Law Firm Clears Panel as Handler of Tobacco Money

Orange County’s financial advisory committee on Thursday once again recommended that the San Francisco-based law firm of Orrick, Herrington & Sutcliffe be hired to handle the county’s tobacco settlement money, saying concerns about the firm’s ethics were unfounded.

The action, unanimously approved by the committee’s five-member voting board, had been sent back to the committee by the Board of Supervisors because of lingering questions about the role the law firm played in the aborted sale of the 91 Express Lanes.

The prominent law firm represented the state bank that had planned to issue bonds worth up to $274 million to finance the sale of the private toll road to a nonprofit group of businessmen. In addition, the firm had advised the other parties involved in the deal, raising some ethical questions about its role in the controversial attempt to sell the state’s only private road.

At Thursday’s hearing, committee members and county staff said they were satisfied that Orrick had done nothing illegal or improper in the 91 Express Lanes deal. Among those expressing support for Orrick was County Treasurer John M.W. Moorlach, a nonvoting member of the committee, who last year had been among the first to raise questions about the law firm’s role.

The discussion, however, was not all conciliatory.

While committee Chairman Thomas Hammond voted to hire Orrick, he also told county supervisors that if they found the 91 deal “repugnant,” he believed they were within their rights to refuse the firm. He questioned why the county’s staff was so set on recommending Orrick, saying that other law firms were just as capable of doing the work.

In response, Jan Mittermeier, the county’s chief executive officer, said staff had an obligation to put “perception and newspaper articles” aside when recommending hires for professional services. She said the county had made that promise to the Securities and Exchange Commission after the county’s bankruptcy in 1994.

“I don’t think we are doing our jobs as staff if we look at anything other than qualification,” she said. “It’s a slippery slope backward to pre-bankruptcy days when the selection of advisors had little to do with qualifications.”

The matter of who will handle an anticipated windfall of $900 million in tobacco settlement proceeds now goes back to supervisors, who can approve the law firm or send the matter back to the advisory committee for more evaluation.