Citing a desire to prevent a repeat of the controversial outside counsel arrangement now playing out in Detroit—where emergency financial manager Kevyn Orr is relying on legal advice from, and approving payments to, his former firm, Jones Day—a Michigan lawmaker has introduced legislation aimed at curbing the powers of state-appointed officials like Orr.
The push comes amid revelations that Jones Day, initially retained to provide restructuring advice to the financially crippled city under a six-month, $3.35 million contract, now has a contract that, with Orr’s approval, is capped at $18 million and extends through fall 2014.
Introduced by Michigan state representative Doug Geiss, the bill would prevent emergency managers from hiring a former employer for any open contract, and would specifically prevent any company that employed the emergency manager in question or in which that individual had an ownership interest from representing the municipality in a Chapter 9 bankruptcy proceeding. In addition to Detroit, emergency managers currently run four other cities and three school districts in the state.
Geiss, a Democrat, said Wednesday that he modeled the proposed legislation on existing regulations designed to head off potential conflicts of interest involving other government officials.
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