Meridian Star

April 21, 2013

Legal fees add up on bond issues

By Terri Ferguson Smith /
The Meridian Star

MERIDIAN —     The Lauderdale County Board of Supervisors will pay $40,000 in legal fees to the law firm of board attorney Rick Barry if a $14 million bond issue under consideration is approved.

    The executive director and treasurer of the company designated to issue the bonds, Mississippi Development Bank, is Bill Barry, brother of Rick Barry. In a telephone interview, Rick Barry said that fees paid to attorneys for bond issues is set by state statute and that he was not involved in the selection process to determine who would handle the bond issue.

    "My employment is just like any other board attorney in any other county in the state of Mississippi," Barry said.

    He is a partner in Hammack, Barry, Thaggard and May law firm, which will receive the $40,000 in legal fees if the proposed bond issue goes forward.

    The Board of Supervisors earlier this month took the first steps toward issuing the bonds for recreation projects and improvements to the Lauderdale County Courthouse. The proposal prompted opponents of the bond issue to start a petition drive to force a county-wide vote on the issue.

    Mississippi law that governs the amount that board attorneys can make on bond issues states that "The board of supervisors shall have the power, in its discretion, to pay reasonable compensation to attorneys who may be employed by it in the matter of the issuance of bonds and the drafting of orders and resolutions in connection therewith. In no instance shall the attorney's fee for the services exceed the following amounts, to wit:"

    • 1 percent of the first $500,000

    • 1/2 percent of the next $500,000

    • 1/4 percent of the amount for the amount above $1,000,000.

    The $40,000 figure is the maximum payment allowed under the law.

    As part of its agreement with the Lauderdale County Board of Supervisors, the law firm of Hammack Barry, Thaggard and May is hired to represent the board. Litigation involving the county is handled by the firm for hourly rates ranging from $100 per hour to $125 an hour, depending upon the attorney providing the services.

    Barry is also on paid retainer for the board. By law that amount cannot exceed the pay of a member of the Board of Supervisors. Lauderdale County supervisors make approximately $44,000 annually.

    Attorneys for municipal governments have a somewhat different formula for calculating the amount they will make from a city bond issue, according to Ronnie Walton, attorney for the Meridian City Council.

    The law provides that the city council can pay the attorney 1 percent of the amount of bonds issued.

    However, under his firm's agreement with the city of Meridian, the legal fees are less than that; the firm gets 1 percent for the first $500,000 and  1/2 percent for everything above that.

    Under that formula, the attorneys fee for the proposed $1.2 million water and sewer bond issue the city is considering would be $8,500. That bond issue is also in the early stages.

     The law specifies that where the regular contract of employment and compensation paid to the municipal attorney covers and includes services in connection with the issuing or refunding of bonds, then the attorney will not be paid additional compensation for such services.     Walton's agreement with the city differentiates between administrative legal work, litigation, and bond work.

    Walton is a partner in the Glover, Young, Walton and  Simmons law firm, which is also paid monthly to represent the city. For administrative legal work, the firm is paid $5,000 a month. Litigation work is billed at a rate of $120 per hour to $160 per hour, depending upon which attorney performs the work.

    As to which lender is chosen to issue the bonds in the county, Joe McCraney, county administrator, said the county gets a financial consultant to look into it.

    "You get governmental consultants," McCraney said. "They go out and they market the bonds and they find the ones that have the best competitive interest rates and they make a recommendation."

    The city of Meridian and Lauderdale County use the services of Government Consultants, a financial services group. Demery Grubbs, a consultant with that group, recommended that the Board of Supervisors use the Mississippi Development Bank to issue the $14 million in bonds.

    Bill Barry has been director of Mississippi Development Bank for about 15 years.

    The Mississippi Development Bank was created by the Mississippi Legislature in 1986 as an independent organization with the power to borrow money and issue its bonds and notes to make funds available to local governmental units, according to information on MDB's website.