As runaway legal bills pile up, who's monitoring law firm activity, billable hours?

Bar Harbor poised to spend $417,000 in legal cost this year, 868% jump in 4 years

BAR HARBOR - Rudman Winchell attorneys who purportedly are representing taxpayers told a judge Nov. 12 they did not object to citizen Charles Sidman’s intervention in Golden Anchor’s lawsuit opposing cruise ship passenger disembarkation limits.

Yet at the same time they filed a six-page document which read exactly like an objection, arguing that Sidman had no more standing in the case than any other citizen even though he was the person who activated the 2022 referendum which established a 1,000-a-day passenger limit the town has yet to enforce fully.

The attorneys ended their bill of particulars against Sidman with this:

“Mr. Sidman no doubt has a right to express his opinions and use available democratic means to achieve his policy preferences, but that is no truer for Mr. Sidman than it is for any other resident or business owner of Bar Harbor.”

And here was the statement from Golden Anchor’s law firm, Eaton Peabody, which left no doubt it opposed Sidman’s intervention:

“Mr. Sidman's interest in Plaintiffs legal challenges to the Disembarkation Ordinance is no different than that of any other Bar Harbor resident and voter. His motion should be denied.”

The two law firms have a history of being on the same page, just as they did in January 2023 when they tried to get U.S. District Court Judge Lance Walker to deny Sidman’s motion to intervene in APPLL’s lawsuit against the town. Not only did Walker approve Sidman as an intervenor defendant, he did so in a very loud manner.

He wrote, “Indeed, there is a strong showing in the record so far adduced that the Town has long given over to one or more agents of the Walsh family enterprises (i.e., most of the nominal plaintiffs) what appears (upon first impression) to be carte blanche in matters of Bar Harbor’s informal and voluntary cruise ship policy.”

The Walsh family owns Ocean Properties which owns Golden Anchor.

(My report March 4, 2023 on Walker’s ruling was the most read QSJ article since I began writing my blog in 2020. It received more than 9,000 views.)

Sidman had an immediate impact in the APPLL lawsuit. He said he refused to approve settlement proposals between the town and APPLL mediated by U.S. Magistrate John C. Nivison. It forced a trial which led to Walker’s historic ruling against APPLL on Feb. 29, 2024.

APPLL has appealed that decision to the federal circuit court in Boston. Golden Anchor’s lawsuit against the town’s attempt to enforce part of the passenger cap is a separate matter in state court.

The town’s Golden Anchor filing on Sidman’s latest request for intervention was submitted only one week after voters repelled the Town’s attempt to repeal the 1,000-passenger cap and replace it with much more accommodating contracts for cruise lines. It amounted to a vote of no confidence in the council.

Sidman said, “Noteworthy is how parallel the Town and APPLL/Golden Anchor continue to operate, with the former trying desperately to walk like, sound like but not appear to actually be a duck.”

Sidman said Rudman Winchell’s confusing and redundant filing is an example of the firm’s profligacy and questionable legal work.

“They're covering their rear ends with our pocketbooks,” said Sidman, the local businessman who has under his belt two successful citizens referendums to cap cruise ship visitation against the Town Council’s wishes.

Rudman Winchell has already spent the entire FY25 legal budget for the town, $135,134, in just the first quarter. (The budget was $130,570 for the entire fiscal year.)

The town is now forecasting this year’s legal cost will be $417,097, blowing by last year’s record $386,035. When Finance Director Sarah Gilbert pointed out the overage Nov. 19, a few council members just groaned.

Four years ago, the town spent $48,189 in legal cost.

According to the legal bills obtained by he QSJ, Rudman Winchell deployed no fewer than 12 lawyers and staff to deliberate over Bar Harbor matters Since July 1. That’s almost half of the 25 lawyers listed on the firm’s website.

The QSJ was finally able to obtain un-redacted copies of most of the firm’s legal bills for the period July 1 through Sept. 19, 2024, but only after I hired Sigmund Schutz, the First Amendment lawyer for the Portland Press Herald. Schutz and Deputy Attorney General Brenda Kielty, who oversees Maine’s Freedom of Access Act, intervened on my behalf and were able to compel Rudman Winchell to release those bills. (Thanks to my loyal donors who make it possible for me to seek legal representation.)

When I first filed the FOAA request on Oct. 9, I wanted to report on the total cost borne by taxpayers for the Chapter 50 gambit before election day Nov. 5 so citizens would have an idea how much public money the Town Council and town manager were using to push the initiative.

