Georgia has spent more than $100 million during the past three years on private lawyers hired by the attorney general to perform state legal work — one of the largest programs of its kind among the 50 states.
The cost of special assistant attorneys general, known as SAAGs (pronounced “sags”), has increased each year since the Great Recession, a time when most of state government was cutting back.
An exhaustive review of the SAAG program by The Atlanta Journal-Constitution and the News Enterprise at Emory University found a case in which the state renegotiated a contract with a Washington lawyer and wound up paying her more than she originally sought – so much more that she returned some of the money of her own accord. The review also turned up an Atlanta attorney who works as outside counsel for the same agency that he lobbies on behalf of private clients. And it found a lawyer in South Georgia who put in for more than $95,000 in expenses in 2012, on top of the $219,000 he billed for legal fees.
The AJC and the News Enterprise, made up of investigative reporting students, spent months reviewing thousands of pages of documents to assess the SAAG program. The investigation revealed some problems in the SAAG system, but it also showed that the state depends heavily on SAAGs; in fact, Georgia has more than twice as many outside attorneys as it has staff lawyers in the attorney general’s office.
Attorney General Sam Olens notes that the attorney general’s office has managed the SAAG program for more than 30 years. “Overall, I believe that Georgia taxpayers receive good value for their money both in how the program is administered and in the legal services provided by the SAAGs,” Olens said in a statement.
He said transparency and efficiency are among his priorities for the SAAG program, and in fact he has brought more transparency to the system by putting some SAAG spending records online.
Hundreds and hundreds of lawyers
The state hired 332 SAAGs in fiscal 2013 to represent the executive branch, supplementing the 139 full-time staff lawyers in the attorney general’s office. Georgia also employed 182 attorneys in the various departments and agencies as of 2010, the last year for which figures were available, but they don’t work for the attorney general and aren’t permitted, by law, handle courtroom work.
In one respect, SAAGs are a bargain for taxpayers because they work at discounted rates. The state hires SAAGs to take on legal matters that the attorney general’s office either lacks the expertise or the staff to handle. In many cases, the state finds it more efficient to hire a local attorney in, say, Valdosta or Ringgold than to send a staff lawyer from Atlanta.
One reason Georgia has one of the nation’s biggest SAAG programs is that, in terms of funding, it has one of the smallest attorney general’s offices, according to Jim Tierney, the former attorney general of Maine and director of the National State Attorneys General program at Columbia University.
“There is a legacy in Georgia that transcends any particular attorney general that says, ‘We’re not going to appropriately fund government lawyers,’” Tierney said. “Fact of the matter is, you’re going to pay more for the private-sector lawyers than you will for public-sector lawyers over time.”
During the last two budget cycles, Attorney General Olens has asked the governor for 14 additional staff attorneys, plus support personnel, arguing that the hires would save the state $1 million a year in SAAG costs.
Olens’ request was denied each year.
“The special attorney general system allows the state to contract with attorneys with the exact expertise needed,” Gov. Nathan Deal’s spokesman, Brian Robinson, wrote in an email. “Transferring those responsibilities to full-time staff attorneys would not allow for the specialization that’s needed.”
Experience suggests that Olens’ proposal could save money. A 2010 House Budget Office report showed that hiring 20 in-house attorneys in 2008 brought SAAG costs down from $38 million to $32 million over two years.
Beginning in 2010, however, the cost of the program went up $1 million a year for three straight years. The rate of increase slowed in fiscal 2013, which ended June 30, when the cost grew by $120,000.
Rep. Jay Powell (R-Camilla) heads the House Public Safety subcommittee on appropriations and works with the attorney general to set an estimate for SAAG spending each year.
“I think we ought to look at the use of SAAGs and whether we would be better-served hiring more staff attorneys,” Powell said. “Because we have been in such a dire financial situation, we just did not have the luxury of going in and looking at the details. We can now that we’ve got a little bit of breathing room.”
The attorney general hires and pays outside counsel, although the agencies requiring the legal work reimburse the AG for each bill. It can be hard to track each department’s spending on outside lawyers; of 27 agencies and departments contacted by the AJC, only one said it has a specific line item for SAAGs in its annual budget.
The Department of Human Services, for example, employs about half of the outside lawyers working for the state, spending about $1 million a month, but it does not specifically budget for them.
Lower-paid associate handled bulk of work
The attorney general has sole authority to appoint outside counsel, according to the law, but the various state agencies typically work with the AG to select outside counsel.
