The Connection

Lawyers at McGuireWoods are on both sides of the controversy over the waterfront, defending Alexandria taxpayers in court while seeking approval from city officials on behalf of three separate developers at the same time. Legal experts say that's not a conflict of interest, but neighborhood residents say it leaves the impression that city officials are in bed with developers. Critics say the city should have considered hiring a firm that does not regularly appear before city leaders seeking zoning approvals.

"There's no question that McGuireWoods is a good firm," said Barbara Beach, former assistant city attorney. " But why would the city hire a firm that comes before the city on behalf of clients asking for their clients to have permission to do things?"

Invoices received as part of a public-records request show that city officials first hired McGuireWoods in the summer of 2011 as part of a fight with the Old Dominion Boat Club over a dispute about Wales Alley. By the next spring, attorneys at the firm began working against Alexandria citizens who were challenging the controversial zoning change. In May 2012, Alexandria City Attorney James Banks signed a conflict waiver from McGuireWoods. Banks, who is a former partner at the firm, declined to be interviewed for this story although he issued a written response to questions. City officials have denied a Freedom of Information Act request for a copy of the conflict waiver.

"Since I left McGuire Woods in 2006, I have not had a financial interest in the firm or any other interest in the affairs of the firm," said Banks in the written statement. "I do not believe there is even the appearance of impropriety in hiring a firm I worked for years ago, in which I have no ongoing financial interest."

THE STAKES ARE HIGH in the battle over the Alexandria waterfront, where three properties slated for redevelopment are at the center of a feud between city officials and Old Town residents. Last year, members of the Alexandria City Council considered a zoning change that would almost triple density at the sites compared to what's there now. Citizens who hoped to derail the process collected signatures as part of a protest petition to force a supermajority vote on the plan, a threshold they could not meet at the time. Banks issued a ruling that Planning Director Faroll Hamer used to reject the petition.

"There are citizens who sometimes, in my view, make their objections personal," said Deputy City Attorney Chris Spera. "They attack members of staff. They attack the elected officials. Sometimes having an outside party that wasn't involved in the process helps preserve some objectivity."

Critics of the waterfront plan say they are concerned about the appearance of impropriety. They say it looks bad for Banks to hire the firm where he was once employed, especially because that firm is now representing a trio of developers who seek to benefit financially from the zoning change that allows for increased density and overturns the longstanding ban on hotels. Some say the city should not have signed the conflict waivers. Others say they are concerned about how city officials will respond to permit applications from a firm on the city's payroll.

"What is in the interest of the citizenry as a whole is not going to be identical with the interest of the developer," said Bert Ely, one of the leading critics of the waterfront plan. "Other than that, you might as well give the developer whatever they want carte blanche. You want to build a 20-story building? Go to it."

LEGAL EXPERTS say a conflict of interest would exist if the developers and the city government had different interests. But because the City Council members adopted the zoning change allowing hotels and increasing the density, the city's corporate interest is in developing the waterfront. That's essentially the same interest as developer Carr Hospitality, which seeks to develop the Cummings property. It's also the interest of developer CityInterests, which seeks to develop Robinson Terminal North, as well as developer EYA, which seeks to develop Robinson Terminal South. All three developers are represented by McGuireWoods.

"There is a congruence of interests right now," said Michael Kraus, law professor at George Mason University. "That is to say the city believes that it is in its interests to do what the developer wants to do."

But opponents of the waterfront plan say many citizens oppose the waterfront plan, and they feel left out of the city's corporate interest. In interviews about the city's use of McGuireWoods, they say they are uncomfortable that their tax dollars are being spent against them in court. And many of the waterfront plan's strongest critics say they believe a conflict of interest exists to the extent that they believe Banks using his former firm to represent the city presents an appearance of impropriety.

"Who does the city work for?" asked Mark Mueller, one of leading critics against the waterfront plan. "How can the developers' goals be congruent with the city if the citizens they are representing and are paying their paychecks are opposed to it?"

CITY RECORDS outlining the use of outside counsel are not always clear. A request for invoices from the last six years initially showed that Alexandria taxpayers spent $10.3 million on outside legal representation over the last five years. Then city officials revised that number to $5.3 million, explaining that a glitch in the system added extraneous categories to the original total. But that figure did not match the set of invoices, so city officials compiled a new set of invoices and presented a third set of numbers showing city taxpayers spent only $4.5 million.

"The staff person assigned to gather the documents had difficulty gathering accurate information from these multiple sources and systems," said Banks in the response to written questions. "We regret the error, but what you requested was not a standard report, and obtaining the information was complicated by changes to the city’s accounts payable systems."

City officials say they rely on outside counsel for a number of reasons. One is expertise, relying on a firm that has a kind of specialized knowledge in railroad law or regulations about toxic waste as was the case when city leaders hired outside lawyers during a dispute with Norfolk Southern. But the dispute over the waterfront plan was about the city's zoning code, a topic where the experts all work in City Hall. Spera said one reason to hire outside counsel was time, opening up the 10 lawyers who work in the city attorney's office to work on other things. Another reason was creating "a third set of eyes" for city leaders in a hotly contested legal dispute that sparked the ire of many citizens.

"When you are involved in a long and contentious process, and then you end up in litigation as a result of that long and contentious process, having an objective set of eyes giving you legal advice is a prudent course," said Spera. "I trust that a large and established and reputable firm like McGuireWoods has a sophisticated and complete conflicts analysis that they went through before they undertook any representation."

THAT CONFLICT WAIVER remains a mystery, one that has been denied to the public because city officials have declined to make it available. Legal experts say it might be a document waiving a potential conflict that could arise in the future. Or it could draw attention to an existing conflict of interest between the law firm and city officials. A spokesman for McGuireWoods declined to comment on the issue. Banks said that these kinds of waivers are routine, although critics say the document should raise a red flag.

"The city is trying to get as much out of the developer as they can, and the developer is trying to give as little as possible," said Ely. "I don't know how you would better define an adverse situation."