View the list of outside lawyers 1999-2002

Most doing work that could be done by highly paid staff...

Board spent at least $10.5 million on outside lawyers since '99

By George N. Schmidt

Despite massive expansion and a pretentious reorganization plan that has left the Law Department of the Chicago Board of Education more than double the size and triple the cost of what it was a decade ago, the school board continues to expand the use of outside attorneys — dubbed by many “pinstripe patronage” — for even the most routine legal work.

Chicago Board of Education “Corporation Counsel” Marilyn Johnson has overseen the tripling of the staff of the Law Department and the unprecedented expansion of pinstripe patronage to outside law firms.

Between January 1, 1999, and December 31, 2002, the Chicago school board officially approved more than $10.5 million in fees and costs to outside law firms doing work for the board, an ongoing Substance investigation has revealed.

These expenses officially appeared in “Board Reports” submitted by the board’s chief attorney, Marilyn Johnson, during each of the 48 months covered by this part of the Substance investigation. Because they involve legal matters, they are supposedly exempt from the requirements of the Open Meetings Act and are not published in the school board’s agenda prior to each monthly meeting.

The board reports approving the expenses for outside lawyers contain virtually no information of the extent or quality of the work performed by the outside firms, which include some of the most prominent in the city. Because of the questionable manner in which the school system’s lawyers report their use of outside help, however, the actual amount spent is likely to be far greater — if the legal books of the Chicago Board of Education are ever audited (double-checked) by truly independent investigators. A close check by Substance of court records of school board expenditures on the settlements in legal cases indicates that what is reported to the Board of Education (and the public) is often different from what is agreed to in court or paid to the attorneys involved.

1995 “deregulation” leads to pinstripe patronage

Most of the outside legal work covered in this investigation is for services that were performed by the Board’s own staff prior to 1995.

The current situation is the direct result of the push for deregulation of public schools and the privatization of public school services during the past decade. The actual record shows that both deregulation and privaitzation are more expensive than previously disclosed — and certainly more expensive than having the same work performed by pubic service professionals employed by the school system.

In 1995, the Amendatory Act to the 1988 Chicago school reform law gave Chicago Mayor Richard M. Daley control over the school system. The Act, which was supported by Daley and the Republican majority in both houses of the Illinois General Assembly, was the most extensive deregulation of public schools in any major city in the United States as of that time, and it subsequently became a model for other cities.

Within a year after Daley’s takeover of the school system, the use of outside attorneys began a gradual escalation. That cost leveled off by 1998 at between $2.5 and $4 million annually. Work now done by outside lawyers that was once performed by school board employees (including attorneys) by 1999 included routine real estate transactions, standard labor relations work, union contract negotiations, and defense — including court appearances and trials — in civil litigation and employment discrimination cases.

At the same time, the number of attorneys employed by the Chicago Board of Education has increased dramatically since the mid-1990s.

In addition to nearly 50 lawyers working in the school board’s Law Department, the board has also increased the number of lawyers — most with no previous experience in public education — in several other departments as well.

The present Substance investigation limits itself to the school board’s Law Department and to the work the lawyers are doing on litigation itself. Future stories will cover lawyers who have been given top positions in the school system in other department despite their lack of qualifications for or experience in those jobs.

By the mid-1990s, the public schools of Chicago were coming to the end of 15 years of austerity, which followed the 1979 bankruptcy of the school system.

At the end of the 1993-1994 school year, the Chicago Board of Education’s budget reflected a structure in its legal department that had been relatively unchanged for more than a decade. In the Law Department, the school board employed an “Attorney” (a position that is required by law for all Illinois school systems). Chicago’s “Attorney” supervised a “First Assistant Attorney” and a number of “Assistant Attorneys.” For the 1993-1994 school year, Chicago’s Attorney was paid $103,000 per year. The First Assistant Attorney was paid $87,000 per year. Nineteen “Assistant Attorneys” were budgeted, at an average salary of $60,000 per year.

“First assistant attorney” Robert Hall is currently being paid $135,000 per year. Hall was the beneficiary of an unusual vote at the September 25, 2002 meeting of the school board, which approved a motion to place $41,000 into his pension. No explanation was given to the public for the lucrative decision.

The following year, Mayor Daley took over the school system.

