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Agenda Item No. 440
CITY OF NEWPORT BEACH
Office of the City Manager
May 8, 1995
TO: Honorable Mayor And Members Of The City Cou
FROM: KEVIN J. MURPHY, CITY MANAGER /�
SUBJECT: SPECIAL BANKRUPTCY COUNSEL SERVICES
BY THE CIGY
CITY OF NEV!P
RECOMMENDATION
The City Council approve an agreement with Mitchell, Silberberg and Knupp for
joint representation with all other Orange County cities in the Orange County
Investment Pool Bankruptcy.
DISCUSSION
The City of Irvine has been utilizing the services of Paul Glassman, a
bankruptcy attorney with the firm of Mitchell, Silberberg and Knupp, to represent
its interests in the Orange County Bankruptcy case. Paul Glassman has been
attending all of the various negotiations that have transpired in the bankruptcy
with Paul Brady, City Manager of Irvine, who has served as the Cities
Representative on the Orange County Investment Pool Creditor's Committee. In
early April a request was received from the City of Irvine that Mr. Glassman's
services be set up in a cost sharing arrangement among all the Orange County
cities, inasmuch as his time and services have been provided heretofore to all
cities at no cost. Mr. Glassman has been available in all meetings of the
Orange County City Managers on the bankruptcy issues, has attended the
various forums with elected officials and in both cases has answered any and
all questions related to all cities or particular problems of individual cities in the
settlement agreement.
Attached for information is a memorandum from Paul Brady to all City Managers
requesting that each City approve a joint services agreement with Mitchell,
• Silberberg and Knupp for special bankruptcy counsel. This issue was
discussed at a meeting among all the City Managers in early April and it was
agreed that each City Manager would recommend retention of this special
counsel to their respective City Councils. At my request, a scope of work was
incorporated into the agreement as well as a reasonable estimate of the
monthly billings which are anticipated by the law firm.
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The costs for these services will be deducted from the recovery that will be
received by all City participants in the Pool. As you'll recall, there was a reserve
fund and an amount set aside in the settlement documents for professional
services. In our case, this reserve fund is estimated to be approximately
$50,000. The services rendered by this law firm would be spread on a pro rata
basis, based on the amount that each City had invested in the Pool as of
December 6, 1994. Based on our Pool Balance on December 6, 1994 and the
estimated cost on a monthly basis for these services, it is estimated that our pro
rata share per month would be approximately $1,156.00.
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Attachment
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%2714 724 0045 CITY OF IRVINE
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APRIL 13, 1995
TO: ORANGE COUNTY CITY MANAGERS
FROM: PAUL BRADY, JR.
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SUBJECT: ATTORNEY SERVICES AGREEMENT FOR "OFFICIAL SUBCOMMITTEE
OF ORANGE COUNTY CITIES"
I mould appreciate having you and /or your City Council (if
necessary) send me an approved copy of the "Attorney services
Agreement" between Orange County cities and Paul R. Glassman and
Mitchell, Silberberg and Knupp.
It's very important that I receive these agreements so all of us
can be assured of our legal representatives being recognized and
compensated by the U.S. Bankruptcy Court. If you need another copy
of the Attorney Services Agreement, please contact me. Time is of
the essence, so the earlier you get them to me, the sooner I and
Paul Glassman can get the court to accept same. Remember that the
monies for this are incorporated into the "professional fee
reserve" as part of the OCIP Settlement Agreement.
Would appreciate anything you can do to expedite this item. If you
have questions, give me a call at 724 -6249. Thanks.
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PAUL BRADY, JR.
City Manager
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ATTORNEY SERVICES AGREEMENT
THIS ATTORNEY SERVICES AGREEMENT ( "Agreement ") is made and
entered into this _ day of March, 1995 by and between the municipal corporations
which are executing this Agreement (collectively the "Cities" and individually the
"City") collectively organized as 'The "Official Subcommittee of Orange County Cities"
(hereinafter the "Subcommittee ") in connection with legal services to be rendered by
Paul R. Glassman, P.C. ( "Glassman ") and Mitchell, Silberberg and Knupp ( "MSIC)
(Glassman and MSK are collectively the "Law Firms ") in the Chapter 9 case of Orange
County Investment Pool, an instrumentality of Orange County, which is currently
pending as Case No. SA, 9422273 JR in the United States Bankruptcy Court for the
Central District of California, Santa Ana Division (hereinafter, the "Pool Case ").
