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HomeMy WebLinkAboutItem 12a - Legal Services for Investigation of Contaminant Cource and Cost Recovery DATE: July 3, 2018 TO: Honorable Mayor and City Council FROM: Tom Tait, Public Works Services Director By: Mandy Jiang, Management Aide SUBJECT: LEGAL SERVICES AGREEMENT WITH SL ENVIRONMENTAL LAW GROUP FOR INVESTIGATION OF CONTAMINANT SOURCE AND COST RECOVERY Recommendation: Approve SUMMARY During a closed session meeting on June 5, 2018, the City Council was briefed by the Public Works Services Department (“PWSD”) about the possibility of entering into a legal services agreement with SL Environmental Law Group. The purpose of the legal services agreement is to: 1) investigate and assess potential claims arising from the presence of emergent contaminants affecting the St. Joseph Well, currently not in service; and 2) provide the terms and conditions for the representation of the City in any civil action that may be filed in the Superior Court of California and/or United States District Court. It is recommended that City Council approve, and authorize and direct the City Manager to execute a Legal Services Agreement with SL Environmental Law Group on a contingent fee basis equal to 32% of the net recovery proceeds resulting from a settlement or final judgment. Under the contingent agreement, if no funds are recovered, there will be no cost to the City. BACKGROUND On July 18, 2017, the State Water Resources Control Board adopted a new Maximum Contaminant Level (“MCL”) of 5 parts per trillion for the contaminant 1,2,3 Trichloropropane (“1,2,3-TCP”). The regulation was approved by the Office of Administrative Law on December 14, 2017, and requires public water systems to monitor their water supply for compliance with the new MCL starting January 1, 2018. Legal Services Agreement with SL Environmental Law Group July 3, 2018 Page 2 of 3 According to the State Water Resources Control Board, 1,2,3-TCP is a manmade chemical used as a cleaning and degreasing solvent, and is also associated with pesticide fumigants. In groundwater, 1,2,3-TCP is a legacy contaminant that leaches through the soil and into the underlying groundwater basin, which may contaminate the local groundwater supply or supply wells. St. Joseph Well was constructed in 2001 and produces approximately 3,000 gallons of water per minute. Of the City’s 11 active wells, the PWSD has detected the presence of emergent contaminant 1,2,3-TCP only in the St. Joseph Well. Consequently, the well was taken out of service on January 1, 2018. The rest of the City’s water supply wells meet the strictly regulated state and federal drinking water standards. It is anticipated that engineering, construction, operation, and system maintenance to remove 1,2,3-TCP contamination can result in significant costs to the City; the PWSD estimates that design and construction of treatment facilities at St. Joseph Well will cost $4-5 million. Ongoing maintenance efforts are estimated to cost approximately $200,000 annually. DISCUSSION By entering into a legal services agreement with SL Environmental Law Group, the firm will assist the City in investigating the presence of contaminants throughout its system and potential sources of contamination, evaluate the potential to recover costs associated with the contamination, provide advice, and represent the City in any legal action against parties potentially responsible for the contamination. SL Environmental Law Group has successfully represented a number of public and private water utilities in California resulting in settlements, including the Cities of Oceanside, Pomona, Roseville, Santa Monica, Riverside, and Sacramento. Locally in the San Gabriel Valley, SL Environmental Law Group is in communication with Sunny Slope Water Company, Golden State Water Company, San Gabriel County Water District, and the Cities of South Pasadena and Sierra Madre to shift costs for 1,2,3-TCP treatment from rate payers to the responsible parties. Under the legal services agreement, payment for attorney fees consists of a contingency fee equal to 32% of the net recovery proceeds . In other words, payment for legal services is contingent on SL Environmental’s success in either reaching a settlement or favorable court judgment. The City does not pay any upfront fees for legal services. If SL Environmental is unsuccessful in recovering any funds, there will be no charge for the services, meaning there is no risk to the City. Therefore, it is recommended that City Council authorize the City Manager to enter into a Legal Services Agreement with SL Environmental Law Group. Legal Services Agreement with SL Environmental Law Group July 3, 2018 Page 3 of 3 While there are other law firms that are qualified to perform this work, SL is the only one currently operating in the San Gabriel Valley with familiarity with 1,2,3-TCP and they are currently working with several nearby agencies. By joining with other communities, it will provide efficiencies and increase the likelihood of success overall. In addition, the