UH pours out cash for consultants

The University of Hawaii’s hiring of three private law firms to work on the aftermath of the failed Stevie Wonder concert reflects an overall tendency by the school to spend large amounts of money on outside consultants without sufficient regard to how much the work will cost, whether the jobs could be done internally and whether the quality of services received was worth the price, according to two senators who served on the panel examining UH accountability issues.

"It seems as though for every little thing, they hire a consultant," said Sen. Donna Mercado Kim, who led the questioning by a special Senate committee in the wake of the botched benefit concert.

The university’s practice of turning to outside law firms for certain types of legal cases despite having an in-house staff of attorneys drew particular scrutiny by the committee, which held its second hearing last week.

For the Wonder case, UH hired two private firms because its Office of General Counsel, which normally performs legal work for the university, played a prominent role in the botched concert case — including drawing up the contract — and therefore could not be assigned to investigate what happened, UH determined. An outside public relations firm also has assisted one of the hired law firms on the case.

The contracts with the two law firms currently total as much as $75,000 combined, but one firm indicated to the committee that its $50,000 cap likely would be exceeded. Preliminary figures provided by the panel show the tab for outside help related to the failed concert could approach $300,000.

Kim told UH officials at Tuesday’s hearing that she was worried by what seemed to be the university’s casual attitude to hire outside firms whenever something happens, without sufficiently analyzing the potential costs, whether the work could be done internally and other issues.

"Contract after contract, consultant after consultant — staggering amounts of money (are spent)," Kim said at the hearing.

Just since January 2011, Kim noted that UH has awarded nine contracts totaling as much as $435,000 to the law firm of Mark Bennett, a former state attorney general. One of those contracts involves the Wonder case.

Bennett said in a statement to the Star-Advertiser that his firm has billed UH only $254,000 so far. He also said one of the contracts he did pro bono, negotiating a deal over securities investments that likely saved the university and taxpayers $15 million to $18 million.

"I believe my firm was selected … because of my experience, qualifications, reputation and proven excellent results," Bennett said.

THE UNIVERSITY’S spending on outside law firms has been particularly pronounced of late.

The Star-Advertiser last year reported that the spending rate had more than doubled in a matter of months and that the $2.2 million it spent in an 11-month period topped the combined amount of what most other state agencies in Hawaii paid for outside legal help.

When Kim asked Carl Carlson, a vice chairman of the Board of Regents, about such spending rates at Tuesday’s hearing, Carlson replied, "It’s a major concern of this board."

The university late last week would not make anyone from the administration or the board available to answer questions for this story. Instead, it issued a written statement Friday from acting President John Morton, vice president for community colleges:

"The Senate investigative committee offered several ideas and suggestions about how the university might better conduct its operations and improve transparency," Morton said. "These will be considered by the administration and shared with the Board of Regents and its appointed operational and financial controls improvement advisory task group, which will be continuing in its work over the next several months.

"The recommendations from the administration and the task group and any subsequent changes in policy, practice or organization will be shared with the public and with the state."

UH spokeswoman Lynne Waters wrote in an email to the Star-Advertiser that the university would have nothing more to say about this matter, and she did not return phone calls Friday afternoon seeking more information.

The role that UH’s legal office has played in the Wonder fiasco also drew scrutiny from the Senate panel. Several senators criticized the legal advice the office has provided to the UH administration and board. Kim, for instance, questioned the rationale for the regents to meet for more than seven hours behind closed doors in August to discuss the concert investigation and other matters.

Kim and others also have questioned why so many names were redacted from the Cades Schutte fact-finding report on the canceled concert, suggesting that the deletions violated the state’s open-records law.

No attorney from UH’s legal office appeared at either of the two Senate hearings, which Sen. Les Ihara, a panel member, said he found curious, given that much of what was discussed involved UH legal issues.

"That office seems to be the source of what I would consider the lack of accountability," Ihara said during Tuesday’s session. "If they could switch and turn around and become really the office that promotes accountability, then I think we can have a lot of change a lot faster."

Noting the redactions on the fact-finding report and on a UH contract, provided to the Senate, in which the names of government agencies conducting an investigation were deleted, Ihara questioned even the advice the university was receiving from outside firms.

"What are they getting from these high-priced attorneys?" he said in an interview. "What they’re getting is pretty much improper — and high-priced — redaction advice."

The UH’s general counsel office, which oversees legal matters for the 10-campus system and last year had eight attorneys, usually hires outside help to pursue cases needing specialized expertise or that involve particularly complex litigation, requiring more attention than what the staff can handle. It also uses private firms when a legal conflict of interest exists, such as with the Wonder case.

UH officials and the board previously defended the hiring of outside law firms, saying such a practice was an integral, effective part of the university operation and mirrors what many other schools do.

Darolyn Lendio, who heads the legal office, previously told the Star-Advertiser that money for such hirings was well spent and meticulously monitored. She said the spending produces intangible benefits, saving the university money through the effective management of its legal affairs.

The university did not make Lendio available to answer questions for this story.

Howard Karr, then chairman of the board, likewise praised the job the legal staff did when asked last year.

Karr, whose term has since ended, did not mention any concern about the spending rate — something that regent Carlson told the Senate panel was a major concern.

To illustrate what Kim described as questionable legal advice, she noted that UH hired the Cades Schutte firm for the fact-finding report by using an "expert witness" designation to justify an exemption from the state’s procurement code.

But responding to an inquiry from Kim’s panel, Aaron Fujioka, the state’s chief procurement officer, said nothing in the scope of work detailed in the Cades Schutte contract substantiates use of the expert witness exemption.

Kim admonished UH for that.

"It’s a pattern of just picking some kind of exemption, using certain things, just to go ahead and get these contracts procured," Kim said. "This really is not very efficient work by the university when it comes to procurement and the spending of dollars of the university and students."