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Lee hires off-the-books attorney for Braves deal

By Dan Klepal - The Atlanta Journal-Constitution

Cobb Commission Chairman Tim Lee unilaterally began working on the Braves move to Cobb County a year ago, by hiring an attorney off the books to lead negotiations of the largest economic development deal in the county’s history.

In directing attorney Dan McRae to begin secret talks with the Braves, Lee bypassed the county’s rules for hiring outside legal counsel. And McRae, according to Lee, listed his own firm in a preliminary draft of the stadium agreement for legal work that would’ve paid his firm $4 million.

Not only did Lee perform an end run around the County Attorney’s Office, but he also chose not to tell the other commissioners about his decision to entrust McRae in negotiating with $400 million of public money. Unlike a strong mayor or a county chief executive, Lee doesn’t have the authority to make decisions alone.

» THE STORY, PART TWO: Draft docs: Braves initially asked Cobb for $442 million

» DOCUMENTS -- See the Braves-Cobb agreement revisions and comment on them: Part One | Part Two

» VIDEO: Interview with Cobb Commission Chairman Tim Lee

» TIMELINE: How the Braves-Cobb deal was done | LEARN MORE: Our Braves Move To Cobb page

It wasn’t until early November that County Attorney Deborah Dance and the commissioners were told about the Braves deal — after nearly four months of negotiations, and just days before the public announcement.

And the county never signed a contract with McRae’s firm, which did not charge for any of the attorney’s time during months of negotiations with the Braves. However, McRae’s firm, Seyfarth Shaw, was listed as the county’s bond and project attorney in a Nov. 12 draft of the preliminary agreement.

Combined, those jobs pay more than $4 million.

In recent interviews, Lee first denied that McRae negotiated with the Braves on the county’s behalf, but later acknowledged that McRae performed that service. Lee also said McRae wrote his firm into the contract without his knowledge or consent, and that he did not promise McRae additional work on the stadium deal in exchange for his help with the preliminary agreement.

Lee said he sought McRae’s help only as a “subject-matter expert,” to determine if the deal was “feasible.” McRae is a partner with Seyfarth Shaw.

Timothy Terrell, an Emory University law professor and expert on legal ethics, said there is “no question” McRae was acting as the county’s attorney during MOU negotiations. McRae performed work for the county after the MOU was finalized, and charged just under $500 an hour.

Publication of this story was delayed a week to give McRae an opportunity to explain his role in the negotiations. Steven L. Kennedy, the firm’s managing partner, responded with a statement last week that praised McRae’s work but did not address the newspaper’s questions about why the firm was named bond and project counsel in the draft agreement, and why the firm participated in the deal without payment or a contract.

The negotiations are revealed in about 30 versions of the so-called Memorandum of Understanding, a critical preliminary agreement that spells out the commitments of everyone involved in building the $622 million stadium. The Atlanta Journal-Constitution obtained the documents through Georgia’s Open Records Act.

Dance removed Seyfarth Shaw from the contract during her Nov. 16 edit. When asked why, she replied that it was not “appropriate” to name McRae’s firm because “the county had an existing bond counsel contract that had resulted from a bid process.”

When asked if individual commissioners have the authority to hire outside lawyers, Dance replied: “I’m not aware that they can.”

Dance’s office is responsible for choosing all outside legal counsel hired by the county. She selected a different firm — Thompson Hine — to be the county’s project attorney, which was paid $250,000 to negotiate later agreements with the Braves. Dance said she chose them after reviewing qualifications of several firms experienced in stadium deals. One of those firms was Seyfarth Shaw.

The county’s bond attorney, hired long before negotiations began with the Braves, will be paid 1-percent of the debt issued. Commissioners have approved up to $397 million in bonds for the project.

Lee may have committed an ethical breach in bypassing the county’s policies and procedures for hiring outside legal counsel, said Edward Queen, coordinator of undergraduate studies at Emory University’s Center for Ethics.

It’s the kind of thing that erodes public confidence in government, he said.

“It’s either an issue of incompetence or unethical behavior,” Queen said. “Neither one reflects particularly well on the individual.”

Project Intrepid

The Braves negotiations — and McRae’s involvement in them — were so secret that Lee and chamber of commerce officials thought it needed a code name.

They came up with “Project Intrepid.”

The first meeting between Lee and McRae happened in July 2013, with Cobb Chamber executive vice president Brooks Mathis playing intermediary.

An email from McRae’s legal assistant to Mathis setting up the meeting had in the subject line: “Project Intrepid — Confidential.” Documents reviewed by the newspaper indicate that McRae’s negotiations with the Braves started within weeks of that meeting.

But in an Aug. 8 interview, Lee steadfastly maintained that McRae did not negotiate on the county’s behalf.

“… The Braves took an MOU they’ve had in the past and said let’s start here, and tweak it to what we’ve had conversations about,” Lee said. “So that’s not negotiations, per se, that’s coming up with a document and making it reflective of what our conversation was. We didn’t negotiate back and forth with the MOU.”

