Gov. Brian Sandoval Questions $6 Million In Legal Fees To Defend Against Freeway Construction Lawsuit

CARSON CITY – A legal firm retained by the state Department of Transportation to defend against a contractor dispute over construction of a section of the Carson City bypass has racked up $6 million in fees so far and the costs could still go higher.

Gov. Brian Sandoval today expressed concern about the amount of legal fees in the case involving a $40 million claim by Utah-based Ames Construction, which built the first phase of the U.S. 395 bypass in the capital that opened in February of 2006.

The cost of the 4.5-mile stretch of freeway was $70 million.

Carson City byass. / Photo courtesy of NDOT.

Sandoval, participating in a meeting of the Board of Directors of the Department of Transportation, said he had not seen such costs for a legal challenge before. The fees have been paid since 2008.

“Because even at those rates, $6 million, I haven’t seen that before,” Sandoval said. “I mean this just gets us to the mediation, as you say, and then we don’t know what the outcome of the mediation is going to be after that.”

Sandoval said the legal costs involved in the dispute point out why it is so important for the agency to deal with such disputes at the earliest possible date to try to head off escalating costs. Earlier in the meeting NDOT Director Susan Martinovich reported on efforts by the agency to resolve disputes as early in the process as possible.

Tom Fransway, a member of the board representing the public, asked whether in the future there is a way to seek competitive proposals for legal work rather than use the no-bid process for such services.

“I agree with the governor 100 percent that those fees are pretty extravagant,” he said. “And I’m wondering if in the future we have the ability to retain legal counsel for a fee that is more responsible.”

The hourly rates charged by the legal firm’s attorneys are as high as $340 an hour for the senior partner, but members of the board were told the rates are not excessive and have not increased since the dispute first began.

“That’s not an unreasonable fee,” said Attorney General and board member Catherine Cortez Masto.

Despite the concerns, the board approved an updated contract with the legal firm of Watt, Tieder, Hoffar & Fitzgerald to take the case to mediation in February. The firm is based in Washington, DC, but has an office in Las Vegas.

Dennis Gallagher, NDOT’s chief legal counsel with the attorney general’s office, said the legal fees also cover the experts hired to defend the state. He said the case is extremely complex and that Ames has not backed down from its $40 million claim.

“The state vigorously disputes this claim; has been defending it in court since 2008; we finally got it to a point where it will go to mediation the end of February and this latest amendment is to bring the fees current through the mediation,” Gallagher said.


Audio clips:

Gov. Brian Sandoval says he has not seen such high legal fees before:

010912Sandoval :27 be after that.”

Board member Tom Fransway asks if there is a way to negotiate lower fees in future cases:

010912Fransway :26 is more responsible.”

NDOT legal counsel Dennis Gallagher says the fees include expert witnesses:

010912Gallagher :22 through the mediation.”