DOJ to state agencies: pay up

March 17, 2010

By KATY GRIMES

The California Department of Justice wants to be compensated by California’s state agencies for legal services.

Last year, the DOJ lost $30 million of its budget and had to cut 130 attorneys from its staff. As a way to manage their caseload and still provide legal services for state agencies, the DOJ is proposing to have the state re-allocate funds usually provided to the DOJ, to the general fund agencies, and in turn, have the agencies pay the DOJ for legal services provided.

In a hearing of the Subcommittee for Resources, Dave Harper with the Department of Justice (DOJ) appeared and proposed that the DOJ begin charging their general fund state agency clients as they would any other paying client, instead of continuing with the endless legal budgets. Harper said the DOJ would like to turn the agencies into “billable clients” for legal services performed by the DOJ.

Currently, special fund agencies such as the Department of Motor Vehicles pay for legal services performed by the DOJ, but general fund agencies such as the California Coastal Commission, do not.

Committee Chair, Ira Ruskin, D-Redwood City, said that he felt this move would lead to serious detachment of independent agencies, and that this was not prudent. Harper disagreed with the use of the term “independent” for state agencies.

Assemblyman Jared Huffman D-San Rafael challenged Harper and said, “You’re missing the bigger picture.” Huffman said that when developers line up to sue state agencies, agencies will be forced to ask themselves if they can afford to defend a lawsuit. “It’s an absurd idea that must be stopped right now,” said Huffman. Huffman described the “chilling effect” this would have on agency independence and said that developers would know that as well.

Harper explained that because the DOJ budget had suffered so dramatically last year, it could no longer afford to defend state agencies without the general fund agencies managing their own legal budgets.

Ruskin commented that the power to stand between an agency and its right to legal counsel is also the right to destroy.

Assemblyman Jim Silva, R-Huntington Beach, challenged committee members and said that the same argument can be said for the other side – developers end up in bankruptcy because they can’t afford to defend lawsuits against state agencies. Silva referred to certain agencies, which have excessive amounts of lawsuits because “they overstep their bounds,” and have deep legal pockets, such as the California Coastal Commission.

Ruskin defended the Coastal Commission and said that what was spent by the DOJ on legal fees for the Coastal Commission is “relatively small,” and “they have not broken the budget.”

Ruskin continued explaining that the kinds of violations he was referring to were not small violations, but examples of large-scale divisions of homes being built without permits by developer corporations. Ruskin said that they “need to be made to follow the law.”

Huffman said that legislators could create some administrative penalties for the agencies to administer and enforce, instead of going to the DOJ for legal remedies. Silva disagreed, saying, “You can’t have agencies setting the rules and then enforcing them. We can’t take away the rights of the public.” Silva added that he lives in a coastal area and people in his district have spent excessive amounts of money fighting the Coastal Commission.

Catherine Freeman and Drew Soderborg, analysts with the Legislative Analyst’s Office (LAO), said that the proposal does have merit. The LAO is recommending that legal requests over $1 million be subjected to an overview, and the new process last just one year. At the end of one year, they will have enough information to make realistic budgets based on the previous year’s legal experience by department.

Harper reiterated that the proposal recommended by the DOJ is for all general fund agencies and not just for agencies that fall under the purview of the Resources committee. Harper said that all they were asking for was to take funding resources currently allocated to the DOJ, and re-allocate them to the individual general fund agencies for legal funds. According to Harper, this is already taking place successfully with special fund agencies. “When the client controls the budget, they are more judicious with the resources,” said Harper. “If you don’t pay for legal services, you may overuse legal services,” he concluded.

Appearing before the committee, Will Travis, Executive Director of the San Francisco Bay Conservation and Development Commission (BCDC) said, “What we are doing is hostage negotiation,” referring to the DOJ recommendation that state agencies pay for their own legal defense from their budgets. Travis said, “All of the DOJ money is spent by the Department of Corrections.” Travis said the DOJ recommendation “should only apply to Corrections.” The BCDC and Coastal Commission have similar missions and environmental authority, with the BCDC exercising its authority over San Francisco.

Harper explained that the Coastal Commission was sixth on the top list of legal users, with Department of Corrections first, Mental health second, the Franchise Tax Board third, the Governor’s office fourth, and Board of Equalization fifth. Harper explained to the committee that even with the $30 million cut to the DOJ last year, there are still going to be legal costs to the state. Harper added that it is fiscally more feasible to have legal budgets written into each of the general fund agency budgets, than the current way — no legal budgetary process at the general fund state agencies.

Ruskin opined that the funding shift will have negative impacts and offered that he does not think fiscal reasons apply in land law management. “The government needs to look at conceptual and reality – this is unnecessary in land law agencies.”