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$10 million legal bill a bargain for Dixon?

City officials say $40 million settlement justified expense

DIXON – A $10.35 million legal bill drew a fair amount of attention around the city.

That was the final cost for Powers, Smith & Rogers of Chicago to represent the city of Dixon in a lawsuit against its former auditors and a bank, who were blamed for former Comptroller Rita Crundwell’s theft of nearly $54 million in city funds.

Led by attorney Devon Bruce, the city was able to recoup $40 million in an out-of-court settlement after filing the Lee County case in June 2012.

For those calculating at home, that’s roughly 25 percent of the award for legal fees.

Not long after Sauk Valley Media posted news of the settlement on its Facebook page, a few commenters remarked about the multimillion-dollar bill.

“I have trouble with the price of the attorneys,” Beverly Eykamp said. “How do they sleep at night?”

While the bill exceeds the total expenditures of the city’s entire 2012 budget by about $300,000, a spokesman for the Illinois State Bar Association says the fee is in line, and possibly a bit on the cheaper side, for the kind of arrangement the city made.

The City Council hired the Chicago firm, known for its work in personal injury cases, at the recommendation of its former longtime attorney, Robert Branson of Ward, Murray, Pace & Johnson, Mayor Jim Burke said.

Contingency plan

Most appealing to the City Council, the Chicago firm agreed to take the case on contingency. This meant the law firm had to come through with a settlement or it would not get paid, Burke said.

“We were being bombarded by firms,” Burke said. “There was a lot of interest in this case. People sending emails, interested in this and that, all the background information.

“Branson called me. He told me about this guy. He said, ‘I think you ought to talk to him.’”

Generally, the legal counsel for cases taken on contingency receives about one-third of the recovery, said David N. Anderson, assistant executive director of the Illinois State Bar Association.

“Without knowing the particular ins and outs or the laws relied on, that’s generally the practice,” Anderson said. “It can be higher or lower, but it’s set by contract from the outset.”

The City Council met with Bruce in closed session of a regular meeting, and commissioners were impressed with his résumé.

“He told us what we would do; we quizzed him pretty good,” Burke said. “If there was no settlement, if the settlement was zero, they’d be out the expenses. Out period. He said the only way we take this thing is on a contingency basis for 25 percent.”

None of the other attorneys that showed an interest in the case, some local, would work on a contingency basis, Burke said. No other firms were interviewed, he confirmed.

The city would not have been able to pay $1,000 an hour to other firms for the ongoing case, especially with a tightened budget in the aftermath of Crundwell’s theft, the mayor said.

“Obviously, we made the right choice,” said Burke, referring to the $40 million settlement. “Nobody is having any second thoughts.”

Bruce’s office combed through millions of documents and filed thousands more in Lee County court. The attorney also questioned five witnesses for depositions.

Attorney never wavered

Four amended complaints were filed, listing former auditors CliftonLarsonAllen, its partners Todd Etheridge and Ron Blaine, Sterling accountant Janis Card Associates, and Fifth Third Bank.

A high-profile lawyer was essential if the city wanted to come away with a good settlement, Commissioner Dennis Considine said. He complimented Bruce’s confidence most of all.

Entering the Sept. 20 settlement negotiations, Fifth Third Bank had filed a motion to dismiss the case, arguing that Illinois banking laws prohibited the city of Dixon from suing it.

Bruce never wavered in his belief Dixon would win the case, the mayor said, and he didn’t give in to initial settlement offers of $12 million. The city finally received the $40 million offer after more than 17 hours of negotiations.

“Hindsight is 20/20 now that we got this reward. What if we didn’t get anything?” Burke asked. “Would people feel better if we paid the attorney less, but got only $10 million back? Remember, people were quite surprised with the [settlement] amount.”

Considine added: “We hired a very talented law firm, and because of their skills, we were able to fight tooth and nail for [the settlement]. It was worth it, in my opinion.”

About the law firm

The law firm Powers, Smith & Rogers of Chicago most notably won $100 million for a family in 1999 for the death of six children who died in a car accident. That same case also led to 57 criminal convictions in a commercial truck driver's license scandal, including the indictment of former Illinois Gov. George Ryan.

Settlements for $35 million for medical malpractice, $23 million in a baler accident, and $18.5 million in an accident during the filming of "Transformers 3" are highlighted in a scroll bar on the law firm's website.

Nearly a decade ago, the firm also represented Illinois Supreme Court Justice Robert Thomas in a libel action against the Kane County Chronicle, a property of Shaw Media. A jury awarded Thomas $7 million, but after the company appealed, an out-of-court settlement ended the case.

A survey conducted by Chicago Lawyer Magazine showed Powers, Smith & Rogers had settled 15 cases for $115.69 million from July 2012 to June 2013 – the most in Chicago.

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