Advice from the state attorney general has forced Mayor Kurt L. Schmoke to abandon his vow to keep private how much quasi-public agencies such as the Baltimore Development Corporation spend on lawyers. But the mayor is still trying to circumvent public disclosure laws by refusing to include loan transaction fees in his promised report. Mr. Schmoke must have the best interests of his lawyer friends in mind, not the public.
Companies that receive loans from quasi-public agencies such as BDC and the Community Development Finance Corporation are required to pay the legal fees associated with preparing the loan documents. Mr. Schmoke contends that paying those legal fees does not involve public money, so the amounts do not have to be revealed. That's ludicrous. Once a company gets its loan, who can guarantee none of that money pays legal fees?
Besides, the people of Baltimore should not be denied any information on the way the quasi-public agencies spend money. Yes, they also get funds from private sources, but the public makes a huge investment in agencies such as BDC and CDFC. Like any investor, the public has a right to know exactly how that investment handles its business. How else is an investor to know whether the investment is worth continuing?
Revealing exactly what each city department and the quasi-public agencies spend on legal fees is just one of the needed reforms Mr. Schmoke must make. No one knows how much is spent now. The city solicitor has records of lawyers hired through the Board of Estimates. But some departments can hire lawyers without Board of Estimates approval, and there has been no central bookkeeping to keep track. That must change.
Even the incomplete picture available now shows the city spends too much on legal fees. Since Nov. 1, 1991, nearly $8 million in legal fees were approved by the Board of Estimates and processed by the city solicitor's office. That's an average of more than $2 million a year. That's double what the state spends when legal work can't be handled by its attorneys general. That's outrageous.
Baltimore County may not have the legal entanglements of the city. But with a legal department that includes only 17 lawyers it has managed to keep its annual expenditures on legal fees to less than $1 million. That is also the case in Prince Georges County, which has 23 lawyers on staff and averages spending less than $800,000 a year on legal fees to non-staff lawyers.
With 78 lawyers on its legal staff, Baltimore City already has one of the biggest law firms in the state. But even if the city has to hire a dozen more lawyers with expertise in areas such as bond counsel, it would be cheaper than all the outside legal fees being paid now. And any outside legal work should be bid. That would dispel notions that most of it goes to the mayor's cronies.