City council discusses conflicts of interest with city attorney

City Attorney Robert Batsel Jr. speaks during an Ocala City Council meeting at Ocala City Hall in Ocala, Fla. on Tuesday, Dec. 15, 2020. [Bruce Ackerman/Ocala Gazette] 2020.

At the Dec. 22 city council meeting, the city attorney and the council had a public conversation about the conflict-of-interest clause the firm inserted in their current contract with the city without explanation.

The discussion came up as a result of the firm requesting a modification to the city’s contract for legal services. Under the new agreement, two of the city attorneys, Robert Batsel Jr. and Jimmy Gooding, would become a new, separate firm under the same roof with the original city firm, Gilligan, Gooding, Batsel, Anderson, & Phelan, PA.  Then, they could focus on land use and development while continuing to serve as the city’s attorneys the remainder of the two-year contact that the firm entered into Oct. 2020.

According to the city charter, the city attorneys appointed through this contract play a pivotal role in the operation of the city as “chief legal advisor to the council, the manager, and all city departments, offices, and agencies.”

In this role, the city charter says the city attorneys must approve every contract the city enters for “form and legality.” The charter states that the city attorney’s review “shall be for the benefit of the city only and not any other person or entity. No contract shall be voided or is voidable because of a deficient form and legality review.”

In addition to drafting ordinances, representing the city in legal battles, and reviewing city contracts, the firm’s monthly billing report indicates that it also actively works “with private partners on several Economic Incentive Program agreements to bring jobs, infrastructure expansion, and utility utilization to the city” as well as “working with water resources and real estate staff on several large projects concerning the city’s acquisition or disposition of property, drainage retention areas, utility easements, and potable water and sewer systems throughout the city and its extraterritorial service area.”

Approval of the attorneys’ request was passed narrowly with councilmen James Hilty and Barry Mansfield voting against and stating concerns about the conflict-of-interest clause that had been inserted in the most recent firm contract with the city–without conversation or notice.

The conflict-of-interest clause said, in short, that the city attorney had advised the city, and the city is aware that the firm also represents “private persons and entities” that include “developers or contractors” who “have relationships with, or seek approvals from, [the] city.”

Previously, all three attorneys indicated that they did not recollect discussing this conflict-of-interest clause with the city council or city management prior to including it in their Oct. 2020 contract.

Under rules established by the Florida Bar, attorneys must explain to clients if there is “a substantial risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person, or by a personal interest of the lawyer.”

In the case of the Oct. 2020 contract that contained the city attorneys’ conflict-of-interest waiver, no specific clients were identified, only industries–development and contractors. The firm and the city indicate that there are no separate written conflict-of-interest agreements since the Oct. 2020 contract was entered.

In the case of navigating conflicts with developers and contractors, all the councilmen, city management, and city staff indicated they knew that Gooding has a long history of representing developers within the county. The majority reasoned that, when Gooding was dealing with developers for projects within the city, the city’s representation took priority–regardless of what he was doing for the same developer outside the city limits.

The potential for conflicts of interest does not seem to be relegated to only developers and contractors. It also includes other entities who the firm represents as private clients—but that do business with the city—since it must approve every contract the city enters.

In what seems to be an effort by the firm to avoid conflicts, the city attorneys shift approval of certain contracts based on who the point attorney is with private clients. For example, Batsel Jr. represents both the city and the Community Foundation of Ocala Marion County, a nonprofit. A review of the most recent contract between the nonprofit and the city had the contract approved by Gilligan instead of Batsel Jr.

At the meeting, the city attorney, Robert Batsel Jr., explained how the firm navigates conflicts: “We’ve had a long-standing conflict, of course, representing certain clients who do business all over the place and know that we are the city attorney first and foremost, and that we cannot touch or assist them with anything related to the city of Ocala. And that’s always been OK. But, it’s caused more and more problem for our private clients.”

Batsel Jr. next directed their attention to paragraph 5 of the contract entitled conflict of interest.

Batsel Jr. explained, “We just want everybody to be aware and we constantly make sure we are clear with staff and with the council that we avoid conflicts. All of our private clients know that not only can we not help them in the city, but that we are going to be adverse to them, and they are waving that conflict and that we are going to be representing the city.”

“We’ve lost several clients over strenuous representation of the city in their dealings with the city. And that if anything ever comes to staff or before council where a client of ours is on the other side, the staff understands that we represent the city notwithstanding the fact that they may be our client, in other matters,” he added.

Acknowledging recent news reports that the conflict-of-interest clause inserted in the Oct. 2020 contract had gone undiscussed until now, Batsel Jr. said, “I know that’s been a topic of interest lately. I frequently advise clients that if you’re explaining, you’re losing, and so, I don’t want to get into it unless you have any questions. But, I want you to know I have plenty of flaws. I’ve made a lot of mistakes in my life, and I can be criticized for many good reasons, but when it comes to honesty, ethics, or my loyalty to my clients and the city–they can’t be questioned.”