City was able to negotiate a reduced contingency fee percentage based on the potential economies of scale that will be created. ENVIRONMENTAL IMPACT The proposed action does not constitute a project under the California Environmental Quality Act (“CEQA”), and it can be seen with certainty th at it will have no impact on the environment. Thus, this matter is exempt under CEQA. FISCAL IMPACT Under the terms of this legal services agreement, payment for legal services consists of a contingent fee equal to 32% of the net recovery proceeds resulting from a settlement or final judgment. Under the contingent agreement, if no funds are recovered, there will be no cost to the City. During the investigation phase, the City will incur the costs of laboratory testing of samples and similar costs that a re normally associated with operating the water utility. These can be accommodated within existing budgets. RECOMMENDATION It is recommended that the City Council approve, and authorize and direct the City Manager to execute a Legal Services Agreement with SL Environmental Law Group for Investigation of Contaminant Source and Cost Recovery. Attachment: Proposed Legal Services Agreement CITY OF ARCADIA LEGAL SERVICES AGREEMENT I. INTRODUCTION A. RECITALS. 1. The City of Arcadia (“the City”) is a California municipality which owns and operates approximately 19 wells. The City is committed to delivering clean drinking water to its residents. The City is also committed to identifying responsible parties and taking reasonable steps to avoid passing on the costs to its residents for the treatment and remediation of contamination. 2. SL Environmental Law Group (“SL Environmental”) is a San Francisco- based law firm representing states, municipalities, and water systems in groundwater contamination cost-recovery litigation. 3. The purpose of this Legal Services Agreement (“LSA” or “Agreement”) is (i) to enter into an attorney-client relationship between the City and SL Environmental (collectively, the “Parties”) for the purpose of investigating and assessing potential claims arising out of the presence of contaminants in water supply wells affecting the City’s water systems; and (ii) to provide for the terms and conditions for the representation of the City in any civil action that may be filed in the Superior Court of California and/or United States District Court (“Legal Action”). 4. This Agreement is required by California Business and Professions Code section 6147 and is intended to fulfill the requirements of that section. II. INVESTIGATION AND ASSESSMENT OF POTENTIAL CLAIMS A. PRE-LITIGATION SCOPE OF SERVICES. 1. Contaminants. The City has detected the presence of emergent contaminants of concern during testing of its water systems, including but not limited to, 1,2,3- trichloropropane (“TCP”), trichloroethylene (“TCE”), perchlorate, hexavalent chromium, and other contaminants in its drinking water supply wells (collectively, the “Contaminants”). Although only a small percentage of the City’s wells are affected by the Contaminants, the engineering, construction, operation and maintenance of systems to treat contamination in affected wells can result in significant financial costs to the City. 2. Investigation. The City has retained SL Environmental to assist the City in investigating the presence of the Contaminants throughout its system and potential sources of the contamination, evaluate the potential to recover the costs associated with the contamination, provide advice, and represent the City in any Legal Action against parties potentially responsible for the contamination. B. PRE-LITIGATION COSTS AND FEES. 1. The City. All costs associated with the City’s pre-litigation investigation of the Contaminants, including those associated with water sampling, laboratory testing and engineering expenses, shall be paid directly by the City. For the avoidance of doubt, nothing contained herein shall obligate the City to incur any costs to investigate the Contaminants. 2. SL Environmental. All costs and fees incurred by SL Environmental during any pre-litigation investigation shall not be charged to the City nor recoverable by SL Environmental against the City under this Agreement. 3. Other. Nothing contained herein should be interpreted to preclude seeking recovery of such fees and costs incurred by either Party as part of any Legal Action that may be filed pursuant to this Agreement. In addition, if SL Environmental files any Legal Action, SL Environmental may use the time incurred for any investigation contemplated herein to support the reasonableness of this Agreement. C. RETENTION OF FIRM RATHER THAN PARTICULAR ATTORNEYS. The City is retaining SL Environmental, not any particular attorney, and attorney services to be provided to the City shall not necessarily be performed by any particular attorney. D. DESIGNATION. The City designates Tom Tait as its authorized representative to direct SL Environmental and to be the primary individual to communicate with SL Environmental regarding the subject matter of its representation of the City under this Agreement. This designation is intended to establish a clear line of authority and to minimize potential uncertainty, but not to preclude communication between SL Environmental and other representatives of the City. The City may designate additional authorized representatives at its discretion. III. LITIGATION SERVICES A. LITIGATION SERVICES TO BE PROVIDED. 