No competitor came close to the $525 per hour fees of a West Palm Beach lawyer whose firm won a contract for more than $6 million from state-run insurer Citizens in December, bidding records examined by The Palm Beach Post show.
The next highest hourly fee, among nine firms bidding from as far away as California: $360.
Citizens executives say the money is well spent if Scott Link and colleagues help the company settle or fight 13,000 claims lawsuits more efficiently without necessarily setting foot in a courtroom, by directing strategy for other lawyers the company already pays. In an interview with Citizens, Link said his role is like “the mover of the chess pieces.”
Not everyone thinks Citizens has check-mated wasteful spending with this deal.
“It doesn’t pass the smell test,” said Jay Neal, president and CEO of the Florida Association for Insurance Reform, a Fort Lauderdale-based advocacy group that includes industry and consumer representatives. “You could bring this in-house and save a lot of money. One of the most important things this company has to do is retain public trust.”
Ackerman, Link & Sartory cited no particular expertise in property insurance before applying in 2012 for the first of two contracts that together stand to pay the firm more than $8 million. In its applications, the firm saw no need to disclose ties to former Citizens President Tom Grady, an ally of Gov. Rick Scott, and Florida Chief Financial Officer Jeff Atwater as potential conflicts.
Records show it finished third of nine bidders in initial scoring by a Citizens evaluation panel for the first contract based on written applications, barely making the cut for interviews. Then it soared to the top after an interview lasting less than 30 minutes.
The compensation stands out at a company criticized for weak oversight on spending by, among others, Gov. Scott’s own inspector general.
Scott Link’s projected billing of more than $1 million a year under the contract is more than triple the $300,000 pay of Citizens president and CEO Barry Gilway, who oversees the entire company. Citizens is Florida’s largest property insurer serving more than 1 million customers.
A draft contract, not yet signed, provides for additional billing at $262.50 per hour for Link’s travel time. That is on top of any travel reimbursements such as hotels or meals, a Citizens spokesman said.
The firm’s job is to serve as “coordinating counsel,” overseeing strategy on lawsuits involving claims from sinkholes to water damage, cases in which Citizens already pays other attorneys.
No ethical concerns
In its application, Ackerman, Link & Sartory said it had no ethics conflicts to disclose concerning Citizens. Not mentioned: former Citizens president Tom Grady had a business relationship with the West Palm Beach law firm, which paid him as recently as 2010, according to Grady’s state financial disclosures.
Grady, a friend and Naples neighbor of Gov. Scott, was interim Citizens president in 2012 when solicitation began for the first of two contracts Link’s firm ultimately won. Those contracts were for a high-paying role that had not existed before at Citizens, and they were handled as “expedited” bids in a speeded-up process.
“This is an emergency contract there was no need for,” said state Rep. Frank Artiles, R-Miami, a public adjuster who has been an outspoken critic of the deal. “This was an inside job.”
Citizens executives dispute that, saying the arrangement was properly bid and stands to benefit the company by helping it handle cases better. That can mean settling some cases quickly, fighting more effectively on others or working with front-line employees to avoid future problems, they say.
Benefit to Citizens argued
Information presented in support of the firm’s work coordinating sinkhole claims said the average amount paid per lawsuit dropped to about $120,000 during the firm’s tenure, compared with more than $140,000 in 2011. Citizens General Counsel Dan Sumner said if a third of the 10,000 pending non-sinkhole cases were resolved on terms the company considers favorable, it could save $97million in litigation costs over the life of the contract.
Artiles scoffed at such claims at a board meeting last month, saying the company was still losing about half of the very small percentage of sinkhole cases that go to trial and estimating it could save $50 million in litigation costs simply by paying the full claims policyholders submit.
Gilway said plaintiff attorneys would love that, but the company has an obligation to other policyholders not to pay for unwarranted claims. The Citizens president spoke out forcefully for Link in company meetings, saying in November, “We need the talents Scott Link is bringing to the table.”
Another partner in the firm, Wendy Link, is projected to bill $50,000 a year under the deal. She serves on the Florida Atlantic University search committee considering candidates for FAU president including Atwater, who interviewed for the university job Friday but was not named one of three finalists. Atwater appoints Citizens board members and, along with Scott and other top state officials, oversees the company’s management.
Wendy Link listed Grady and Atwater as her first two references for an appointment to the Florida Board of Governors in 2011, records provided by the governor’s office show.
Link told The Post last week she disclosed potential conflicts including the reference and the Citizens contract to FAU and state officials, who “encouraged me to continue my service to the Search Committee.”
As for other questions, she said, “Our firm has always had a commitment to our clients not to discuss any issues regarding our clients with the media unless the client specifically requests that we do so.”
Meeting with Atwater
Two days before Citizens approved the contract Dec. 13, Atwater organized a meeting in his office that included Scott Link, records show. The participants included a homeowner advocate and the only discussion was “to make sure Floridians are getting the claims assistance they deserve,” an Atwater spokesman said.
Despite protests from Rep. Artiles, Citizens board member John Wortman, appointed by Scott, made a motion to approve the contract last month, and it passed 4-1 with two abstaining.
Any business relationship with the West Palm Beach firm had ended by the time Grady assumed his role at Citizens, so it wasn’t an issue, Citizens officials maintained. Officials said they were assured Grady received no residual compensation from the firm, and both the 2102 contract and the one now pending forbid paying fees to others firms or lawyers — including, specifically, an “of counsel” attorney.
Grady is listed in records as having served “of counsel” to the Ackerman firm. That term typically means he received compensation for services without being a partner or full-time employee.
Total payments of $6.5 million over four years to the law firm have been approved, though a final contract has not been signed, a company spokesman said.