THE LAW FIRMS AND THE CITIES (INDIVIDUALLY AND AS
MEMBERS OF THE SUBCOMMITTEE) AGREE AS FOLLOWS:
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A. SERVICES. The Law Firms shall provide service, advice and represent
the Subcommittee on various legal matters involved in the Pool Case, including
without limitation, bankruptcy, insolvency and litigation matters. In providing such
advice, representation and services, the La Firms shall primarily report directly to the
City of Irvine in its capacity as the designated "Official Representative" of the
Subcommittee and, when appropriate, shall report directly to the Subcommittee as a
whole (or to any individual City upon request). •
The Law Firms will be under the direction of and report directly to the
City Manager of the Official Representative. All billings sent out under this
Agreement shall be provided to the City Manager of the Official Representative for his
approval.
The Subcommittee understands and acknowledges that the Law Firms
may also act in the Chapter 9 proceeding of the County of Orange, a political
subdivision of the State of California, which is currently pending as Case No. SA 94
22272 JR in the United States Bankruptcy Court for the Central District of California,
Santa Ana Division (hereinafter "Orange County Case ") as well as a possible
Chapter 11 action with respect to the Pool Case in the event it is determined to be a
business trust or partnership.
The Law Firms advise the Cities that the Law Firms maintain errors and
omissions insurance coverage applicable to the services to be rendered under this
Agreement as required by the California Business & Professions Code. The policy •
limits of that coverage exceed $100,000 per occurrence and exceed $300,000 per policy
term.
Nothing in this Agreement is intended to or shall be deemed to be
construed as a guarantee or promise about the outcome of the matter on any phase
thereof. The Law Firms make no guarantee or promises and any comments
concerning the various matters are expressions of opinion only.
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B. COMPENSATION AND COSTS. The Law Firms shall be compensated
for services rendered and reimbursed for expenses in accordance with the regular
• hourly rates of each lawyer rendering services. The Law Firms agree not to seek
compensation for any services rendered or expenses incurred prior to March 15, 1995.
The Law Firms also agree to use their best efforts to keep the Subcommittee informed
of developments, to assign appropriate personnel to the tasks associated with the work
under this Agreement and, to the extent reasonably possible, to minimize the costs and
expenses associated with the work undertaken pursuant to this Agreement.
The Law Firms estimate that the budget for their services pursuant to
this Agreement shall be on average approximately $50,000 - $60,000 per month. The
Subcommittee understands and acknowledges that this budget is merely the Law
Firms' best reasonable estimate of the fees and expenses which might be incurred by
the Subcommittee members in resolving the Pool Case and related bankruptcy actions
and that there are circumstances which may cause this budget to be exceeded.
Specifically the Subcommittee members understand and acknowledge that the
institution of an adversary proceeding (or other litigation) may cause an increase in
this estimate. The Law Firms will endeavor at all times to advise and represent the
Subcommittee, both individually and collectively, within the constraints of this budget,
however, in the event it appears to the Law Firms that the budget will be substantially
exceeded, the Law Firms will advise the Subcommittee thereof and, if possible, provide
a revised budget estimate.
The Subcommittee agrees and acknowledges that the Law Firms may
seek to be employed as official Subcommittee counsel by the Bankruptcy Court. In
addition, the Subcommittee agrees and acknowledges that the Law Firms may seek
payment of their fees and expenses on a monthly basis pursuant to the proposed
interim compensation arrangement (or to any variation of the same). The Law Firms
agree that, to the extent they receive payment pursuant to any arrangement, such
payment shall be applied against any amounts due under this Agreement and further,
that the Official Representative may be reimbursed for any amounts it has paid under
this Agreement out of any such interim payments.
C. DISCLOSURE OF CONFLICTS. The Law Firms represent to the
Subcommittee that they have the following representations:
1. MSK and Glassman have represented and continue to represent
the City of Irvine in connection with the 'Tool Case ";
• 2. MSK has and continues to represent Bank of America in regard to
matters not related to the Pool Case or the Orange County Case;
3. MSK has represented and continues to represent the City of
Garden Grove in regard to certain labor matters;
4. MSK has done work for the City of Montebello;
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5. MSK has done corporate work for Donaldson Lufkin and Jenette;
and
6. MSK has done and continues to represent Liefer Capital in regard •
to certain labor matters;
collectively the above representations are referred to as the 'Disclosed
Representations ".
D. CONFLICT OF INTEREST. The Cities agree to waive any and all
conflicts of interests (whether real or potential) that may arise in connection with the
retention of and services performed by the Law Firms in connections with the
following:
1. The Disclosed Representations;
2. The representation of the City of Irvine in its individual capacity
or as Official Representative of the Subcommittee or as representative of the
Subcommittee on the official Participants Committee in the Pool Case or in any case
related to the Pool Case;
3. The representation of a majority of the Cities on the Subcommittee •
on issues as to which there is disagreement among the Subcommittee;
4. The representation of any City (as well as other third parties) who
have consistent interests on common issues that are not adverse to the Subcommittee
about which the Subcommittee has chose to take no action;
5. The interpretation and enforcement of the terms of the
Agreement, and
6. The representation of other clients (who might be involved in the
Pool Case) on matters other than the Pool Case or the Orange County Case.
