OCEAN PINES – Officials in Ocean Pines last week selected a new law firm to represent the homeowners association.
After a lengthy debate, the Ocean Pines Association Board of Directors voted last Saturday to approve and award a contract for legal services to the Ocean City-based law firm of Ayres, Jenkins, Gordy & Almand.
While Association President Doug Parks praised the community’s current general counsel – Lerch, Early & Brewer – he said it was a good business practice to explore other opportunities.
“This motion says to contract for legal services,” he explained. “This does not mean we have a contract yet. What it means is we are open and going to pursue Ayres, Jenkins, Gordy and Almand to enter into a contract.”
Parks told the board last week the association had sent a request for proposals to five law firms. Of those solicitations, two firms – Ayres, Jenkins, Gordy & Almand and Lerch, Early & Brewer – responded.
Director Colette Horn, however, said she had read the two proposals and had concerns about selecting the Ocean City-based firm. She said Lerch, Early & Brewer had experience in HOA law and representing Ocean Pines.
“Our current general counsel has years of experience with Ocean Pines Association and is well versed in its history of general legal issues, prior litigation, prior and current HR issues, collection issues and the evolution of our governing documents and practices,” she said.
While she noted legal fees were higher at Lerch, Early & Brewer, she said the association had access to top Maryland litigators and various legal specialties.
“The fees of our current firm, as proposed, are somewhat higher than the other option,” she said. “But my opinion is we would save money by staying with the current firm because of all that they bring.”
Horn also questioned if hiring Ayres, Jenkins, Gordy & Almand would represent a conflict of interest, as the firm had represented two sitting board members in other legal matters. She also pointed out the firm represented the Town of Ocean City.
“I’m also concerned about potential conflicts on the issues in which their other local clients’ interests, such as Ocean City, may conflict with ours,” she said. “And I would like to hear, before we sign the contract, their plan on how they would handle such conflicts when and if they arise.”
Director Frank Daly he supported whatever firm was preferred by the general manager, as most litigation is handled between them and the attorney. He noted, however, that he preferred the association be represented by top litigators.
“On my four years on the board, we have averaged one major court case a year. And in those court cases, when I look at the comments coming back and forth from our homeowners, there is what I would call a basic misunderstanding of our process,” he said. “When somebody takes legal action against the Ocean Pines Association, the general manager informs our insurance carrier. Our insurance carrier appoints counsel, and the counsel defends us. That is not our association general counsel that does that.”
Daly argued the association should work with its insurance carrier to ensure it receives top litigators.
“I think our insurance rate is $250 an hour, and the top litigators get somewhere around $1,000 an hour …,” he said. “First thing we’d have to do is change our range with insurance carrier, to say they’ll pay us $250 an hour and we cough up the difference, or they pay to defend us with that top litigator rate … That’s something we should do. We pay almost three-quarters of a million dollars for insurance, and we shouldn’t have dog food defending us.”
Daly said he also wanted the contract for legal services to identify who would defend the association in litigation and the rates they would charge.
“If we go with Ayres, I want Bruce Bright defending us,” he said. “If we go with Lerch Early, I want Stan Reed. Those are the two options in my mind.”
For his part, Director Steve Jacobs said both firms presented strong proposals, but that Lerch, Early & Brewer was well versed in HOA law.
“To me, while I think it’s a close call, there’s a little bit of a tilt,” he said.
Parks, who presented the motion, said he was in favor of hiring Ayres, Jenkins, Gordy & Almand. He noted, however, that he supported Daly’s suggestions.
“I don’t believe we need to change the motion,” he said. “We can make that a condition when we look at the terms and conditions of the contract we enter into.”
After further discussion, Jacobs made a motion to postpone the consideration of a new law firm until the board members could meet publicly with Ayres, Jenkins, Gordy & Almand and share their concerns regarding conflicts of interest.
“I’m not saying this is irresolvable,” he said. “But I think we ought to know what the plan is by the Ayres law firm before we agree to enter into a contract.”
However, Jacobs’ motion failed in a 4-2 vote, with Parks and Directors Monica Rakowski, Rick Farr and Stuart Lakernick opposed and Horn and Jacobs in favor. Daly abstained from voting.
With Parks’ original motion back on the table for consideration, Horn questioned if General Manager John Viola supported the selection of a new law firm.
“From my office, I believe I can work with either one …,” Viola replied. “They are both really well qualified.”
After further discussion, the board voted 4-1-2, with Parks, Rakowski, Farr and Lakernick in favor, Horn opposed, and Daly and Jacobs abstaining, to approve and award a contract for legal services to the law firm of Ayres, Jenkins, Gordy & Almand.
