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Four law firms dominate school district services

BY STACEY ALTHERR and EDEN LAIKIN | stacey.altherr@newsday.com
eden.laikin@newsday.com

10:40 PM EST, February 23, 2008

On Long Island, where public education is a multi-billion-dollar enterprise, four law firms control more than 60 percent of the estimated cost for legal services.

In 106 of the 124 school districts, $56.9 million was spent for legal fees from 2000 through 2004 -- $16.4 million alone during the 2003-2004 school year. Experts say legal costs have grown since then, with lawyers handling a wide range of issues from personnel and union issues to special education lawsuits.

The four law firms -- Guercio & Guercio in Farmingdale; Ingerman Smith in Hauppauge; Ehrlich, Frazer & Feldman, and Jaspan Schlesinger Hoffman, both of Garden City -- earned the majority of that total amount during that period, the most recent data available to Newsday.

Some experts say that consolidation of legal services is expected because educational law is highly specialized and few lawyers are experts at it.

In an unprecedented series of moves that have unfolded in rapid-fire fashion in the past week, three of these firms -- Guercio & Guercio being the exception -- that have attorneys whose arrangements with school districts allowed them to receive lucrative public benefits while working as private legal counsel are now under state and federal investigation.

Subpoenas and probes

Last week, Ingerman Smith turned over its files on former law partner Lawrence Reich to the FBI and the IRS. New York State Attorney General Andrew Cuomo has opened both a civil and criminal investigation and has subpoenaed records at the three law firms.

Federal and state investigations were begun a week ago after Newsday reported that Reich, while at Ingerman Smith, was also listed as a full-time employee at five school districts at the same time, even as the law firm was on retainer to those same districts, allowing him to earn an annual state pension of more than $61,000.

Carol Hoffman, a partner at Jaspan Schlesinger Hoffman, was listed on public records as an employee at different times at four districts, Newsday has reported. At Plainedge and Beth.page she was listed as full time; at East Rockaway and Lawrence, part time.

Jerome Ehrlich, a partner of the Garden City law firm of Ehrlich, Frazer & Feldman, was employed part time by two districts, Hewlett-Woodmere and Great Neck simultaneously -- and prior to that, full time at Bellmore-Merrick Central High School District. That allowed him to retire in 2006 with an annual pension of $34,029. Both served the districts as outside counsels at the time of the pension accruals. Hoffman has not yet retired.

Ingerman Smith, Ehrlich, Frazer & Feldman, and Jaspan Schlesinger Hoffman have been subpoened in recent days.

Federal and state criminal probes of numerous Long Island school districts is unprecedented. All of the firms involved have said they have done nothing wrong. Last week, Guercio & Guercio posted a letter on its Web site essentially stating that it had broken no laws and had never had one of its attorneys on a school payroll.

Education expertise

The evolution of how four law firms tied up the bulk of the legal work has to do with the growing complexities of education law, said Gregory Guercio, a partner in Guercio & Guercio, which currently represents 31 of the Island's 124 districts.

"School districts are $100 million plus corporations today with very significant and intense legal issues," said Guercio. "There is no school district that could employ enough staff lawyers with all the specialties necessary."

Representatives of the firms and others say that, as education law has become more complex within so many different areas of law, districts need larger firms to handle their needs. Those needs include lawyers having specialties in such diverse areas as labor, special education, litigation, and even public construction law and bonding issues.

"We have five lawyers that do only special education work," said Guercio.

Critics, who generally agree that large firms can handle more specialized needs, say that these law firms wield too much power with school boards and superintendents, and are not looking out for the best interests of taxpayers.

Relationships too close?

Very few school districts maintain inside counsel, experts say, because no one lawyer could handle all the work. Firms with expertise in the complexities of education law are hired by -- and report to -- boards of education, not superintendents, although they will represent them if litigation comes out of the duties of that position, such as a student suspension.