Legal fees beget more legal fees – $80,000 in two months!!!

Giving attorneys a blank check = bad idea

In the first two months of the fiscal year, SCA’s spending $79,760 for legal services. Attorneys have burned through 40% of the $195,000 budget for the whole year.

Had the 2018 budget not be more than doubled from the 2017 level, the burn rate would have been a whopping 89%.

2017 Legal services budget was $90,000, an amount that prior Boards fond to be adequate for SCA’s needs.

Was the service SCA got worth it?

  • Do you feel like paying this attorney has improved the quality of your life in Sun City Anthem?
  • Do you think, as this current Board does, that the attorney must be retained to do work that is normally performed by a Community Association Manager, like propose towing or publication policies?
  • Do you believe that the Board is incapable of making decisions unless the attorney approves them?
  • Do you think SCA owners should pay for the association attorney to represent the GM to protect her “privacy rights” against owners finding out what she is being paid in 2018?
  • My best guess is that SCA has been billed in the tens of thousands of dollars for the GM to use the  association attorney to keep her secrets. I can’t be more precise because when I requested an explanation for spending $321,000 instead of less than $90, 000 in 2017,  the response boiled down to:

“We don’t have to. You can’t make me”

2017 legal expenditures exceeded $321,000

This was a whopping 3 1/2 times the $90,000 budget! So, one would think that the correct response would be to look at ways to bring that number back in line. But, that wasn’t what the Board did. They more than doubled the 2018 budget to $195,000. 

While a strategy of carefully calculating the increases needed in the budget to cover runaway costs may be prudent in a strictly fiscal sense, it completely ignores the Board’s duty to analyze the root causes of why we are wasting so much money on attorney fees.

Last year’s waste blew my mind, and this year is starting out even worse.

What I told the Board at the 3/22/18 meeting

The Board and the GM are using attorneys excessively, inappropriately and in a manner which is not serving owners well.

The Board is not following the business judgment rule if you:

  • Use attorneys to conceal from owners how our money is being spent when you are required by law to tell us.
  • Allow the GM to use the association attorney to serve her own purposes in violation of SCA’s bylaws and the Board policy manual, e.g., relieving the Election Committee of their duties in the recall election ($90,000 spent on her order), and at least $50,000 to conceal records from me as a director, and threaten frivolous litigation, and unfairly remove me
  • Accept without question demands for payment for unbudgeted services which others who are not being paid tell you, are not necessary or cost-effective if done by attorneys.
  • Ignore warnings of inappropriate expenditures
  • Refuse to allow any investigation by owners to determine the veracity of the complaints that these fees are out of line.
  • Refuse to have a Legal Services Committee to provide owner oversight to protect the Association.

The Board silently noted and (round)filed.

I predict no action will be taken to control the costs of control.

And another thing

Why did owners have to pay $43,022 to write-off bad debts last month?

When this amount was written off, Forrest said that it had largely been due to foreclosures by banks.

  • What properties were affected?
  • Why so much write off?
  • Was litigation involved?

My questions  could be answered if the Board would require the GM/attorney/debt collector to publish the quarterly delinquency report mandated by our bylaws and keep them posted on the website.

Refusing to manage the attorney instead of letting him run amuck is costing owners money unnecessarily. It is not a good example of sound business judgment.

Bylaws 3.21 (f) (5) Quarterly reporting requirement

…(quarterly) commencing at the end of the quarter in which the first Lot is sold and closed,…(v) a delinquency report listing all Owners who are delinquent in paying any assessments at the time of the report and describing the status of any action to collect such assessments which remain delinquent…

Publishing the required report would improve the cost-effectiveness of collection efforts significantly, reducing attorney/debt collector fees and uncollectible debts.

But this isn’t something you will hear from the attorney.

2 thoughts on “Legal fees beget more legal fees – $80,000 in two months!!!”

  1. Without a doubt the SCA Minister of Information will put a different spin on this”

    Josef Goebbels would be proud

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