Taxpayers could be on the hook for a lot more than $10,000 to defend the Wake County school board against allegations it violated the state's Open Public Meetings Law.
The inclusion of the second firm could raise costs unless Wake's insurance carrier makes an exception in this case to pay for both firms.
Typically, Wake has a deductible for any lawsuit. Once the deductible is reached, the insurance carrier picks up the remaining costs.
For instance, the audit report from attorney Thomas Farr shows that Tharrington Smith billed for $132,840.06 in legal bills for defending the Wake CARES lawsuit. But Michael Evans, Wake's chief communications officer, said insurance picked up everything above the district's $25,000 deductible.
The deductible is now at $10,000. Normally, the insurance carrier would just pick up the legal bills for anything above $10,000.
But with two law firms in this case, Wake needs to identify one to be the primary firm. Evans said the insurance company would normally pick up all the legal fees past $10,000 for the primary firm.
The district would pick up all costs for the secondary firm.
As of Thursday evening, Margiotta hadn't yet designed which firm would be the primary. Marigotta said he's hoping to persuade the insurance company to pick up the secondary firm's bills as well.
The contract that Shananhan has agreed to is for up to $25,000. The board would have to agree to pay for anything above that amount.
Whether Shananhan's bills are covered by Wake or the insurance carrier remains to be seen.
In the contract, Kieran Shanahan has agreed to be the primary attorney from his firm and will be working mostly with Ann Majestic, the board's main attorney from Tharrington Smith. In terms of the division in labor, note that it's Shanahan who wrote the district's response to the lawsuit.
Shanahan, a former Assistant U.S. Attorney, is cutting his $450 an hour rate in half to $225.
Margiotta explained that he had hired Shananan because of his legal skills and because of the possibility that attorneys from Tharrington Smith could be called in as witnesses. Margiotta noted how they had followed Majestic's legal advice in holding the meetings.
Click here to view Shanahan's response to the complaint.