City Council locks in interim attorney, eyes permanent hire after rocky contract changes and ballooning legal costs
Morro Bay’s city attorney situation appears to be ironing itself out after the City Council changed up its contract with its old attorney and sets out on a path to find a new, permanent one.
The City Council was slated on April 22 to address the situation with its legal representation, which has been in a somewhat chaotic transition since last fall, when it cut ties with the long-time contract firm, followed the former city attorney to his new firm, and then fired him too in short order.
Last December, the council brought back the former city attorney, who had been forced out in 2013 after holding the job for over a dozen years. Rob Schultz was hired as city attorney in Los Gatos shortly after leaving Morro Bay and has since retired from public employment.
The city’s roller coaster ride started two years ago, when Councilwoman Zara Landrum and Mayor Carla Wixom started questioning the monthly bills being charged to the city by its former firm, Aleshire & Winder, LLP, which had the contract since 2013.
Attorney Chris Neumeyer from A&W had been the city’s attorney since 2018, and left A&W last November for another firm, Burke, Williams & Sorensen, LLP, and was able to bring Morro Bay along with him.
But after the council majority changed with last November’s election, the new council decided to end that contract, which was in effect for just a few weeks.
Schultz came out of retirement to fill in and help the city look for new attorneys. Initially, he was hired for a flat $200 an hour and under an independent contractor contract.
But legal waters are like Yoo-Hoo soda, and questions arose over whether he could work as an independent contractor under the retirement rules of CalPERS, the agency that manages the public employee retirement system.
“Under the Public Employees’ Retirement Law,” reads a report from City Manager Yvonne Kimball, “whether an individual is an ‘employee’ or an ‘independent contractor’ determines whether a retired annuitant must be enrolled in CalPERS as a retired annuitant (employee) or can return to work with a CalPERS agency without being subject to post-retirement work restrictions (Independent Contractor).”
Schultz reportedly wrote to CalPERS seeking clarification but hadn’t officially heard back from the state, according to Kimball. “CalPERS has stated orally that CalPERS has determined that Robert Schultz is classified as a retired annuitant employee as opposed to an independent contractor and therefore must comply with CalPERS rules,” she said.
So the City Council was being asked to formally hire him as an interim to fill a vacancy while they recruit a full-time attorney, either a firm or a solo act and employee like Schultz was. It should be noted that the City of San Luis Obispo and SLO County are the only two government agencies that have in-house attorneys, all other cities have a firm under contract.
The city has hired retirees on an interim basis before, twice each for police chief and city manager. All four times, the interims went back into retirement when a permanent manager or chief was hired.
Fortunately for taxpayers, though perhaps not so fortunately for Schultz, his pay is getting cut nearly in half. Instead of a flat $200 an hour he will be paid $107 per hour, and that’s it.
“Robert Schultz will not receive any additional benefits, incentives, compensation in lieu of benefits, paid leave, or paid holidays unless required by state or federal law,” Kendall’s report says. “Since Robert Schultz did not submit any invoices and has not been paid until a determination was made by CalPERS, Robert Schultz will be paid as a retired annuitant retroactively from Dec. 19, 2024.” The report did not list the exact amount of back pay.
Under the CalPERS rules, Schultz can’t work a minute more than a total of 960 hours within a fiscal year (July 1 to June 30).
With the contract issue apparently now settled, Schultz was to present the City Council with a job description and pay schedule to be used in the recruitment for a new attorney.
At its April 8 meeting, the City Council directed Schultz to write up a job description and figure out a salary range for hiring a new in-house attorney, as the council apparently does not want to hire another law firm.
Under A&W — and BWS for a short time — in 2024 the city’s attorney bills totaled over $692,000 (and it was $971,302 in 2023).
According to the report, it’s not going to be cheap to re-establish an in-house legal office. “The fiscal impact of establishing an in-house City Attorney is estimated to be between $550,000 and $700,000 annually, including salary, benefits, support staff, office space, furniture, technology, and professional resources, such as a legal assistant,” the report said. “The first year is expected to have a higher cost due to the need to acquire computers, copier, printer, scanner, and phones.”
Pay is not going to be too bad. The salary range being proposed to the council started in FY 2024/25 at $201,000 to $222,000; FY 2025/26 at $212,000 to $234,000; and FY 26/27 at $222,000 to $245,000. These salary ranges are the same amounts as the city manager’s contract.
This salary would be augmented by a generous benefits package including insurance and retirement with CalPERS, into which the city (taxpayers) contributes mightily.
Schultz also estimated it would cost up to $5,000 to do the recruitment in-house; or up to $35,000 “if a professional search firm is engaged, plus candidate travel expenses.”
The recommendations as to qualifications are extensive. The job description reflects the experience needed: “The City must establish a job description for the City Attorney role that reflects the full scope of services required, including land use, real estate, harbor lease negotiation and administration, and public works construction legal support. This role is an executive-level position and is expected to perform commensurate responsibilities.”
Having to do legal work in so many areas of the law is one of the advantages of hiring a firm, such as A&W, which usually include lawyers with varying areas of expertise, each billing at a different rate.
In the annual city budget, an amount is set aside for possible legal expenses, under what’s called a “Risk Management Fund.” From this pot of money, an in-house city attorney would be able to hire outside legal help if needed on any given matter.
Assuming the City Council chooses to seek an attorney in-house, Schultz’ report estimated it would take from eight to 14 weeks “depending on the volume and quality of applicants.”
A second option would be to find a recruitment firm to handle the screening of applicants or a combination of in-house and outside firm.
