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December 14, 2018

Law firm NYCHA hired to fend off investigations of failures racks up nearly $10 million in legal bills

October 9, 2018
Mold and lead paint are consistent issues for NYCHA. (Jefferson Siegel / New York Daily News)

A top-shelf law firm NYCHA hired to handle a federal investigation of its own failings has racked up nearly $10 million in legal bills, with the final toll set to climb much higher, the Daily News has learned.

The authority hired the WilmerHale firm in the spring of 2016 to deal with a wide-ranging investigation by the Manhattan U.S. attorney’s civil division that ultimately uncovered years of lies and coverups about NYCHA’s failure to provide habitable apartments for its 400,000 tenants.




That investigation began in late 2015 when the U.S. attorney requested documents from NYCHA and other city agencies. At first, the city corporation counsel handled the case, court records show.

Sometime in 2016, the city Department of Investigation also opened an inquiry into whether NYCHA was complying with laws and regulations on lead paint.

NYCHA hired WilmerHale shortly after the city lawyers failed to block subpoenas served by the U.S. attorney demanding years of records on lead paint and mold inspections. The board approved the hire with a “not-to-exceed” amount, but neither the hiring nor the original amount are public because it voted behind closed doors in what’s known as “executive session.”

The firm submitted its first bill to NYCHA on Aug. 3, 2016, seeking a modest $48,000 in payments for its services, according to records obtained by The News under the Freedom of Information Law. NYCHA only released this information after The News threatened to sue for it.

From there, the bills continued to climb. A Sept. 20, 2016, invoice sought $149,507. Six days later, Wilmer Hale put in for another $171,395, the records show. This continued over the next two years.

Month after month, the invoices arrived: In 2017, $292,099 in January, $754,850 in April, $908,186 in December. Two invoices arrived on May 18, seeking a total of $1,891,877. All told the firm submitted 19 bills for a total of $9,707,667, the records show.

The last invoice was submitted this April 9 for $637,000, but wasn’t paid until early August.

Since WilmerHale was first hired, NYCHA’s board has quietly approved more than one extension of the original contact, expanding the “not-to-exceed” amount. NYCHA’s board on Friday declined to disclose the most recent approved fee cap.

And a NYCHA source familiar with the matter said managers have raised questions about the specifics of the most recent bills, such as which attorneys were handling the case and what their hourly rates are.

Asked about the delay between the April invoice and the August payment, NYCHA spokeswoman Jasmine Blake said Friday, “When we receive an invoice for legal services, we review it for accuracy before paying it. We are fighting every day to improve resident quality of life, and our legal compliance is critical to that mission.”

Firms often charge a discounted rate when performing public service work, but it’s not known what hourly rate WilmerHale lawyers are getting from NYCHA. NYCHA has yet to respond to a separate public records request made by The News 10 months ago for information on the hourly rate, as well as how much NYCHA is paying the firm for everything from paper copies to meals consumed by lawyers working after hours on the case.

Frank James, a spokesman for WilmerHale, declined to answer questions about the bills and referred The News to NYCHA.

Regardless of how those talks resolve, it’s highly likely the $9.7 million bill will rise. Since April, WilmerHale lawyers have been heavily involved in all aspects of the case, including marathon negotiation sessions leading up to the June 11 filing of a consent decree with federal prosecutors to close the civil investigation.

On the day that agreement was publicly announced, two WilmerHale lawyers were listed in the court system as representing NYCHA on the case. Since then, a third WilmerHale lawyer has been added to the team, court records show.




And the bills will arrive at NYCHA’s 250 Broadway headquarters for some time if WilmerHale continues in its role going forward.

The consent decree proposes that the court appoint an independent monitor to oversee NYCHA’s compliance with local, state and federal laws and rules. The Manhattan federal judge in the case, William Pauley, has yet to approve either the agreement or the monitor. And applications to be monitor are still coming in.

Manhattan U.S. Attorney Geoffrey Berman is pursuing a criminal investigation.
Manhattan U.S. Attorney Geoffrey Berman is pursuing a criminal investigation. (Anthony DelMundo / New York Daily News)

And Manhattan U.S. Attorney Geoffrey Berman, working with the inspector general of the federal Housing and Urban Development Department, the city DOI and the U.S. Environmental Protection Agency’s criminal investigation decision, is pursuing a criminal investigation that could result in arrests.

In some respects, the need for NYCHA to have lawyers representing it on this case has just begun.

The authority chose to go the route of private representation despite the fact NYCHA has 60 in-house attorneys on the payroll who earned more than $5.1 million in salary last year.

All of the taxpayer money NYCHA has paid to WilmerHale is in addition to what NYCHA has paid yet another outside law firm, Herzfeld & Rubin, to represent the authority in a separate lawsuit that’s trying to force the cleanup of dangerous toxic mold.

Because NYCHA does not disclose its contracts in the city controller’s open records system, the amount paid to Herzfeld to date is not public.

The firm, which was already on retainer handling other claims against NYCHA such as slip-and-fall cases, was brought into the mold case in late June just before the resignation of Donna Murphy, NYCHA’s in-house lawyer handling the case.

At that time, the NYCHA board approved a preliminary $100,000 payment to the firm that will inevitably rise significantly. In that case, the board voted in public session.

Also NYCHA was forced to pay out another $668,557 to lawyers representing the other side of that case – the public housing tenants who filed suit in December 2013 to get NYCHA to clean up mold in apartments of tenants with asthma. NYCHA entered into a consent decree and promised to get the job done, but failed to make promised deadlines.

And as part of that same mold lawsuit, Francis McGovern, a Duke University law professor, was appointed as a “special master” to monitor NYCHA’s compliance with the agreement to aggressively combat mold in apartments where tenants have asthma.

As of last November, NYCHA had paid McGovern $364,946 at a rate of $500 an hour, plus airfare and hotels to fly back and forth a dozen times from his home in Houston.

McGovern also had NYCHA bring a New York-based mold expert, Microecologies Inc., to train its workers in mold remediation and inspect apartments after the authority performed cleanups. To date, Microecologies Inc. has been paid $68,243, records show.

As of Friday, the taxpayers have paid out a total of $10,909,413 on lawyers and consultants to defend NYCHA in both the federal investigation and the mold case.




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