DeKalb school system sued over ‘debt’ to lawyers

Coming Sunday

The DeKalb County School District spends far more on lawyers than other big Atlanta districts.

Two DeKalb County residents are alleging in court that their local school district has incurred illegal debt for lawyer fees.

The lawsuit, filed Friday against the DeKalb Schools by former Georgia Attorney General Michael Bowers, could derail an older lawsuit in which the district is seeking $100 million from Heery International Inc., the company that used to manage DeKalb’s school construction.

The new lawsuit in DeKalb Superior Court attacks the contract that binds DeKalb to its lawyers in the Heery suit, Atlanta-based King & Spalding. It alleges that the district entered into an unconstitutional agreement that commits the district to paying millions of dollars to the attorneys.

One of the plaintiffs, Donald M. Green, is a Heery vice president named as a defendant in the older lawsuit, which alleges fraudulent billing and mismanagement by Heery. The company acknowledged through a spokesman that it is helping to pay for the new lawsuit. The second plaintiff is Marsha M. Harding, who works in the construction industry but told the AJC she has no business ties to Heery and that she has a child in the school district.

The new lawsuit plays on mounting public frustration over legal costs in a district that is facing another budget shortfall this year.

DeKalb had paid around $6.5 million in attorney fees to King & Spalding by 2008, when the firm agreed to start billing on a “contingency” basis, meaning its pay would come from any judgment or settlement. The lawyers had logged $19 million in unpaid fees by last summer. The contract also compels DeKalb to pay those fees directly if the district settles the case against the law firm’s will.

That clause has stymied some school board members who are tired of paying and want the case to go away. Melvin Johnson, the school board chairman, didn’t seem upset about the new lawsuit, even though he is named as a defendant.

Though DeKalb is no longer paying for the lawyers’ time, the contract compels the district to continue paying the firm’s expenses. The AJC reported last summer that DeKalb had spent more than $19 million on the case, mostly for expenses. During the final six months of last year, DeKalb paid King & Spalding another $1.4 million, according to district records.

“We want to eliminate the legal fees to the degree possible,” Johnson said. He said the board wants “some closure” in the Heery case, and has told Superintendent Michael Thurmond to reduce the district’s overall legal bill. “The amount of money that we’re spending on legal fees should be directed toward student learning,” Johnson said.

Jeff Dickerson, a district spokesman, said he discussed the new lawsuit with Thurmond. Dickerson implied DeKalb would not work hard to protect the contract with its lawyers: “The school board and administration would not look kindly on authorizing any new spending on any new legal cases, including this one,” Dickerson said.

King & Spalding had no comment.

Bowers said his new lawsuit hangs on the definition of “debt.” He and his clients contend the contingency agreement to pay legal fees amounts to taking on public debt that can only be authorized by voters.

Legal experts say the case has merit.

Ronald Carlson, a law professor at the University of Georgia, read the Bowers lawsuit at the request of the AJC, and said it is a “significant attack on the contract.”

After DeKalb fired Heery, the company sued in 2007 seeking half a million dollars in unpaid bills. The district countersued for $17 million, alleging fraudulent billing and mismanagement, and later raised its demand to around six times that amount. No trial is scheduled, and the legal costs continue to mount, making any settlement harder to negotiate.

Chuck Clay, a lawyer and former state senator from Cobb County, has followed the Heery case. He said the legal fees and expenses “far outweigh” what’s at stake and will make it politically difficult for a judge to immediately dismiss the new suit challenging the contract. Mounting public concern about the costs in the Heery case creates “enormous pressure to allow the proceedings to move forward,” he said.

Officials such as the newly hired DeKalb superintendent have felt that pressure. This week, Thurmond released his “90-day” plan. Among the stated goals: “eliminate excessive legal fees.”

Kirk Lunde is among the DeKalb parents who have been pushing Thurmond to curb legal costs.

“I think he is responding to public pressure on something that is outrageous,” Lunde said.