Daley appointed a school board which was headed by a Gery Chico, a lawyer with little experience in the courtroom or in the practice of law who had most recently served as Daley’s chief of staff.

Daley also appointed a “Chief Executive Officer” for the school system, choosing Paul G. Vallas, who had served in various capacities under Daley. Immediately prior to 1995, Vallas had served as Daley’s budget chief. Although Vallas was widely reputed to be a “finance person”, his professional training was mainly in political science and his experience showed him to be a master manipulator of the political sides of budgets. Vallas did not have the qualifications to serve either as a certified public accountant or as a financial officers in any Illinois school district. The politics of the Amendatory Act — which essentially deregulated a great deal of the governance of Chicago’s public schools — made it possible for Daley to appoint a man to head the entire system who would not have been permitted to act as a substitute teacher in any school district in the state.

The political impact of those political appointments was felt almost immediately within the school system, but a massive campaign of public relations, coupled with cutbacks in investigative journalism in all Chicago media, left a void which exists to this day. Propaganda and spin became more important in most of the city’s media than fact.

Less than ten years after the 21 lawyer Law Department that existed immediately prior to the City Hall takeover of Chicago’s schools, the budget for the Law Department was radically different.

Corporate model and crony capitalism

Today, the Law Department is headed by a “Corporation Counsel” (Marilyn Johnson) whose salary is $154,000. The “First Assistant Attorney” for the school board, Robert Hall, is budgeted to earn $123,000 this year.

Three years ago, Johnson reorganized the department to include eight “associate attorneys.” Each of Johnson’s “associate attorneys” is budgeted to be paid $110,000 this school year. This year’s budget also includes at least 33 lawyers working under the titles “assistant attorney” and “senior assistant attorney.” The salaries of the assistant attorneys and “senior assistant attorneys” range from $70,000 to $90,000.

This school year, there are at least 47 lawyers working full-time in the Chicago Board of Education’s Law Department (although the number might be higher). The reason is that for the past five years, Johnson has routinely made appointments and promotions during the school year. These changes have received no scrutiny from the members of the Chicago Board of Education. They only appear internally within board expenses or are reflected the following year when the size and budget for the department again expands. The result is that the numbers printed in the annual public budget of the nation’s third largest school system (released to the public in July of each year) are more fiction than fact — only the flimsiest guide to the actual costs of the department.

Where it once occupied a corner of the space on the upper floors at 1819 W. Pershing Road, the Law Department presently occupies the entire Seventh Floor of the Board of Education’s massive headquarters at 125 S. Clark St.

If the budget document is to be believed, more than 77 people are currently working there. However, recent head counts and a close examination of internal mailboxes — both by reliable sources — show the number of individuals working on the Seventh Floor is actually in excess of 100. Since the Board of Education has refused for the past seven years to publish its administrative directory, the public has no way to make any independent examination of the claims made by school officials. Members of the Board of Education rarely question the statements of the board’s attorney at public meetings. The board has never voted against a proposal offered at its monthly meetings by Johnson.

Litigation is not the only activity now being outsourced at the school board. In addition to contracting out work that was once done by the Board’s own lawyers and staff, the Board’s massive Law Department now hires outside firms — at a cost of between $500,000 and $1 million per year — to manage its own internal case work, to maintain its law library, to ensure that its litigation dockets are not in disarray, to research in its law library and for other routine activities, all of which were once the responsibility of employees, not outside contractors.

This report, the first part of a six-part investigation, only deals with data and arrangements that appeared on the Board’s public agendas. Substance has reason to believe that many more lucrative arrangements are in operation that have not been disclosed to the public. Top officials in the Law Department — including Board “Corporation Counsel” Marilyn Johnson and her First Assistant Attorney, Robert Hall — routinely encourage board members, the board’s secretary, and many of the board’s administrators to routinely violate, ignore, or circumvent the Illinois Freedom of Information Act and the Open Meetings Act.

Earl L. Neal’s Christmas present

On December 18, 2002, without discussion, the Chicago Board of Education accepted a “Board Report” to pay the law firm of Earl L. Neal & Associates $300,000.