In some cases, agencies have gone ahead of the attorney general and hired their own outside counsel. In 2011, the Department of Community Health faced an appeal deadline over a longstanding $90 million dispute in disallowed Medicaid payments to the state. DCH hired Washington attorney Caroline Brown without seeking the approval of the attorney general.
Lauren Kane, the AG’s spokeswoman, said instances like the Brown case are “extremely infrequent.”
“In such circumstances, we will communicate directly with the attorney to determine whether it is appropriate to hire them as a SAAG and, if necessary, we will renegotiate their hourly rate to be consistent with what we pay other SAAGs with similar expertise,” she said.
Initially, DCH contracted for Brown’s services at a discounted rate of $525 per hour, and for her associates various rates as low as $190. But the attorney general’s office scotched that agreement and retroactively approved Brown’s hire at the “blended rate” of $375 per hour for Brown and her legal team.
Brown told the state she expected the matter would cost $100,000 to resolve, records show. But in 2012 alone, her team collected $338,096.76, for which Brown put in 35 hours, while her lower-paid associate worked 647.
Brown recognized that the state was overpaying for her services and offered a $15,000 discount on her March 2012 bill, records show. The case has now cost the state more than $420,000.
Brown declined to comment for this article.
Representing the state — and lobbying, too
Atlanta attorney Stacy G. Freeman has lobbied on behalf of insurance companies since 2006. In 2010, he was hired as outside counsel for the Department of Insurance. Since then, Freeman has continued his work for various insurers, sometimes lobbying Insurance Commissioner Ralph Hudgens and his department on their behalf. Until last month, one of Freeman’s lobbying clients was Munich American Reassurance, where his wife is chief legal officer.
Freeman the lobbyist spent more than $1,000 between 2010 and 2013 on meals for department employees, the same years the department paid him $37,158.71 to handle an insurance receivership case, records show. Freeman the campaign contributor and his wife gave $17,500 to Insurance Commissioner John Oxendine — $8,500 of that in the year before Freeman became a SAAG. He and his wife have also donated $4,000 to Oxendine’s successor, Hudgens.
Freeman did not respond to multiple messages left at his office and home.
The attorney general’s policy on conflicts precludes SAAGs from representing private clients against the agency they serve. By this standard, the office says it does not consider Freeman’s relationship with the insurance commissioner a conflict of interest.
“It is our understanding from the Insurance Department that Mr. Freeman has represented clients before the agency, but not against the agency,” Kane said.
In North Georgia, 300 cases at a time
The AG’s office has long maintained that it must have private lawyers for the state Department of Human Services, which includes the Division of Family and Children Services and the Division of Child Support Services, and operates in all 159 Georgia counties.
DHS paid 119 private attorneys last year, including Steven M. Ellis, who has represented the department since 1994 and has created a small, tightly run industry out of DFCS cases. Ellis and his five associates handle cases in the North Georgia counties of Catoosa, Chattooga, Walker and Dade. Ellis bills at the state’s standard rates of $52.50 per hour or $55 per hour depending on the case, much less than the market price for such work.
Even with the discounted rates, Ellis billed $518,107.04 in fiscal 2013, including expenses, making him the top-earning attorney working solely for DHS. His earnings account for the work of his five-person legal team, but he is the sole attorney listed on state reports. He has been one of the 10 top-billing SAAGs statewide the past two fiscal years.
Ellis told the AJC via email that the state accounts for 90 percent of his practice. He outsources much of that work to other lawyers, identified only by their initials on his bills. Ellis and his associates billed for one-tenth of an hour thousands of times in 2012, according to billing documents, for such tasks as “uploading docs” or “email from clerk.”
Ellis declined to identify his associates, saying he selects and manages them, not the attorney general.
“Having one SAAG for the circuit means that all cases for the connected courts, judges and DFCS offices are handled from one office instead of spread around different offices,” said Ellis in an email. “The AG’s office expects me to properly handle my assigned counties and it is up to me to properly supervise any associates working for me.”
Ellis’ team handles about 300 open DFCS cases at a time, and he has developed his own “secure digital system,” including websites for each county in which he operates, for sharing case information with the agency, he said.
In March 2012, Ellis and his associates spent more than 50 hours uploading documents to these websites, logging at least 6 minutes per upload. Ellis said via email that each upload includes time for attorney review. Over one month, the state paid $2,648 to Ellis for the uploads.
“This is a very important function of my SAAG work,” Ellis said of the websites. “Our system provides the most efficient way to get this done.”
Lisa Haddock Malas, a SAAG who represents DFCS in metro Atlanta, was paid $413,210.18 in fiscal 2013. In a phone interview, Malas said that money was divided among seven people at her firm who help with the SAAG caseload.
