Overview
During our audit period, the Baker Hill Road District (BHRD) paid an attorney a total of $199,119 for legal services without a written contract for the services. According to BHRD’s attorney, BHRD had a verbal agreement for legal services with the attorney. In an email to us on May 26, 2021, the attorney stated,
I have an oral contract with the road district, that has two parts, a monthly retainer [$2,500] and an hourly rate [$200 an hour]. The monthly retainer covers maintenance issues, research and documentation of issues related to the environment, stormwater management, road construction/maintenance and compliance with the Traffic Control Agreement, safety issues and governance issues with purchasing, economic development, and financial standards. The hourly rate applies to pre-litigation matters, court appearances, including waiting time, travel to and from court, telephone conferences, telephone calls to and from the Client, office conferences, legal research, depositions, review of file materials and documents sent or received, drafting of pleadings, correspondence and memoranda, and preparation for trials, hearings and conferences, and development projects.
During our audit period, the payments totaled $60,000 in retainers and $139,119 for hourly services. During our audit, we reviewed invoices and identified the following examples of services provided to BHRD: correspondence and handling of legal proceedings, including traveling to and from court; correspondence with tenants of the Berkshire Mall in Lanesborough; and research related to grants and redevelopment of the Berkshire Mall property. Without a formal, written contract with a defined scope of services and duration, BHRD may incur unnecessary costs.
The “Consultant Contract Requirements” section of the Office of the Comptroller of the Commonwealth and Operational Services Division’s joint policy “Procurement/Contracts: Commodities and Services” requires “a scope of services and duration of work . . . [and] a written contract” when executive branch agencies of state government contract for services such as legal services.
Although BHRD is not required to comply with this policy, the Office of the State Auditor (OSA) believes that it is a best practice that BHRD should follow. A formal, written contract ensures that all the terms and conditions, including the contract’s duration and each party’s duties and responsibilities, are documented.
On June 9, 2021, BHRD and the attorney entered into a written contract for legal services; however, OSA’s review of the contract revealed that it did not establish a specific duration.
BHRD should enter into written contracts for all services it purchases, including legal services, that include the scope of services, work duration, and responsibilities of each party.
Auditee’s Response
We will discuss adding a term to our contract for legal services.
Auditor’s Reply
Based on its response, BHRD is taking measures to address our concerns.
| Date published: | March 24, 2022 |
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