Little Rock School District legal fees totaled $677,042 for the first eight months of this fiscal year, more than 40 percent of which are the result of a long-running federal school desegregation lawsuit and the negotiations that led to a milestone settlement in the case this year.

The state's largest district spent $283,078.59 for desegregation lawsuit-related fees -- 42 percent of the total legal fees paid -- between July 1 and Feb. 28 of this fiscal year.

District Chief Financial Officer Kelsey Bailey prepared the separate report on the overall legal costs, and the desegregation-related fees in particular, for the School Board as part of preparing the district's budget for the forthcoming 2014-15 school year.

Bailey said the use of attorneys and payment of their fees are to be expected every year, but he brought the costs to the board's attention as a possible area for future savings.

"In large districts, you have a lot of personnel issues and contract reviews," Bailey said. "We want to make sure the lawyers look at the negotiated agreements and everything. But this has been a busy year [legally], and desegregation was probably one of the bigger pieces. We knew it was going to be."

That shouldn't be the case from now on, Bailey said, because of the settlement that was successfully negotiated in the 31-year-old case in November and approved by a federal judge in January.

Anticipation of lower legal fees by district leaders comes at a time when the district is preparing for the eventual end to about $37 million a year in state desegregation aid, which will require an accompanying reduction in expenses.

The district this school year has budgeted revenue of $328 million. The district is collecting data to develop revenue and expenditure projections for the coming 2014-15 school year.

The new settlement in the long-running desegregation lawsuit establishes a June 30, 2018, end date for state desegregation funding to each of the three Pulaski County school districts. It also stops any new enrollment of students in desegregation-related, interdistrict student-transfer programs. And, further, it brings to an end the Little Rock district's years-long legal battle against the state-approved establishment of charter schools in Pulaski County.

The settlement came in the midst of preparations by Little Rock School District attorneys for a two-week federal court hearing last December, which would have almost certainly been followed by an appeal to the 8th U.S. Circuit Court of Appeals at St. Louis. The December hearing was to have been on the state's motion to be immediately relieved from its desegregation funding obligations.

The Little Rock district keeps the Friday, Eldredge & Clark law firm on retainer. Chris Heller and Khayyam Eddings are the two attorneys from that firm who work routinely with the district administrators and the School Board, although others are brought in as needed.

Employee and vendor contracts, employee grievance and termination hearings, land purchases and sales, district policies, lawsuits and state Freedom of Information Act requests are some of the issues regularly referred to the attorneys.

Heller and Eddings charge a discounted fee of $200 an hour for their work, Bailey said. Additionally, Clay Fendley, a former attorney with the firm who now has his own law practice, regularly assists Heller on desegregation matters on behalf of the district.

In return for its investment in legal fees this school year, the Little Rock district first and foremost achieved "a fair and reasonable settlement that will allow a smooth transition to the post-desegregation era," Heller said Tuesday.

"There are significant financial benefits, as well," he said, "including state payments of about $150 million over four years, state forgiveness of a desegregation loan on which the Little Rock School District owed several million dollars and state reimbursement of $250,000 to the district in attorneys' fees."

Heller agreed with Bailey that the legal-fee amounts for the desegregation case will be significantly decreased, as there are only small issues to "clean up." The amount to be billed to the district for April will likely be less than $3,000, he said.

The fees from earlier this fiscal year reflect the amount of the work that was done, he said.

"We were preparing to defend at trial an important interdistrict remedy, which benefited thousands of students and which was supported by about $40 million each year in state funding," he said. "The state hired experts in Los Angeles and Washington, D.C. We went to those places to depose them. State lawyers deposed our experts here and in Washington, D.C. Both sides also deposed many lay witnesses, most of whom were employed by the Little Rock district or by the Arkansas Department of Education.

"We then layered settlement negotiations on top of our trial preparations," he said. "The settlement agreement was preliminarily approved less than three weeks before a two-week trial was set to begin.

"This was simply a time of intense trial preparation and settlement negotiations," Heller said.

Legal fees paid by the district for desegregation costs and other expenses swing widely from year to year.

In 2012-13, a relatively low $69,349.33 was expended for legal fees in the desegregation case, according to Bailey's report. Total invoices for fiscal 2013 amounted to $746,178.

In 2011-12, the amount expended for desegregation case work was $213,853.66 of the total legal fees expended -- $932,534.75.

In 2010-11, $89,951 was spent on desegregation case-related legal fees. That cost was $182,936.93 in 2009-10.

Little Rock School Board member Tara Shephard has asked whether the quantity of legal work done in the district warrants putting an attorney on staff, similar to the practice in other government agencies such as the city of Little Rock.

Shephard said this week that she raised the idea as part of brainstorming on ways to cut expenses. She does intend to explore the staff attorney option. She said the district can't expect to avoid the need for an attorney.

"Being in the business that we are in, someone is always going to be trying to sue the Little Rock School District," she said. "If hiring our own attorney saves money for the district, then that is something we need to consider."

Dexter Suggs, the Little Rock district superintendent, said some school districts do include an attorney on staff. But even if the Little Rock district had its own attorney, it would continue to require services from a law firm when expertise in a particular area of the law is needed, Suggs said.

A section on 05/08/2014