Councilman James Hilty responded first, stating, “Obviously, it’s come to light that this clause was included in the contract back in 2020, but nobody read the clause or was informed of it.”

“It looks like from the clause, that you guys were preparing for this separation way back when you decided it was time to put this conflict-of-interest clause in the contract. It just concerns me a little bit that it was in the contract, and nobody was made aware of it before, which is obviously the duty of the attorney to inform those things,” said Hilty.

“So, a lot of people could be hanging their heads, saying, ‘Well, I should have read the contract.’ But that’s a little disconcerting to me in that I work in the industry and the regulations I have to follow–in the securities industry. You know some of the contracts we have to deal with, knowing your customer, and explaining everything up front and things of that nature,” said Hilty.

Hilty continued, “It doesn’t necessary mean there is anything going on, but just that it wasn’t handled properly. And then, you know, you guys being under one roof–I still don’t understand how that would work. There is no separation being friends and all. And if your staff is working on something for a developer and then they have to turn around and work on something for the city–there could be information shared back and forth.”

Batsel Jr. responded that the clause summarizes what the firm has been doing since 1992 and explained, “In a town like Ocala, if you have a private law firm as the city attorney, you know that law firm is not going to be 100 percent devoted to the city, and this is naturally what occurs when they have to  represent private individuals as well [as those] who occasionally have business with the city.”

Batsel Jr. said that, in his opinion, from the city’s perspective, what they should be concerned with was whether or not they were navigating their conflicts exactly as described in the contract with their private clients while “making sure that our staff and our city council know that that is the case and if specific circumstances arise that you know and you have what we call informed consent.”

However, Batsel Jr. also qualified that “informed consent” would only be necessary if the private client and the city became “directly adverse,” but “most of the situations that we’re describing are not situations where people are directly adverse.”

Batsel Jr. concluded that the conflict of interest “codifies the way we’ve been doing things long before” he was added on as city attorney, and that “from a code of ethics standpoint, it’s always been appropriate.”

Hilty next stated, “What I’ve seen in my industry, when people get terminated by companies, its not usually because they’ve really done wrong by the client, but rather, they’ve been become too complacent, and they do things without checking with the client on transactions or things of that nature. And then, our compliance [department] asks how a transaction happened. I think that’s what I see here is there was a complacency after 30 years.”

Hilty confirmed with city manager, Sandra Wilson, that the last time a task force was assembled to look at hiring in-house attorneys versus an outside private firm was in 2009.

“I think it’s time to revisit that,” said Hilty.

“Marion County has five attorneys on staff, plus support staff, and they don’t have an electric utility, or nearly the amount of activity with water and sewer and the other utilities,” Batsel Jr. offered.

Batsel Jr. explained that, although their split from the firm would be effective Jan. 1, they intended to continue to serve as city attorneys in order to give the city time to find their replacements at the end of the Oct. 2022.

Mansfield, who voted against approving the contract, says he remains concerned, “As a businessman, I’d never allow the arrangement to go on. I wouldn’t allow this arrangement with a contractor, let alone an attorney.”

Batsel Jr. declined to comment on whether the original firm would continue at the end of the 2022 contract but clarified that Gooding and Batsel Jr. would not be continuing as city attorneys at that point.

After the contract was approved, and right before the meeting ended, assistant manager, Pete Lee, asked the council for direction on whether or not growth management should use the firm for a new matter involving a negotiation with R&L Carriers, an entity that Jimmy Gooding represents, who has significant development interests in the area.

Lee said that city staff had taken the lead on negotiations, “but we’re going to need our attorneys to review that contract.”

“Staff doesn’t have a conflict with them reviewing for legality and form,” continued Lee.

Next, Batsel Jr. told the council, “Yes, we talked about this earlier today and I was unaware of it.  So, again, I forgot to bring it up. Unlike the normal course of events, we are bringing it to you on the front end this time just to make sure you’re more-than-aware and that you’re informed, and you are OK with me negotiating that on behalf of the city. The other option would be to hire outside counsel.”

Councilman Jay Musleh asked Batsel Jr. if he was negotiating the deal or just reviewing it for form and legality.

Lee and Batsel Jr. said that staff would negotiate and outline the substantive portions of the agreement. Then, Batsel Jr. said that if there were any “legal terms that they won’t budge on, then that’s more in my court, but either way, I’m representing the city to this point.”

The council verbally acknowledged they understood and would allow the attorney to work through the conflict.

Batsel Jr. closed the session, telling the council, “I would love to spend time here defending myself and going into detail about the things that I disagree with, but most of all you need to be comfortable with me, and everybody here at a staff level–that’s true for them as well. So, if you have any questions, don’t hesitate. I’m an open book and I’m happy to talk about it.”