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City paid $2.4 million to Shapiro, Olander

THE BALTIMORE SUN

Shapiro and Olander, the Baltimore law firm with close political ties to Mayor Kurt L. Schmoke, has been paid $2.43 million for city-related legal work during the past 4 1/2 years, the city and the firm reported yesterday.

In its most extensive disclosure of legal fees, the city reported that Shapiro and Olander has received more money from the city than all but one other law firm. That firm, Cooper, Beckman and Tuerk, received $3.3 million for representing Baltimore in litigation against asbestos manufacturers.

The payments to Shapiro and Olander include $1.21 million for representing several of Baltimore's quasi-public agencies, $609,249 for municipal bond work and $169,244 for city departments -- a total of $1.99 million.

Shapiro and Olander also disclosed that it had earned $442,860 in fees charged to the clients of two quasi-public agencies it represents -- the first time such an accounting has been made.

Before Mr. Schmoke became mayor in 1987, Shapiro and Olander did virtually no work for the city.

William E. Carlson, a Shapiro partner, said yesterday the payment of $2.43 million in fees had more to do with "putting the city first" than any "special relationship" with the Schmoke administration.

Mayor Schmoke long refused to divulge the legal fees paid by separate quasi-public agencies, saying he wanted to protect their independence. The groups are substantially financed with tax dollars.

Three weeks ago, The Sun documented that Shapiro and Olander had been paid at least $1.4 million for city-related work during Mr. Schmoke's second term, double the amount reported during the mayor's first four years in office.

After the article appeared, Maryland's top lawyer and other elected officials called for a more complete accounting. City Council President Mary Pat Clarke, challenging Mr. Schmoke's bid for a third term this fall, also made the amount of outside legal fees a campaign issue.

In an attempt to quell the controversy, Mr. Schmoke promised on July 6 that the city would make public all fees paid to law firms for city-related work. "Every lawyer that got a dime of public money, we'll have that on the public record. Even if it's just a dime," he said.

Yesterday, the city provided an inch-thick report detailing expenditures of $17.4 million from Jan. 1, 1991, through June 30, 1995, an average of $3.8 million a year. The report by City Solicitor Neal M. Janey emphasized that hiring lawyers with special expertise allowed the city to collect more than $30 million and avoid paying $17 million in claims.

"I promised the fullest disclosure possible, and I am pleased with the presentation made by the city solicitor," Mr. Schmoke said in a statement. "I hope people understand better now why there's a need for outside counsel and that these fees have been very appropriate."

His statement made no mention of the amount paid to Shapiro and Olander, whose lawyers include Ronald M. Shapiro, the mayor's campaign treasurer, and Larry S. Gibson, the mayor's chief political strategist. The 33-member downtown firm has played a role in some of the Schmoke administration's highest-profile initiatives.

Mr. Schmoke's spokesman, Clinton R. Coleman, said, "When you look at the total amount of legal fees, Shapiro and Olander actually received a small percentage of that."

The report also emphasized that the $1.99 million the firm collected from Baltimore and its quasi-public agencies represented only 11.42 percent of the outside legal work.

Most of the fees earned by Shapiro and Olander were generated by its work for the Baltimore Development Corp., the city's economic development agency, and the Community Development Financing Corp., a lending bank to provide funds for developers to revitalize dilapidated and vacant properties, the report noted.

"Shapiro and Olander has considerable expertise in the field of corporate law," the report said. "In addition, the firm is widely known for the legal work that it does in the area of public finance."

Shapiro and Olander was one of only three firms to receive more than $1 million. The other two, Cooper, Beckman and Tuerk, and Levy, Phillips and Konigsberg, were paid a total of $4.94 million to press the city's claims against asbestos manufacturers and suppliers. That litigation, which is aimed at recouping the cost of asbestos removal, has resulted in payments of $20.5 million in cash, the report said, and $26.3 million in judgments yet to be paid.

The report showed the extent of Shapiro and Olander's involvement in city business. It was one of only three firms among the top 10 in receipts to work for city departments, serve as bond counsel and represent the quasi-public corporations.

The others are Piper and Marbury, Baltimore's largest law firm, and Tydings and Rosenberg.

In its work for quasi-public organizations, Shapiro and Olander far outdistanced any other firm. The $1.21 million it received was 14 times the amount received by the next-highest-paid firm, Tydings and Rosenberg, which got $88,163.

Shapiro and Olander said in a written statement that during the 4 1/2 years covered by the report, it was paid a total of $442,860 by clients of BDC and CDFC. The firm was paid $231,279 in fees and expenses by borrowers in BDC deals, and $211,581 in fees and expenses by borrowers in CDFC loans.

"These [client] fees are insignificant when compared to the positive economic impact the underlying transactions have had on the city of Baltimore," said Christopher Dean Olander, the firm's managing partner.

Yesterday's accounting covers about 95 percent of the city's outside legal fees. Not included are a handful of quasi-public organizations, among them the groups overseeing the public markets, the convention bureau and the $100 million federal empowerment zone. The empowerment zone board has yet to pay the $118,510 budgeted for Shapiro and Olander through September.

The remaining groups are expected to report any legal fees they have paid by next month, Mr. Janey said.

LEGAL FEES

The 10 top-ranked law firms receiving fees paid by the City of Baltimore and most of its quasi-public agencies between Jan. 1, 1991, and June 30, 1995:

1. Cooper, Beckman and Tuerk ..... ..... $3,303,968

Shapiro and Olander ..... ..... ..... $1,991,061*

Levy, Phillips & Konigsberg .... .... $1,634,416

Piper and Marbury ...... ..... ...... $923,598

Tydings and Rosenberg ..... ..... ... $861,990

Arter & Hadden .... ..... .... ...... $818,011

7. Gartrell and Associates ...... ...... $757,783

8. Felicity Lavelle ...... ...... ...... $731,402

9. Community Law Center ...... ..... ... $667,500

Patton, Boggs and Blow ...... ...... $626,070

Source: Baltimore City Law Department

* Shapiro and Olander also reported being paid $442,860 by clients of the Baltimore Development Corp. and Community Development Financing Corp., two of the quasi-public agencies. Shapiro and Olander does the vast majority of such work for those agencies. Other firms doing similar work for BDC and CDFC were not asked to provide such information.

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