E. BILLING. Beginning thirty (30) days from the date of this Agreement
and thereafter by the last day of each calendar month during which the Law Firms
continue to represent the Subcommittee pursuant to this Agreement, the Law Firms
shall submit to the Official Representative a monthly statement for the preceding
month of charges showing the Law Firms personnel involved, the tasks performed by
the Law Firms, the time actually expended by each such person for each task, and all •
reimbursable expenses and costs incurred by the Law Firms for the calendar month
preceding each such statement. The first such bill shall include all fees and costs
theretofore accrued.
The Law Firms and the Cities understand and acknowledged that the
Official Representative, while initially responsible for paying all bills, will sub -bill each
City its share of the legal fees and costs incurred. The amount of each City's payment
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obligation under this Agreement shall be based upon each City's pro -rata outstanding
principal balance in the Orange County investment pool as of December 6, 1994. In
determining the amount of a City's share in the Orange County investment pool as of
• December 6, 1994, the amount of the claim of all entities, sub - agencies or divisions
related to or controlled by a City shall be included as if the claim were owned by the
City. The Official Representative shall be entitled to reimburse itself through the
subbilling for any fees paid to the Law Firms pursuant to this Agreement.
F. TERMINATION. This Agreement may be terminated by the
Subcommittee at any time by written notice from the Official Representative to the
Law Firms. This Agreement may be terminated by the Law Firms by giving thirty (30)
days prior written notice to the Official Representative.
G. ASSIGNMENT. This Agreement is not assignable either voluntarily or
by operation of law.
H. INDEPENDENT CONTRACTOR. The parties agree that the Law Firms
are independent contractors and not employees of the Official Representative or the
Subcommittee and, therefore, neither the Law Firms nor any of their principals or
employees are entitled to the salaries, benefits, or privileges of being an employee of
the Official Representative or the Subcommittee, including, but not limited to vacation
• pay, holiday pay, overtime pay, health insurance, disability or retirement benefits, and
workers' compensation benefits.
I. EFFECTIVE DAY. This Agreement shall be deemed to pertain to all
work undertaken by the Law Firms on behalf of the Subcommittee on or after
March 15, 1995.
IN WITNESS WHEREOF, the Law Firms and each City designated
below, individually, and as members of the Subcommittee, hereby agree and consent
to the terms and conditions set forth in this Agreement.
CITY OF IRVINE
CITY MANAGER
CITY OF IRVINE
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CITY MANAGER
CITY OF ANAHEIM
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CITY MANAGER •
CITY OF BREA
CITY MANAGER
CITY OF BUENA PARK
CITY MANAGER
CITY OF COSTA MESA
CITY MANAGER
CITY OF CYPRESS
CITY MANAGER
CITY OF DANA POINT
CITY MANAGER
CITY OF FOUNTAIN VALLEY
CITY MANAGER
CITY OF FULLERTON
CITY MANAGER
CITY OF GARDEN GROVE
CITY MANAGER
CITY OF HUNTINGTON BEACH
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CITY MANAGER
CITY OF LAGUNA BEACH
CITY MANAGER
CITY OF LAGUNA HILLS
CITY MANAGER
CITY OF LAGUNA NIGUEL
CITY MANAGER
CITY OF LA HABRA
CITY MANAGER
CITY OF LAKE FOREST
CITY MANAGER
CITY OF LA PALMA
CITY MANAGER
CITY OF LOS ALAMITOS
CITY MANAGER
CITY OF MISSION VIEJO
CITY MANAGER
CITY OF NEWPORT BEACH
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CITY MANAGER
CITY OF ORANGE
CITY MANAGER
CITY OF PLACENTIA
CITY MANAGER
CITY OF SAN CLEMENTE
CITY MANAGER
CITY OF SAN JUAN CAPISTRANO
CITY MANAGER
CITY OF SANTA ANA
CITY MANAGER
CITY OF SEAL BEACH
CITY MANAGER
CITY OF STANTON
CITY MANAGER
CITY OF TUSTIN
CITY MANAGER
CITY OF VILLA PARK
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CITY MANAGER
CITY OF WESTMINSTER
CITY MANAGER
CITY OF YORBA LINDA
PAUL R. GLASSMAN
A PROFESSIONAL CORPORATION
PAUL R. GLASSMAN, P.C.
•MITCHELL, SILBERBERG AND KNUPP
A PARTNERSHIP OF
PROFESSIONAL CORPORATIONS
JAMES O. THOMA, P.C.
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