A legislative panel on Wednesday cleared the way for state Treasurer Dennis Milligan's plan to shift $185,000 within his office's budget to cover current and anticipated legal fees.
But Senate President Pro Tempore Jonathan Dismang, R-Searcy, said he wants Milligan's office in the future to provide lawmakers with a monthly report of detailed billings from law firms and the office's payments to the firms to ensure that the office doesn't spend more on legal fees than it's authorized.
The Legislative Council's Performance Evaluation and Expenditure Review Subcommittee backed Milligan's request to transfer $175,000 in spending authority to pay for representation by the Mitchell Williams law firm in lawsuits filed by David Singer, a former outreach manager for the office, in federal and state courts. The subcommittee also supported shifting $10,000 for representation by the Rose Law Firm related to investments.
Milligan, a Republican from Benton, asked the panel to shift $185,000 in spending authority in his office's fiscal 2017 budget from data processing and services to maintenance and operations in order to cover the legal fees. Fiscal 2017 ends June 30.
Last month, the subcommittee declined to sign off on a similar request by Milligan.
So far, the Mitchell Williams law firm has been paid $163,909.75, and the treasurer's office still owes the firm $169,146.54, Milligan spokesman Stacy Peterson said after the subcommittee's meeting.
"So the remaining $169,146.54 will be paid for upon approval of the transfer of the $175,000 to Mitchell Williams and the $10,000 to Rose Law [firm]," she said.
The treasurer's office has paid the Rose Law Firm $27,143 so far and doesn't owe money to the firm, Peterson said.
The Mitchell Williams law firm has represented the treasurer's office in the lawsuits filed by Singer, instead of the attorney general's office. Republican Attorney General Leslie Rutledge's office said it had a conflict of interest.
Milligan said Republican Gov. Asa Hutchinson and Rutledge have approved his office's use of an outside law firm regarding investments.
During the subcommittee's meeting, Sen. Terry Rice, R-Waldron, said, "We don't know where the end is" on legal fees.
In response, Milligan said, "We've been exonerated completely on the federal [lawsuit] charges.
"We do have a state lawsuit pending that is favoring similarly. There has been a number of dismissals allowed by the judge, but hopefully everything will be secured."
In February, a federal jury cleared Milligan of a discrimination claim and his former chief of staff, Jim Harris, of a defamation claim by Singer. Singer's suit contended that Harris defamed Singer by publicly releasing a confidential email in which Harris questioned the employee's sanity. The jury also had to decide whether Milligan believed, based on the email or conversations with his executive staff, that Singer was mentally ill and whether he fired him April 27, 2015, because of that -- in violation of federal disability law.
In March 2016, the Legislative Council approved Milligan's request to shift $50,000 in his budget to cover legal fees.
Dismang said Wednesday that lawmakers had the impression that most of that $50,000 was for investment-related legal expenses.
"I think most were surprised to see that only $7,000 of that amount had actually been used for legal services in regards to investments," Dismang said.
Peterson told lawmakers that "it was actually $21,000."
But Dismang said, "The bigger issue is that there was billings that totaled well in excess of the spending authority for the treasurer's office in regards to legal fees.
"There was no notification to the legislative body or anyone else that those liabilities were being incurred and created especially in the amount that they were," Dismang said. "What is the procedure that has been put in place to ensure that the treasurer's office doesn't continue to have billings that exceed the spending threshold, besides asking for additional funds?"
Milligan said, "We have hired in-house legal counsel to guide us with respect to making sure that we do our best job of communicating."
Milligan said his office planned and budgeted for one trial regarding Singer's federal lawsuit.
"We had no idea that a mistrial would be declared" and a second trial would be held, he said.
"That cost alone kind of hit us between the eyes. It was very, very unfortunate to the citizens of Arkansas," he said.
Milligan said his office has budgeted about $195,000 for legal fees in fiscal 2018 and that he hopes to avoid exceeding that. He said he expects to spend about $10,000 with the Rose law firm for investment legal expenses.
But Rice said the treasurer's office also has paid $25,500 to a consulting firm, Legacy Consulting, and he asked Milligan what that was for.
"That is for some consultation, some direction on good government for the treasurer's office," Milligan said. "We rely on them for a number of pieces of advice about what is happening around the country with other treasurers."
Milligan said he doesn't know whether any other constitutional offices pay for similar consulting services.
"I just know that we've returned over $100 million [in investment earnings] to the state of Arkansas in 2½ years, and we're very pleased with what we are accomplishing in that role," he said.
Afterward, Peterson said the office's contract with Legacy Consulting started in April 2015 and expires this month. The consultant will help the office inform cities and counties about money-management trust legislation enacted during this year's legislative session, she said.
"We're still in discussions with regard to how or whether to move forward in the next fiscal year," she said of whether the office will continue working with the firm.
Metro on 06/15/2017