If the justification for the contract is to save money over the long haul, is the firm’s pay tied to any specific dollar figures to be saved, or number of cases to be resolved? A draft contract provided by Citizens mentions no particular figures but says, in part, “Anticipated cost efficiencies including demonstrated savings in fees and defense costs will be measured and related to the implementation of specific strategies in order to determine the effectiveness and efficiency of the specific strategies and/or the overall claims litigation strategy in achieving the state objectives.”
‘Hope and a prayer’
Former state insurance consumer advocate Sean Shaw, a Tampa attorney who sues insurers, said, “There’s no evidence this is going to save any money. It’s a hope and a prayer.”
A spokesman for Gov. Scott said before the Dec. 13 vote, “This will be entirely up to the Citizens board and we have every expectation that they will do the right thing to protect Florida taxpayers.”
In an explanation of its ethics policy on its website, Citizens explicitly forbids senior managers from, for example, working for or entering a contractual agreement with a private insurer that receives a bonus to take Citizens customers within two years.
Neither Citizens nor the law firm saw anything in Grady’s situation they regarded as a particular ethics problem, though the company website says determining whether a course of action is ethical involves questions including “How will it look to others?” and “How will it affect Citizens’ status as a trusted decision-making entity?”
Link’s firm claimed no expertise, or even any significant experience, in property insurance or sinkholes when it applied in 2012 to win a newly created $1.5 million contract to become coordinating counsel for sinkhole claims. Instead, it emphasized experience with complex civil litigation involving brokerage and financial firms, auto insurers and phone companies.
The firm was not the initial top choice of a Citizens evaluation committee including Sumner, assistant general counsel Elaina Paskalakis and vice president of claims Lance Malcolm, records show. Based on written applications, the committee scored it No. 3.
No. 1 was Gray Robinson of Tallahassee, followed by Colodny, Fass, Talenfeld, Karlinsky, Abate of Fort Lauderdale. Those firms declined to comment for this story.
“There were others ranked higher for less money per hour?” Artiles said. “Are you kidding?”
But the Ackerman firm rocketed to the top in the interview round. In an interview lasting less than 30 minutes, Sumner told Link he had done a “good job” in the written application distinguishing between the role of coordinating counsel and that of a regular defense lawyer working on a particular case, an audiotape shows. Sumner asked him to elaborate and add “color.”
Sumner asked about fees, saying “you get what you pay for,” but the firm’s fees were high compared to other bidders. Scott Link said he would hesitate to lower fees, which he considered already “discounted” compared to other firms that charge more than $600 an hour doing similar work. That would not be fair to other clients, he said.
Malcolm asked about how the law firm could help the company’s front-line workers process sales and claims. Paskalakis had no questions.
In March, Link’s firm said it reached the limit of its previous $1.5 million contract and Citizens granted it another $100,000 per month.
Citizens emphasized experience as coordinating counsel for the broader contract awarded in late 2013, and by that time the West Palm Beach firm was bidding as an incumbent expanding its prior role.
In his 2013 interview for the bigger contract, Link was again asked if he would consider renegotiating his fees.
“I would certainly increase them if you insisted on it, but I would do it reluctantly,” he said.
People laughed. The moment of levity over, Link then repeated his position the fees were already discounted and lowering them would be unfair to other clients.
Citizens chooses priciest per-hour bidder
Cooordinating Counsel Contract aproved in December
Bidding Law Firm /Top hourly fee
Ackerman, Link & Sartory, West Palm Beach $525
Adams and Reese, Jacksonville $360
Alexi Professional Services, Mandeville, La. $125
Brown, Garganese, Orlando $110
Cozen O’Connor, Philadelphia $350
Cruser & Mitchell, Orlando $205
Daniels Kashtan, Coral Gables $$190
Hiles Borgeson, Glendale, CA $200
Lawrence Lafferty, Boca Raton $115
2012 Coordinating Counsel/Sinkhole contract
Firm/ Top hourly fee
Ackerman, Link & Sartory, West Palm Beach $525
Colodny, Fass, Fort Lauderdale $250
Critical Claims Consulting, Pinellas Park $150
DLD Lawyers, Coral Gables $195
Fowler White Burnett, Miami $250
Gray Robinson, Tallahassee $350
Hightower, Strattton, Wilhelm, Miami $138
Kelley, Kronenberg, Fort Lauderdale $200
Lewis, Longman & Walker, Tallahassee $275
Source: Citizens Property Insurance Corp.
Details of the deal
Citizens policyholders will pay for fees estimated at $6.4 million over three years to a West Palm Beach law firm, or $6.5 million with smaller fees in an optional fourth year, for Ackerman, Link & Sartory P.A. to act as “coordinating counsel” for claims litigation.
Name /Title/ Estimated annual hours /Hourly fee/ Annual total
Scott J. Link Partner, Vice President 2,000 $525 $1.05 million
David P. Ackerman Partner, Sec.,Treas., 250 $250 $131,250
Wendy S. Link Partner, President, 100 $500 $50,000
Lanelle Meidan, Counsel, 500 $375 $187,500
Kristen L. McKeever, Counsel, 250 $375 $93,750
Dana E. Foster, Senior Associate, 750 $375 $281,250
Holly C. Galinskie, Associate, 100 $250 $25,000
E. Raul Novoa Associate 500 $225 $112,500
Tina L. Campbell, Senior Paralegal, 900 $175 $157,500
Linda Davey, Paralegal, 100 $175 $17,500
Keisha S. Lee, Paralegal, 100 $175 $17,500
Vicki Fearon, Paralegal, 100 $150 $15,000
Annual total 5,650 hours $2.1 million
Three year total $6.4 million
Source: Citizens Property Insurance Corp.
What The Post Found
Citizens hired a West Palm Beach law firm with no expertise in property insurance and barely made the cut for an interview. One of its principals could make three times the salary of Citizens CEO.