In Chicago, the press still portrays the school boards of the 1970s, 1980s and early 1990s as ineffective and contentious, but no previous school board would have voted to spend $300,000 on one lawyer without some questions. Each month, however, the present school board spends tens of millions of dollars without discussion or public reporting. Chicago’s current school board — the majority of whose members are millionaires with little contact with the public schools and no experience in public education — don’t discuss anything in public. The present school board includes three bankers, but no educators. They take pride in their ability to vote through massive agendas (often longer than 200 pages) in less than 15 minutes per month.

According to the public records of the school board, Earl Neal’s firm has receive payments from the Chicago Board of Education on 16 separate occasions since January 1, 1999. The total for the four-year period is $4,190,000. None of these expenditures appeared on the agenda of the school board meeting that is published prior to each meeting, and each appeared only on the “Agenda of Action” that becomes public after the meeting.

The public explanation regarding the Earl Neal expenditure consists of four lines which have been the same for the past four years and throughout the $4 million:

“ The General Counsel has continued to retain the firm Earl L. Neal & Associates, L.L.C. to provide legal services in connection with land acquisition and related regulatory matters for the Capital Improvement Program. Additional authorization for the firm’s anticipated fees is requested in the amount of $300,000. As invoices are received, they will be reviewed by the General Counsel and, if satisfactory, processed for payment.”

Since the Daley administration took over the school system in 1995, the total spent by the board on Neal’s services has been far greater than the $4.19 million spent during the time covered by this Substance investigation. During those years, the board members have not once asked whether the services being performed by Neal, one of Mayor Daley’s most prominent supporters, could have been performed less expensively elsewhere or by others.

Had any board member asked, she would have learned that for more than a half century, the services of Earl Neal were all being done by school board employees in the Law Department and other departments at much less cost than the board now pays for outside counsel.

Throughout the 1950s and 1960s, during the last major capital improvement program in Chicago’s public schools, the school board employed attorneys to do the legal work, while the departments of real estate and architecture handled many of the routine matters required in such massive programs.

One of the purges completed early by the Vallas administration was the destruction of those departments (and in some cases, even the records of the history of those activities) to pave the way for the enormously expensive privatization of their functions. Under the guise of “reducing bureaucracy” Vallas systematically destroyed the institutional memory of the school system, leaving the door open to the more expensive crony capitalism which replaced what had come before.

“ The mayor’s labor guy...”

There was no Christmas present Board Report for the law firm Franczek Sullivan P.C. in December 2002, but the firm received $450,000 for its services during 2002. No labor contracts were being negotiated during 2002.

In fact, the last major labor contracts negotiated by the Chicago Board of Education were signed before Christmas 1998 so they were in place for the 1999 mayoral election. The past four years have been hailed as a time of “labor peace” in the school system. Yet during the four years between January 1, 1999 and December 31, 2002, the Franczek firm received $1.18 million for work it did for the Chicago Board of Education. The firm’s total makes it second in total dollars spent on outside law firms during the period under investigation for this story.

According to school board reports, the main work of the Franczek firm has been labor contracts. The Board Report for each of the payments to the firm states the same thing (as in the following, from August 28, 2002, when the board voted to pay Franczek $150,000):

“ The firm provides legal services to the Board and the CEO in the areas of collective bargaining; in other labor-related matters and in property tax assessment appeals filed before the Property Tax Appeal Board (PTAB)…”

Had the members of the board asked, they would have learned that Chicago’s public schools first began negotiating labor contracts with their employees during the 1960s. Once the collective bargaining process became routine, the school board maintained an employee relations department (sometimes called a “bureau”) whose chief, usually an assistant or deputy superintendent, employed staff to conduct negotiations and follow up on enforcement once contracts had been signed. The Board of Education’s 1980-1981 budget, for example, shows that the Department of Employee Relations had a staff of 11, headed by an assistant superintendent. The entire department cost the board less than $400,000 per year. The Chicago Board of Education did not begin hiring outside labor specialists until the late 1980s, and then at relatively small amounts.

Although the “PTAB” work is listed among the duties of the Franczek Sullivan, the firm’s real work is in contract negotiations and enforcement. Three other outside firms have been paid since 1999 to do work before the PTAB.

Since the Daley administration took over the school system, the school board has also maintained its labor relations and human resources departments — but added the expense of the Franczek firm’s work atop those.

