Sewer Authority Sale Costs $3 Million in Legal Fees
SCRANTON — How many lawyers does it take to sell a public sewer authority to a utility?
The answer is 50, according to the billing invoices Newswatch 16 obtained from the Scranton Sewer Authority
But whatever those lawyers did to earn those fees, is being kept private.
Scranton City Council member Bill Gaughan calls the legal fees staggering. He says when Scranton chose to sell the Scranton Sewer Authority to Pennsylvania American Water for $195 million, no one told city leaders it would cost so much, for so many lawyers.
“It was a frenzy for the attorneys and consultants in the deal,” said Gaughan.
Pages of billing invoices from the sale show eight law firms, 50 lawyers, and a bill of over $3.1 million.
“The lawyers and consultants made out like bandits,” Gaughan said.
The legal fees paid by the Scranton Sewer Authority amount to 1.5 percent of the total sale price.
That’s a lot when compared to a similar transaction near Philadelphia.
Limerick Township in Montgomery County is selling its sewer authority to Aqua Pennsylvania Wastewater** for $71.5 million. Legal bills for the Limerick Sewer Authority will be capped at just over $200,000 and only two law firms are involved.
So why did the Scranton Sewer Authority spend more than 15 times* as much in legal fees and what did all those lawyers do?
We don’t know. Details on the legal bills were redacted, kept from the public.
When we asked why, sewer authority director and chief counsel Jason Shrive says the descriptions are part of attorney-client privilege and releasing them would violate confidentiality.
“I can tell there are concerns about the bills because they seem to overdo it with the redactions,” said John Toothman.
Newswatch 16 used Skype to talk to John Toothman from his office near Washington DC. He heads the legal advocacy group devilsadvocate.com.
Toothman believes most parts the billing statements should be made public because the sale was finalized this past December. He also questions why so many law firms had a hand in the sale of the Scranton Sewer Authority.
“Lawyers are business people, too, and one of the things that happens is, they can sense when there’s an opportunity to make some money,” said Toothman.
More than half of the $3.1 million in legal fees went to Buchanan Ingersoll, a law firm based in Philadelphia where legal fees are the highest in the state.
Two lawyers from that firm were paid more than $800 an hour for their work.
Another lawyer from that firm billed the authority $770 an hour, for working 160 hours in one month.
“$123,816 for a month’s work? For a month’s work,” Gaughan asked.
Newswatch 16 and other news organizations have appealed to the state office of open records to get an account of what the lawyers did to earn all that money.
Jason Shrive, who is currently both the executive director of the Scranton Sewer Authority and its solicitor during the transition from the sale, said he would not comment on the legal fees while the open-records appeal remains active.
*In terms of actual dollars, the $3.1 million the Scranton Sewer Authority paid in legal fees is 15 times more than the approximately $200,000 paid by the Limerick Sewer Authority. As a percentage of the total sale price, Limerick’s legal fees amount to 0.3 percent, or about 5 times less than the 1.5 percent paid by the Scranton Sewer Authority.
** 5/4/17 – Corrected to show Limerick Sewer Authority was sold to Aqua Pennsylvania Wastewater and not Pennsylvania American Water.