Law firm with ties to mayor doubles income from city

July 02, 1995|By Eric Siegel and JoAnna Daemmrich | Eric Siegel and JoAnna Daemmrich,Sun Staff Writers

Shapiro and Olander, the politically powerful Baltimore law firm with close ties to Mayor Kurt L. Schmoke, has been paid at least $1.4 million for city-related legal work in the mayor's second term, doubling the payments reported in Mr. Schmoke's first four years.

The payments, documented from city, state and private sources, may well represent only part of the revenue the firm receives for representing Baltimore and its quasi-public agencies.

At the mayor's directive, the total amount of public funds paid to Shapiro and Olander -- which has among its lawyers Mr. Schmoke's campaign treasurer and his chief political strategist -- remains secret.

For the past seven weeks, The Sun has repeatedly asked Mr. Schmoke for a detailed accounting of the law firm's earnings from the city and separate taxpayer-funded agencies, such as the Baltimore Development Corp. and the Community Development Financing Corp.

The extent of Shapiro and Olander's work for the city reflects the firm's close relationship with the mayor. Ronald M. Shapiro, a founding partner, is Mr. Schmoke's campaign treasurer. And Larry S. Gibson, a University of Maryland Law School professor who is "of counsel" at the firm, is the architect of Mr. Schmoke's political career.

At first, Mr. Schmoke said that he would disclose direct city payments to Shapiro and Olander, as he had in the past, and would consider for the first time releasing fees paid by the quasi-public groups.

Late last week, city officials provided an incomplete account of payments to the firm during the mayor's second term. But Mr. Schmoke said he had decided not to divulge the fees from the quasi-public agencies that the firm represents.

Position defended

Mr. Schmoke defended his decision by saying he was following precedent set by Mayors William Donald Schaefer and Clarence H. Du Burns and was concerned about eroding the independence of the quasi-public groups.

"If we want to maintain the flexibility and the speed with which these entities can solve problems, then we've got to maintain the past policy," Mr. Schmoke said.

Christopher Dean Olander, the firm's managing partner, refused make public his bills, citing attorney-client privilege.

"We don't discuss the fees that our clients pay us," he said. "It's unethical for us to do that."

Mr. Schmoke's refusal to disclose all the fees paid to Shapiro and Olander raises questions about oversight of the firm's lucrative relationship with City Hall.

Baltimore hires a number of law firms to supplement the work of its Law Department, which has a staff of 78 and a budget of $10 million. But it does not select them through competitive bidding, as do many state agencies and quasi-public groups. The city also does not keep centralized records to track how much it spends on outside legal work -- something the mayor promised to do four years ago. "I dropped the ball," the mayor said.

Asked about the lack of disclosure, the state's top lawyer and others said the figures should be made public.

"Public moneys and how they're spent should be fully disclosed. I think that's basic," said Attorney General J. Joseph Curran Jr.

"Fees that are undisclosed make government shadowy," said Daniel J. Loden, president of the Baltimore City Homeowners' Coalition for Fair Property Taxes, which monitors city spending.

The head of the ethics committee of the Bar Association of Baltimore City said that there is nothing in the state code of conduct that prohibits government legal work by firms with political connections. But she said she was troubled as a taxpayer by the lack of full disclosure.

"We all have an interest in how much money is going to Shapiro and Olander," said Kathryn Miller Goldman, a member of the Baltimore firm of Lord & Whip. "It's coming out of our tax base somewhere."

Shapiro and Olander did little city work before Mr. Schmoke became mayor in 1987. But it has had little trouble getting business from City Hall since then.

Today, the 33-member downtown law firm plays a role in some of the Schmoke administration's highest-profile initiatives, from a federally funded empowerment zone to setting up a public markets corporation and a new convention board. Mayor Schmoke counts Mr. Gibson and Mr. Shapiro in his small, intensely loyal inner circle. Honora M. Freeman, then a Shapiro and Olander lawyer, worked with Mr. Shapiro to set up the Community Development Financing Corp., the community lending bank the mayor promised in his first campaign. Ms. Freeman was later appointed to head the Baltimore Development Corp., the city's quasi-public economic development branch.

Sources of fees

The $1.4 million the Shapiro firm has earned during the mayor's second term, based on documents and interviews, includes direct payments as well as fees charged to clients of the quasi-public organizations authorized when the firm is counsel to the agency involved. The total is made up of the following:

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