“I assure you that the SAAGs, especially those working for DFCS, are not doing this for the money,” Malas said, noting that she is in court four days a week. “We do this for the kids.”
In South Georgia, expenses top $95,000
A third SAAG working DFCS cases, Charles Reddick, led all DHS SAAGs in 2012 in expense reimbursements, putting in for $95,132 for costs he incurred in the state’s service, records show. Reddick, who works with one associate attorney, three paralegals and two secretaries, covers a lot of ground — 11 counties over two judicial circuits in South Georgia. Even so, his 2012 expenses were more than triple those charged by most other private attorneys working for DHS.
In January 2012, Reddick was reimbursed $1,991.55 for travel. The summary files the AJC reviewed did not specify the type of travel, but assuming the reimbursement was for mileage, Reddick billed for more than 3,500 miles in that month. For calendar 2012, Reddick’s total travel bill — again assuming that the travel was for mileage — comes to more than 33,800 miles.
“Unfortunately down here where we live everything is about 40 to 50 miles apart,” said Reddick, adding that his team is traveling almost every day.
The attorney’s copying expenses were nearly double his travel expenses. In 2012, Reddick billed for more than 178,000 photocopies at 20 cents a page, according to the summary of his bills provided by the attorney general’s office. That’s the equivalent of nearly 700 pages per business day.
Reddick said some judges in the circuits he serves require “voluminous” paper copies of case files before they will hear a case. He estimated he has hundreds of open DFCS cases at any given time, and handles 5,000 or 6,000 child support cases a year.
“This [SAAG work] consumes probably 90 percent of my practice, some years more,” said Reddick. “It’s 100 percent of all my staff.”
He collected an additional $91,108.13 in expense reimbursments in fiscal 2013.
10 highest-paid SAAGs
Fees and expenses for special assistant attorneys general in Georgia for fiscal 2013. State records list only the SAAG receiving payment; some attorneys pointed out that their work for the state also involved other attorneys and paralegals in their offices.
And these attorneys were the 10 highest-paid SAAGs in 2012. Includes hourly fees for legal work for the full year, as well as expenses.
About the reporter
AJC news intern Chelsea Cariker-Prince began investigating the SAAG system in the fall of 2012 as a member of the News Enterprise, a student investigative reporting initiative of the journalism program at Emory University. Cariker-Prince’s inquiry brings to light a complex system involving countless actors who each claimed a small part of a vast universe. To help map this universe, she reviewed SAAG records posted on the attorney general’s website, outside counsel records for other states, hundreds of SAAG invoices and conducted numerous interviews.
History of the system
The SAAG system was launched in 1971 to manage the hiring of outside counsel for the state. Before that, Georgia often contracted county attorneys to handle state cases.
“There was not much continuity, there was not much consistency about how they did it,” said Tom Whelchel, a SAAG serving the Department of Transportation since 1972. The new system established rates and unified hiring procedures for outside counsel across the state, he said.
Former Attorney General Michael Bowers, who served from 1981 to 1997, attributes growth in the SAAG program to the needs of agencies like DOT and DHS, which require legal services in distant regions of the state. “Especially with respect to certain kinds of cases, we need local experts, like highway condemnation,” he said. Local lawyers know local systems and players better, so they often have an advantage.
“We needed local lawyers to keep from getting home-cooked,” Bowers said.
In 1991, the earliest year for which SAAG data are available, Bowers’s office spent $10.8 million on outside counsel. When he left in 1997, SAAG costs totaled $16.3 million, an increase of more than 50 percent.
Over the next 16 years, the cost has more than doubled.
2010 report: how many lawyers?
Three years ago, members of the House Appropriations Committee commissioned the House Budget Office to report on the SAAG program. The legislators questions included: Who was performing the state’s legal work? How much money was being spent on SAAGs? And how many state agencies had in-house attorneys? The resulting report was illuminating.
With a total of 182 lawyers, various agencies and departments had more in-house attorneys than the attorney general’s office, which employs about 140. Only the attorney general’s office, however, may represent the state in court. This is where SAAGs come in, taking up the slack the AG’s office can’t handle.
The state saved a net $3.9 million on SAAG expenses when the Legislature approved an additional 20 staff lawyers for the attorney general’s office in 2008, the report found.
The House Budget Office report called for a “thorough analysis of individual agencies in their respective budget committees to determine that attorneys — and all personnel— are being utilized to the highest level of efficiency.” To date, no such review has occurred.