1. Inclusions. It is the intent of the Parties that SL Environmental shall represent the City in a civil action for damages in the Superior Court of California and/or the United States District Court. The legal services to be provided by SL Environmental consist of representation of the City with respect to: a. The contamination of groundwater supplies and/or soil by the Contaminants or other contaminants identified during the investigation stage described in Section II of this Agreement, as approved by the City and SL Environmental. b. Claims and/or actions for damages sustained by the City as a result of actual or threatened conduct relating to contamination of groundwater, the loss of use of groundwater, and any past, present, and future costs incurred to remove the Contaminants from drinking water, groundwater and/or soil. 2. Retention; Filing of Legal Action. The filing of any Legal Action pursuant to this Agreement shall be at the discretion of the Parties. Nothing in this Agreement shall be construed as obligating the City to retain SL Environmental in connection with any Legal Action or obligating SL Environmental to file a Legal Action on behalf of the City. B. LEGAL SERVICES SPECIFICALLY EXCLUDED. 1. Exclusions. Legal services that are not to be provided by SL Environmental under this Agreement specifically include, but are not limited to, the following: a. Proceedings before any administrative or governmental agency, department or board, including the California Public Utilities Commission, California Department of Water Resources, California Department of Toxic Substances Control, any Regional Water Quality Control Board and/or the California State Water Resources Control Board. However, at the City’s election, SL Environmental shall appear at such administrative proceedings to protect the City’s rights to pursue any Legal Action filed pursuant to this Agreement, without the City being assessed any additional attorneys’ fees in connection with such appearance. b. Defending any legal action(s) against the City commenced by any person, with the exception of any cross-complaints, counterclaims, or other third party claims filed in a Legal Action pursuant to this Agreement. c. Defending any claim against the City for unreasonable use of water and/or waste of water. d. Defending any action concerning water rights. 2. Additional Legal Services. If the City wishes to retain SL Environmental to provide any legal services for additional compensation not provided under this Agreement, a separate written agreement between SL Environmental and the City shall be required. C. RESPONSIBILITIES OF ATTORNEY AND THE CITY. 1. SL Environmental’s Responsibilities. SL Environmental shall perform the legal services called for under this Agreement, keep the City informed of progress and developments, and respond promptly to the City’s inquiries and communications. SL Environmental shall provide status reports to the City on a mutually agreeable schedule, as events reasonably warrant further reporting, and at the further request of the City. 2. The City’s Responsibilities. The City shall cooperate with SL Environmental and keep SL Environmental reasonably informed of developments in connection with any Legal Action. 3. Selection of Experts. SL Environmental and the City shall meet and confer regarding selection and retention of experts in the Legal Action. The City shall not unreasonably withhold approval of selection and retention of such experts. 4. Settlement. SL Environmental shall not settle any Legal Action without the approval of the City. The City shall have the absolute right to accept or reject any settlement. SL Environmental shall notify the City promptly of the terms of any settlement offer received by SL Environmental. D. ATTORNEYS’ FEES. 1. Contingent Fee. The amount SL Environmental shall receive for its fees for the legal services to be provided under this Agreement shall consist of a contingent fee (“Contingent Fee”) equal to thirty-two percent (32%) of the Net Recovery. 