But Town Clerk Liz Graves, no doubt under orders from Town Manager James Smith, refused to respond to my calls as election day fast approached. I then received an email from town attorney Stephen Wagner on Nov. 1 denying most of my request for the information by blacking out detailed explanation of the invoices like this one below:

I wrote back to Wagner that he had no business ruling on my request since it was his bills which I was investigating.

But the blackout worked. I was prevented from writing about the cost of Chapter 50 before election day.

(The cynical part of me wondered what was in the invoices they didn’t want me to see.)

On Nov. 19, Rudman Winchell finally released descriptions of the bills.

A different lawyer from Rudman Winchell, Tim Pease, forwarded the documents but did not acknowledge that Town Manager James Smith violated Maine’s Freedom of Access Act by failing to disclose public information in a timely manner, only that “The Town is waiving its claim privilege to the requested invoices out of the interest of cooperation, avoiding unnecessary disputes and litigation expenses.”

The invoices under the category, “Chapter 50 cruise ship disembarkation ordinance and related proceedings” was $16,145, from June 27 to Aug. 1.

I thought that was low considering the activity the council, town manager and town attorney exhibited during that period.

Then I spotted a bill from a mediation service for 52.4 hours of work at $300 an hour, or a total of $15,720. That was from Durward W. Parkinson, a Kennebunk-based mediator who conducted multiple sessions between Cruise Lines International Association, represented by Eaton Peabody, and the town, represented by Stephen Wagner. The town apparently split the cost with CLIA.

I asked Town Manager what was the purpose of that mediation. He refused to reply. I assumed it was to negotiate the contracts with cruise lines for Chapter 50. Perhaps Rudman Winchell will report it in future submissions.

There were other examples: Four items under the category, “Defense of Cruise Ship Amendment - Memorandum of Agreement.”

One Rudman Winchell attorney Anthony D. Pellegrini, billed 5.1 hours or $1,249.50 on Aug. 21 for “extended video conference with counsel regarding Chapter 50 …” Why was it under the category for the APPLL lawsuit? Similarly, he billed 6.8 hours next day for $1,666. It also was filed under “Defense of Cruise Ships.”

So that’s about $10,000 in Chapter 50 cost which were erroneously filed. Will Rudman Winchell “true up” future invoices? But then would that end up double counting? Is anyone in the town office building watching?

Dear reader, I apologize for taking you down a circuitous and tedious path of accounting. But I believe taxpayers are entitled to know how much the council spent. Certainly the town manager and Town Council aren’t eager to find out.

The upshot: Expect the more up-to-date bills to reflect a much worse financial picture.

And expect more chicanery.

I asked Town Manager James Smith about a $1,081 payment to COA professor Jamie McKown for “non-testifying expert consultation.” What was that for? Smith refused to answer.

That was on top of the $5,000 Rudman Winchell already paid McKown, who was its hand-picked moderator for a Chapter 50 “QandA” session and who previously asserted that voters didn’t know what they were voting for when they approved the 1,000-passenger cap in 2022. He then proceeded to shut down all comments and questions except those from town lawyers and staff.

The town also brought another Rudman Winchell lawyer to “train” town boards and committees during which he suggested strongly that some conflicts of interest were not in their purview.

The result was that the lead plaintiff in the APPLL lawsuit against the town, a senior employee of Ocean Properties, continued with his unfettered influence of the warrant committee resulting in its overwhelming approval of Chapter 50.

From Aug. 13 to Aug. 28, Rudman Winchell lawyer John K. Hamer billed the town 15.2 hours, or $3,725, for that “training session” which was categorized under “general legal counsel” for the town and not for Chapter 50 specifically.

All the legal bills will not reflect the biggest cost of Chapter 50. That’s the time town staff spent on this failed effort.

Town Manager James Smith worked virtually full-time the last six months on Chapter 50, giving short shrift to much more pressings issues in town: Numerous staff meetings, calls with individual councilors, multiple in-person appearances with residents. It was all-hands on deck.

Smith’s salary is $155,000 a year, or 32 percent more than his predecessor. Add 40 percent to that for benefits and it’s not an exaggeration to say that Smith cost the town $100,000 for his work on Chapter 50. And what about the time harbormaster Chris Wharff and his staff put into this wasted effort, or the finance department, public works, town clerk, planning department?

I asked Smith whether he’s done a proper allocation of that “soft cost” of staff time. He refused to answer.

He’s not eager to find out. Nor is his boss, the Town Council.

By my back-of-the-book estimate, the real cost of Chapter 50 was between $250,000 to $500,000.

I’m happy to hear rebuttals, as long as the Town opens its books.

It could have been worse. It could have been a $4.5 million Higgins Pit bond for which the town is now looking for a purpose to spend all that taxpayer-funded overhead.