The non-partisan Legislative Audit Bureau recently concluded a months-long analysis of the technical colleges’ use of outside legal counsel.

The audit showed that three technical college districts — Milwaukee, Gateway and Lakeshore – accounted for more than half (53%) of the technical colleges’ spending on outside legal counsel in the years from 1999-2000 to 2003-04. 

At Gateway, spending on outside counsel increased dramatically over the period examined, jumping from $58,300 in 2000-01 to $308,500 in 2001-02.  Costs remained at around $280,000 in 2002-03 and 2003-04.  The cost increase coincides with Gateway’s creation of two 501(c)(3) non-profit corporations (BioCATT, Inc. and CATI, Inc.)  

In addition to the cost analysis, the audit raised serious concerns about the use of retainer agreements at Milwaukee and Gateway.  The other 14 technical college districts pay for outside legal services through direct billing on a fee-per-hour basis.

The state auditor recommended Gateway “immediately terminate” a retainer agreement it maintains with a former district administrator.  The $136,900 per year agreement, which runs through January 2006, includes a $10,000 per month payment to the attorney as well as the provision of various fringe benefits, including family health, dental and life insurance through January 2008.  The auditor found the attorney on retainer frequently worked significantly less than the minimum 80 hours per month stipulated in the retainer and concluded that Gateway would have paid 18.7% less for services if the district would have billed on a fee-per-hour basis.   

Milwaukee Area Technical College maintained a $34,000 per month retainer with Michael Best & Friedrich for much of the period studied.  The retainer was reduced to $27,950 in mid-2004.

The audit also raised concerns about the failure of several districts to engage in an annual request for proposal process when procuring legal services.  The auditor recommended districts develop annual letters of engagement with outside firms to clarify services to be provided and the rates for those services.

The audit was requested by Sen. Roessler and Rep. Jeskewitz, chairs of the Legislature’s Joint Audit Committee, after an earlier audit of Milwaukee Area Technical College raised questions regarding spending on outside legal firms.

Several legislators from the southeast portion of the state (Sen. Robson, Sen. Wirch and Rep. Lehman) have requested the Joint Audit Committee hold a public hearing on the technical colleges’ use of legal fees.  They have also asked that the auditor examine 2004-05 expenditures at Gateway.  The audit covered expenses through 2003-04.