Philadelphia Housing Authority paid $33 million to politically powerful law firms

The Philadelphia Housing Authority has paid out more than $33 million in legal fees since 2007 under executive director Carl R. Greene to some of the city's most politically powerful law firms, documents show.

More than half the legal work went to two firms - Ballard Spahr, which received $9 million, and Wolf Block, which was paid $8 million before it disbanded last year.

During Greene's tenure, spending on outside legal work has skyrocketed, nearly doubling over the last three years, according to documents released Tuesday by the authority in response to an open-records request filed by The Inquirer.

The PHA spent more in 2009, $11.2 million, than it did over two years in 2002 and 2003.

In 2002, an attorney with the U.S. Department of Housing and Urban Development expressed "growing concern over the escalating cost of legal services" at PHA.

The authority said Tuesday that none of the legal fees paid to outside firms since 2007 went to represent Greene in four sexual harassment complaints that have been settled by the authority's insurer.

But the documents detailing the $33 million in legal spending merely list amounts paid to 15 firms and do not describe the services provided.

The authority defended the payments, saying the increase can be attributed to new and complex legal problems confronting public housing agencies.

It's not uncommon for housing officials to encounter technical environmental issues and complex financial transactions, not to mention complex federal regulations and requirements, said Kirk Dorn, a PHA spokesman.

"The work of any housing authority is not what it once was," Dorn said, adding that the authority's legal bills might seem high unless they were considered in context.

The authority decided years ago to reduce its number of staff attorneys and turn increasingly to outside experts, he said.

Dorn said the money was now well spent on outside counsel and that it enabled the authority to attract private investors, who look at legal competence as an assurance that their funds are protected.

Abraham Reich, cochairman of Fox Rothschild, said his firm's work with PHA was focused on environmental issues, such as problems arising from ground contamination.

Reich said the firm significantly cut its rates for PHA because of the public service nature of the housing authority in serving low-income Philadelphians.

"We have considered it a privilege to represent PHA," he said.

The authority's use of outside counsel has been controversial since 2002, when a HUD attorney questioned why the authority was paying large fees to law firms to defend against relatively minor employee disputes that could have been settled for far less than the cost of the legal fees.

The letter was followed by a January 2003 report by HUD's inspector general criticizing the authority for violating procurement rules by repeatedly amending legal contracts rather than putting them out to bid.

Two PHA staff attorneys later sued the authority in 2003, alleging problems in legal billing. One of the suits was dismissed and one was settled.

At the time, Ballard also headed the authority's list of outside legal firms with $3.1 million in fees over a two-year period.

Ballard is the former firm of Gov. Rendell. The firm's chairman, Arthur Makadon, served as a legal adviser to Mayor John F. Street.

Makadon did not respond to a detailed request for comment left with his assistant.

Street currently serves as chairman of the PHA's five-member Board of Commissioners, which approves all contracts.

Street said Tuesday that he had never asked Greene to direct legal work to any firm.

Since its review in 2003, HUD has not revisited PHA's legal spending.

In 2008, HUD attempted to freeze funding and limit PHA's ability to spend federal housing subsidies.

Greene then sued HUD and its director, Alphonso Jackson, alleging that Jackson's attempt to limit PHA's flexibility in spending $347 million in federal aid under a program called "Moving to Work" was in retaliation for Greene's refusal to turn over two parcels of HUD property to Jackson's friend, the developer and music producer Kenny Gamble.

Sens. Arlen Specter and Bob Casey intervened to negotiate an agreement.