CHICAGO -- Following the threat of a subpoena, Chapman & Cutler has arranged to meet with the Chicago city council finance committee and corporation counsel to discuss the bond counsel fees it has charged the city.
The firm asked Tuesday to meet with the committee in the wake of concerns raised in June by Alderman Robert Shaw, who questioned Chapman & Cutler's legal fees. The firm has charged the city $809,000 since 1989, according to Alderman Ed Burke, who is chairman of the finance committee.
In response to Shaw's concerns, Burke sent a letter on June 17 to bond counsel firms that have done business with the city, requesting information on lawyers and the amount of time they spent working on city bond issues.
Shaw said yesterday that Chapman & Cutler was the only firm that failed to comply with the request.
In a July 8 letter to Burke, David G. Williams, a partner at Chapman & Cutler, said the firm would not supply the information, saying that its bond counsel charges are negotiated by the city's corporation counsel and "have been fair to the city and this firm."
Williams also said that the corporation counsel determines the fees based on a number of factors, including the amount of time spent on a particular bond transaction, the novelty of the financing, the difficulty of questions raised by the deal, and the results of the deal.
Responding to Williams' letter, Burke said in a July 12 letter that he found Chapman & Cutler's "failure to cooperate" with his request for information "disturbing and puzzling."
"I now must advise you of the potential repercussions of your apparent 'shell game' tactics," Burke said in the letter. He told Chapman & Cutler that the city could subpoena the firm to provide the information. In addition. he said that the city council could vote to defer consideration of any transaction the firm is involved in until the information is provided to the finance committee. Burke also said "the city council may consider an order directing the corporation counsel to cease and desist from.employing your firm," until the information is provided.
Miffed by Chapman & Cutler's refusal to provide the information. the finance committee on Tuesday passed a resolution. drafted by Shaw, ordering the city clerk to issue a subpoena requiring the firm to supply documentation relating to fees charged on city bond deals since Jan. 1, 1989.
However. yesterday the city council deferred consideration of the subpoena resolution in light of a letter sent by Chapman & Cutler to Burke on Tuesday after the resolution passed the finance committee.
In the letter. which was signed by Williams, Chapman & Cutler requested that Burke defer further action on the subpoena resolution until after a meeting among representatives of the firm, the finance committee, and the corporation council's office to discuss the matter.
Williams said that Chapman & Cutler regrets that it "did not have the opportunity to appear before the committee and respond to the charges being leveled against" it.
In a telephone interview yesterday, Williams said that Chapman & Cutler has been willing to discuss the matter with the committee.
He said that Chapman & Cutler did not comply with Burke's June 17 request for information because the firm "had some questions" relating to the relevance of providing a breakdown of the number of hours its attorneys worked on city bond deals.
Wiliams said that the firm questioned why it should provide an itemization of its hours when its fees are negotiated by the corporation counsel and involve a number of factors besides the number of hours worked.
Williams said that he believes any misunderstandings about the firm's legal charges to the city will be cleared up at the meeting with the finance committee and corporation counsel. He said that the meeting could be held next week.
"I really do believe it can be Worked out," Williams said.
Burke said yesterday that a $310 million revenue bond issue for O'Hare Airport improvements has been deferred until questions relating to Chapman & Cutler's legal charges are answered. Chapman & Cutler is the underwriter's counsel on the deal, Burke said.
Burke said that the tone of Chapman & Cutler's July 8 letter "offended many members of the city council, and I think [Chapman & Cutler would] be well advised to reconsider their position" on providing information about their legal charges to the committee.
Burke said that Chapman & Cutler's meeting with city officials should be scheduled soon because the next city council meeting is Aug. 3.