The four years during which the Franczek firm received its $1.18 million were a time of labor peace in the public schools. The former leaders of the Chicago Teachers Union reached an agreement (which was generally applied to all other unions representing school employees) in November 1998, nine months before the expiration of the old union contract (which expired on August 31, 1999). Since January 1, 1999, the unions representing school board workers have been working under four-year agreements which expire, in general, on June 30, 2003. Therefore, the $1,18 million paid to Franczek Sullivan since January 1999 has been for work done during a time when contract negotiations were not taking place.

Big time law firm keeps union in its place

Between January 1, 1999 and December 31, 2002, the Chicago Board of Education paid Jenner & Block, one of the city’s most powerful law firms, $777,000.

Almost all of that money was paid for the firm’s representation in federal and state court to thwart claims by the Chicago Teachers Union that the layoffs, beginning in 2000, of tenured teachers were, in some way, unconstitutional or in violation of state law.

Despite claims by the former leaders of the Chicago Teachers Union that it had a cooperative relationship with the mayor and the school board, the Board didn’t risk its defense of its right to fire tenured teachers in the hands of its own lawyers. From the onset of the litigations, Jenner & Block was hired to represent the Board in both the federal case (called “Shegog”) and the state case (called “Land”).

One of the reasons for using a firm like Jenner & Block for high level litigation, sources have told Substance, is that members of the federal and state judiciaries are often alumni and alumnae of the city’s top law firms. In January 1999, Jenner & Block began the process of reducing the union’s claims in federal court to dust. Claims in state court are still pending.

Both cases involve the right of the Chicago Board of Education to lay off tenured teachers in Chicago without cause, an unprecedented erosion of teacher rights. One of the most important aspects of the Amendatory Act, in the eyes of its corporate sponsors, was that it gave the school board maximum “flexibility in staffing”. This meant, in practice, that the board could raise class sizes at any time to justify laying off members of the teaching staff and that the board could use other means to justify the termination of tenured teachers without cause. The work of Jenner & Block has helped the board sustain those objectives.

A half million dollar in pursuit of Substance and this reporter

In future installments of this investigation, Substance will detail expenses on a number of cases where the Board paid outside counsel more money than the Board finally had to pay to its opponents in litigation when the cases finally settled.

But one case deserves special mention here in Substance.

Substance attorney Mark Barinholtz joined editor George Schmidt and Sam Schmidt after an appearance in federal court on December 13. Mark Barinholtz is one of the three members of the Substance legal team, the other two of whom are Alan Barinholtz and Elaine Siegel. Since the Board of Education sued Substance for $1 million (later increased to $1.4 million) in January 1999, taxpayers have paid more than $250,000 for the Board’s outside lawyers, as well as salaries and costs to several Board lawyers who have appeared at various times during the four years since the litigation began. Because the Law Department is spending tax dollars — and is subject to no oversight by the members of the Chicago Board of Education — almost every case is drawn out as long as possible by Board attorneys to maximize their fees and costs and to wear down opponents.

On January 26, 1999, amid great media fanfare, the Vallas administration sued Substance for $1 million (later increased to $1.3 million in federal court and $1.4 million during administrative hearings).

In addition to deploying a total of at least seven of its own attorneys at various points during the four-year litigations and hearings in the Substance case, the Board has also paid more than a quarter million dollars to outside lawyers who have handled various parts of its case.

Since January 1, 1999, the Board has paid $220,000 to Patricia Felch and the three law firms she has worked for since then (Peterson and Ross; later Banner and Witcoff; now Felch is in private practice). Additionally, the Board has paid $35,000 to attorney Frederick Bates to conduct an investigation of this reporter’s work at Bowen High School. Although the Bates investigation turned up nothing negative, the Board has refused to release it, either under FOIA requests or to Substance’s lawyers.

Thus, the total spent on outside lawyers deployed against Substance and this reporter during the past four years has been $255,000. And with the litigation likely to go on appeal to the Seventh U.S. Circuit Court of Appeals in the coming months, that bill is likely to continue increasing — just like all the other bills that the Chicago Board of Education gets from the expensive outside law firms that are doing the work that might otherwise be done by the nearly 50 lawyers who go to work every day on the Seventh Floor of the Chicago school system’s headquarters at 125 S. Clark St.