arizona Education Association representative Paula Maniszko and General Counsel Samantha Blevins.

We'll estimate five days for the hearing. Gilbert Public Schools also must provide a court reporter for the hearing. Estimated costs include $60.00 per hour for the court reporter. We'll use a 9 hour day to allow for payment of travel time (which might be pretty low for this big valley).

Don't expect to see these costs included in any public budgets -- since 2005, GPS has participated in the Arizona School Risk Retention Trust's prepaid legal program for a fixed financial contribution. Benefits of participation include that attorneys bill the Trust rather than the district. That means no one sees the total of the expenses for firing a teacher ...

       ...except Clyde Dangerfield, JD, Board President who also is Assistant Superintendent for Business Services and General Counsel for Gilbert Public Schools, and has been for the past 17 years. The only other people who will see these expenses are people Clyde Dangerfield allows to see the invoices. If this sounds like an arrangement similar to Valley Schools Insurance Trust,  which has been the subject of a criminal investigation by the Maricopa County Attorney's Office for issues ranging from conflicts of interest to misuse of public funds, you're probably on to something.

The Arizona Bar Association explains a typical pre-paid legal fees arrangement:

Public school districts pay a fixed premium to a non-profit trust in exchange for an agreement to provide the school districts with certain legal services. The contract identifies legal services as either "basic" or "special." "Basic" services include correspondence, most contracts, leases, document reviews, and meeting attendance. "Special" services include non-routine legal issues such as intellectual property, health care, tax, real estate, zoning and adversary proceedings. The contract authorizes payment of no more than six hours for "basic" services unless the attorneys receive prior express authorization from the Trust. Toward this end, attorneys agree to use standardized contracts and documents as the attorneys deem appropriate. "Special" services have no presumptive billing limitations, but instead allow payment for those hours that are "reasonable and necessary to render" the legal services. If the attorney agrees to provide the requested "basic" or "special" legal services, the attorney must first obtain a legal service billing number.  Attorneys are compensated for time billed and costs incurred in accordance with the billing guidelines.

The matter of legal fees is very important to understanding the current GPS litigation against CrossPointe LLC, a software vendor. Assistant Superntendent Clyde Dangerfield, Esq. explains how the district uses both an hourly fee billing arrangement and a contingency fee arrangement in the litigation the district has brought against contractor CrossPointe LLC:

1) The actual law suit against CrossPointe for breach of contract and fraud has been going on for more than a year and Brad Holm has actually been working on the dispute for over two years. During that time the District has had a contractual relationship based on hourly fees and the firm has been paid for their work to date approximately $75,000. The Judge has ruled against CrossPointe regarding their motion to dismiss on the contract claim and Brad has filed an amended claim regarding the fraud. It has been determined that a contingency arrangement with Brad Holm is in the best interest of the District going forward. When and if a settlement is reached or the District wins at trial, Brad's firm will be entitled to 1/3 of the amount recovered less the $75,000 paid to date.

2) If the District does not prevail, Brad has and is entitled to the fees he has been paid to date while working under the existing hourly contract, but will not receive any additional fees.

3) If GPS terminates the contingency agreement he will be entitled to the hourly rate fees based on the original fees agreement, including any additional time invested.

4) If Brad withdraws going forward he will not be entitled to any additional fees beyond what he has been paid to date based on the original hourly contract.

5) The original hourly contract fees are $195 per hour for partners, $170 per hour for associates, $100 per hour for law clerks and $85 for paralegals.

In other words, attorney Brad Holm of the firm Holm Wright Hyde & Hays appears to have the best of all worlds -- legal fees for two years of work followed by a contingency fee agreement for 1/3 of the district's winnings (if the district wins). Notice that "the $75,000 paid to date" is more than what the district paid for the 2011-2012 school year in pre-paid legal fees. 

One thing that is important is that according to an azcentral.com article that is no longer available, in 2007 Gilbert Public Schools chose CrossPointe over Edupoint, which has a Mesa office and is headquartered in California, had offered to sell the district its Microsoft-based info tracking system, Genesis, for about $500,000 less than CrossPointe's. Edupoint President and CEO Joe Kirkman said his company had to prepare its proposal twice due to the budget error, and was disappointed that the district chose a Florida firm over a local one.  He noted that several of his staff at the Mesa office live in Gilbert and have children who attend Gilbert schools, so they care a lot about what happens in the district, aside from business deals.

What's happening with the CrossePointe litigation?  On December 9, 2011, after briefing and oral hearing, the District's claims for conspiracy to defraud and fraudulent inducement were dismissed under the economic loss doctrine.

On January 13, 2012, the District filed its Second Amended Complaint. On May 2, 2012, the court dismissed without leave to amend the Fourth Claim of the Second Amended Complaint.

Gilbert Public Schools paid $1,508,721.00 for property, liability and casualty insurance coverage for the 2011-2012 school year, which included a 5% "loyalty credit." 

• Employment Practices and Professional Liability pays for the sums that the district is obligated to pay as damages by reason of liability imposed on the district as a result of a wrongful act.
• Prepaid Legal Services cost the district $74,240.00.
• General Liability, including governing board and teachers professional liability cost $387,625.00.
• Administrative Practices Liability cost $17,500.00.

MORE: Cost to Peoria School District to Fire a Teacher Unfairly...and What Gilbert Public Schools Can Expect to Pay

MORE: Legal invoices and billing records from Lewis and Roca, the law firm representing the Peoria Unified School District from June 30, 2010 through February 2, 2012

MORE: Alarming Information about the Valley Schools Insurance Trust, the Peoria Unified School District's self-insured trust, which has been the subject of a criminal investigation by the Maricopa County Attorney's Office for issues ranging from conflicts of interest to misuse of public funds.

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