A back-and-forth negotiation is exactly what happened.

McRae was the primary contact for Braves attorney Greg Heller on all the MOU work, and the two also met in person to talk about the contract, according to documents reviewed by the newspaper. McRae worked on the project from at least August until the final MOU was approved by the county commission Nov. 26.

About 30 versions of the agreement were shuffled between Heller and McRae, who then sent the documents to Mathis so they could be reviewed by county officials. No county personnel retained the documents, which effectively prevented public inspection.

Dance, whose first edit was Nov. 14 after about a dozen versions of the document had been traded between McRae and Heller, said she saw McRae negotiating in meetings. Dance performed edits on the document after being made aware of the deal.

“Dan McRae was negotiating with the consent — however it was given — of the county. I personally observed it,” Dance said. “As an attorney having reviewed this deal and the course of conduct … Dan McRae was the lead point person negotiating this agreement.”

Dance also said she thought McRae did a good job representing the county.

After making that statement, Dance told a reporter that she was going to talk to Lee about his comments in the AJC’s interview. The next day, Lee issued a statement through a spokesman acknowledging that McRae was the county’s lead negotiator.

“It is now my understanding that McRae was acting on the county’s behalf,” the statement says. “Dan’s expertise in this area of law, and his efforts, played a key role in securing our partnership with the Braves.”

Lee’s statement did not acknowledge that secretly hiring McRae without a formal agreement was improper.

Lost Confidence

The Braves were still trying to secure a deal to stay in the city of Atlanta when McRae started negotiating with the Braves.

In fact, as proposed budgets were being developed for a new stadium in Cobb, the Braves sent Atlanta officials the team’s 16-point demand letter for staying in Turner Field. A majority of those points dealt with their desire to have a mixed-use development built outside the stadium that would guarantee at least $10 million a year in new revenue.

And Braves executives insisted that Lee maintain complete secrecy regarding the Cobb negotiations.

But in the interview, Lee said the secrecy demand did not play a role in his decision to keep the County Attorney’s Office out of the loop.

“I knew Dan and I didn’t want to hire him, I just wanted to get his advice: does this make sense to move to the next level,” Lee said. “It’s not any different than you calling your uncle who happens to be a master plumber (to) say: `Look I’m thinking about adding an outside spigot.’”

By Oct. 2, Cobb and the Braves had put together four separate budget proposals. The most expensive, dated Sept. 26, had a project budget of $732 million, with $472 million (64 percent) to be financed by taxpayers. The budget eventually approved by commissioners is $622 million, with the county paying $392 million (63 percent). A portion of the county’s debt will be covered by $6.1 million in annual rent payments from the team.

Mike Plant, the Braves executive vice president of business operations, told the AJC’s editorial board earlier this year that the final straw in negotiations with Atlanta came about because of conflict over redevelopment outside the ballpark. The Braves issued a statement Friday that said McRae negotiated “the framework for the MOU.”

“It was just a feeling that I lost confidence that we’d be able to address the development,” Plant said to the editorial board. “We said: if you’re going to build outside the front door, and we’re going to be there for the next 20 or 30 years, we kind of have to control how that operates and the potential adverse financial impact.”

The Braves plan to build a private, mixed-use development outside the new stadium.

Heller, the Braves attorney, submitted the first written MOU to McRae on Oct. 14, with an email.

“Attached for your review please find an initial working draft of the Intrepid MOU,” Heller wrote. “You will note there are a number of items bracketed for discussion. As such … I look forward to walking you though the draft tomorrow and discussing in greater detail.”

From there, the document was passed back and forth between the attorneys who performed separate edits — underlining text to be added to the document; striking through text to be deleted. McRae and, eventually, Dance often wrote comments or notes in the margins before returning the document Heller and the team.

That is a routine method of contract negotiation, so that changes to the document can be easily tracked. Subsequent agreements with the Braves were negotiated in exactly the same manner by the Thompson Hine firm, and so was the Falcons agreements negotiated by attorneys for the Georgia World Congress Center.

Frank Poe, executive director of the GWCC, said his organization worked through the Attorney General’s Office to find the two firms hired for the Falcons deal. Both signed contracts to document their scope of work and fees.

“You’ve got to make sure you define the roles and expectations of the legal team, and then what they should be fairly compensated,” Poe said.

Commissioners Lisa Cupid and Bob Ott both expressed concern over Lee hiring an outside counsel without the commissioners knowledge or approval.

“Certainly it’s a concern because that’s not how we’re supposed to do things,” Ott said of McRae’s secret hiring. “Those actions are supposed to be determined by the board.

Lee agreed to a second interview last week, after issuing his statement acknowledging that McRae negotiated on behalf of the county. He said that he probably should have re-evaluated using McRae as the deal progressed, but then shrugged off the issue as being “semantic as to what negotiation means.”

“I thought it was good judgment and good management, actually,” Lee said.

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