Recent disclosures of the huge dollars spent by the Philadelphia Housing Authority on the services of some of Philadelphiaâ€™s top-drawer law firms have been eye-popping. In the past four years more than $38.5 million in legal fees have been paid to cover labor and employment, development and real estate, contract, tenant disputes and litigation fees. To say that the PHA is an industry dream is to understate the conditions at play here. Was anybody paying attention? The NYC Housing Authorityâ€™s legal bills were less than ours notwithstanding a public housing clientele that is almost 10 times larger.
The reason that Carl Greene and his PHA Board allowed such a large drain-off of PHA resources for law firms, resources that could have built more housing, can be summarized in one word: politics!
In a town where little power actually exists and even less is exercised, what amounts to the cityâ€™s power pulse resides mostly in the cityâ€™s major law firms. Their campaign dollars, close ties to important elected officials, their government affairs operations (read: lobbying) put the law firms in the front seat of all of the important policy decisions emanating from Washington, Harrisburg and City Hall. Grease the gears, and the machinery will work just fine. Carl Greene understood this as well as anybody. And for obvious personal reasons, he needed to be surrounded by lawyers.
But there are two other parts to this story that piqued my interest. Both deal with a sense of fairness and proportion.
Law firms have ethics, collections and billing practices. These are all constantly under review. So where was the sense of judgment and proportion in assessing the allocation of professional resources (lawyers and their billable time) to their PHA client? Did any of these major firms ever look at this and ask, “How much lawyering does the PHA really need and what are the public policy tradeoffs of using resources for attorneys versus building more housing or providing more housing subsidies?” I think I know the answer to both of these questions, but it would be nice to think that one outcome of this really sordid affair is that these kinds of questions start being asked by management at area law firms.
The second point leaves a larger odor. One or more of the firms identified as generating these huge fees felt so violated by the HUD investigation into PHAâ€™s legal fees that they engaged the American Bar Association to rush into the fray on the principle of attorney-client privilege. Hand me the Kleenex so I can wipe away the tears. The ABAâ€™s opinion obviously has a lot of clout, but it would have been interesting if the letter of protest sent to HUD had also referenced the extraordinary amount of compensation paid by an agency created to serve the poor. No such luck.
PHAâ€™s decision to bring their legal work in-house is the logical extension of this misallocation of public funds. PHA needs to be well-represented, given the scope and complexity of its operations, but it also needs to keep its mission front and center: to provide housing for the poorest in the city.
But public-spirited citizens, which on many levels Philadelphiaâ€™s law firms most certainly are, also need to be mindful of proportion. Even if a firm’s client is not engaged in accountability and demanding transparency, firms have a responsibility to practice proportion and good sense. This level of legal service and spending shouldnâ€™t have passed the smell test.
The words “Philadelphia lawyer” have long stood for integrity and professional excellence.
This story has stained the brand.
It needs to be fixed.