2. Definitions Relevant to Attorneys’ Fees. a. “Net Recovery” means the total value received by the City of all Cash Recoveries plus Non-Cash Recoveries, whether awarded by Settlement or Final Judgment, minus (i) all amounts owed by the City to any litigants in a Legal Action filed by SL Environment on behalf of the City and (ii) all court-awarded attorneys’ fees or costs received by the City from said litigants. The amount of any Net Recovery shall not include any reductions for Costs. b. “Costs” include, but are not limited to, court filing fees, deposition costs, expert fees and expenses, investigation costs, reasonable travel and hotel expenses, messenger service fees, photocopying expenses, and process server fees. Items that are not to be considered Costs, and that must be paid by the City without being either advanced or contributed to by SL Environmental, include the City’s expenses incurred in providing information to SL Environmental or defendants. c. “Final Judgment” means any final, non-appealable court order or judgment terminating any Legal Action filed pursuant to this Agreement and finally determining the rights of any parties to the Legal Action where no issue is left for future consideration or appeal. d. “Settlement” refers to any voluntary agreement executed by the City and any third party to this Agreement, whether resulting from a settlement conference, mediation, or court stipulation, terminating any Legal Action filed pursuant to this Agreement and finally determining the rights of parties to the Legal Action where no issue is left for future consideration or appeal. e. “Cash Recovery” means, without limitation, the total monetary amount received by the City in a Settlement or Final Judgment arising from an actual or threatened Legal Action by SL Environmental pursuant to this Agreement, including interest of any kind received by the City. f. “Non-Cash Recovery” means, without limitation, the fair market value of any property delivered to the City, any services rendered for the City’s benefit, and any other non-cash benefit, including but not limited to the construction, operation, and maintenance of one or more water treatment facilities; delivery of replacement water; modification, alteration, construction or operation of well(s) and/or any part of a public or private water system; or any other types of injunctive and/or equitable relief conferred on the City, in a Settlement or Final Judgment of an actual or threatened Legal Action by SL Environmental pursuant to this Agreement. g. “Present Value” means the interest rate of the one-year treasury bill as reported by the United States Federal Reserve in the weekly Federal Reserve Statistical Release closest in time to the date of the recovery for which the present value is being calculated. h. “Reasonable Fees” or “Reasonable Attorneys’ Fees” means such fees as is reasonably determined by taking into account the amount of time spent on the Legal Action by SL Environmental and associate counsel retained by SL Environmental, the value of that time, the complexity of the Legal Action, the benefit conferred on the City, and the financial risk to SL Environmental and associate counsel by their agreeing to represent the City in the Legal Action and to invest time and advance Costs without compensation or reimbursement in the event that there is no Net Recovery or a Net Recovery that does not fully compensate or reimburse SL Environmental and associate counsel for their time and advanced Costs. 3. Calculation of Non-Cash Recovery. a. For any Non-Cash Recovery resulting in the receipt of property, the provision of services, or the receipt of other non-monetary benefits by the City, such property, services, or other non-monetary benefits shall be deemed for purposes of this Agreement to have been received by the City upon the execution of a Settlement or Final Judgment. The value of the services shall be discounted to Present Value. b. If any Non-Cash Recovery is awarded in a Final Judgment, or before accepting any settlement offer that involves a Non-Cash Recovery, the City shall provide SL Environmental with its estimate of the value of the Non-Cash Recovery. SL Environmental shall promptly respond in writing, indicating whether SL Environmental accepts said estimate. If SL Environmental objects to the City’s estimate, the Parties shall proceed as set forth in Section III.G (“Disagreements Concerning Value of Recoveries”). Nothing herein shall impede or restrict the City’s right to include a Non-Cash Recovery in any Settlement, nor SL Environmental’s right to receive a Non-Cash Recovery. E. DISTRIBUTION OF PROCEEDS. 1. Pay-if-Paid; Option for Advance Payment. Receipt of any Net Recovery by the City is a condition precedent to payment of any portion of the Contingent Fee by the City to SL Environmental. Undisputed payment(s) of the Contingent Fee owed to SL Environmental in accordance with Agreement shall be made no later than seven (7) days after receipt by the City of any Net Recovery. Notwithstanding the foregoing, the City, in its sole and absolute discretion, may choose to pay any Cash Recovery portion of the Contingent Fee prior to receipt of any Net Recovery by the City (“Advance Payment”). Upon the City’s election to make an Advance Payment, the City shall estimate the amount and timing of outstanding Cash Recoveries, treat all such outstanding payments as constructively received by the City upon the execution of a Settlement or Final Judgment requiring such payments, discount all such payments to their Present Value as of the time of said Settlement or Final Judgment, and pay SL Environmental the Contingent Fee due on the Present Value of such portion of the Cash Recovery at that time. Nothing herein shall be construed to modify how any amount shall be distributed or the Parties’ remedies in this Agreement upon a dispute over any estimate or amount due under this Agreement. 2. Distribution; Revolving Fund. The receipt of any Net Recovery by the City shall be distributed as follows: (i) all unpaid Costs shall be paid, including all Costs advanced by SL Environmental, which shall be reimbursed, (ii) the Contingent Fee shall be paid until SL Environmental is paid in full, and (iii) any remaining amounts shall be paid to the City. Notwithstanding the foregoing, if the City receives a Cash Recovery in a Settlement that is entered while a Legal Action remains pending, and the Cash Recovery is in excess of any unpaid Costs, the unreimbursed Costs advanced by SL Environmental, and the Contingent Fee, a revolving fund of $500,000 (“Revolving Fund”) shall be maintained from the City’s share of said Cash Recovery to apply to subsequent Costs incurred as part of the then-ongoing Legal Action. Replenishment of the Revolving Fund shall occur within thirty (30) days of the fund becoming drawn down to $250,000; however, in no event shall the City be required to replenish the Revolving Fund with monies in excess of the City’s share of the Cash Recovery obtained to date. 3. Use of Monies Held in Trust. SL Environmental is authorized to apply any funds received on behalf of the City in connection with a Settlement or Final Judgment and held in SL Environmental’s trust account to the payment of any Costs owed to third parties to this Agreement; provided that for any payments in excess of $1,000, SL Environmental shall furnish copies of third party invoices for the City’s review at least two (2) days prior to making said payments. 4. Transfer, Assignment, Sale of Right to Payments. After the Settlement or Final Judgment of the last remaining Legal Action brought under this Agreement, SL Environmental is free to transfer, assign, sell, or hypothecate to a third party the right to receive any or all such payments owed to SL Environmental under this Agreement. F. REASONABLE FEE IF CONTINGENT FEE UNENFORCEABLE. 1. Reasonable Fee. In the event of a Final Judgment finding that the Contingent Fee portion of this Agreement is unenforceable for any reason or that SL Environmental cannot represent the City on a Contingent Fee basis, the City shall pay a reasonable fee for the services rendered. 2. Fee Determination. The Parties shall use best efforts to negotiate a reasonable fee. If the Parties fail to do so, said fee shall be determined by arbitration proceedings before a mutually agreeable arbitration service but, absent such agreement, before the Judicial Arbitration and Mediation Services (JAMS), with any costs of such proceedings born equally by the City and SL Environmental. G. DISAGREEMENTS CONCERNING VALUE OF RECOVERIES. 1. Procedure. In the event the Parties disagree with respect to the value of any Contingent Fee, Net Recovery, Cash or Non-Cash Recovery, Costs (collectively, “Disputed Recoveries”) or settlement offer, and the Parties cannot resolve the disagreement through good faith negotiations, the Parties shall proceed as follows: a. Each party shall select an appraiser qualified to conduct an appraisal of the value of the Disputed Recoveries or settlement offer within five (5) days of any written notice to the other party advising of a bona fide dispute that cannot be resolved by negotiations. b. Each party’s selected appraiser shall then confer and select a third qualified appraiser within five (5) days of said conference, and the third appraiser shall determine the value of the Disputed Recoveries or settlement offer. c. The third appraiser shall conduct an appraisal, and the valuation of any Disputed Recoveries or settlement offer shall be final and binding, subject to appeal by arbitration in the case of Disputed Recoveries as provided in Section VI.K (“Arbitration of Disputes”). 2. Expenses. The City and SL Environmental shall each bear the expense of its own selected appraiser, and the City and SL Environmental shall share equally the expenses of the third appraiser. H. COURT-AWARDED AND/OR SETTLEMENT-AWARDED ATTORNEYS’ FEES. 1. Duty to Seek Attorneys’ Fees and Costs in Legal Action. The City may obtain an award of Attorneys’ Fees and/or Costs in a Final Judgment or Settlement. SL Environmental agrees to seek any such award(s) in any Legal Action it files on behalf of the City, provided there is a colorable legal basis for doing so. 2. Credit for Court-Awarded Fees and Costs. Any Attorneys’ Fees or Costs awarded in connection with a Legal Action shall not be considered part of the Net Recovery for purposes of calculating SL Environmental’s Contingent Fee, but said fees and costs shall be applied as a credit against the City’s obligation to pay SL Environmental’s Contingent Fee under this Agreement. 3. Court-Awarded Fees and Costs in Excess of Contingent Fee. Notwithstanding any other provision of this Agreement, if court-awarded Attorneys’ Fees and Costs exceed the Contingent Fee to which SL Environmental would otherwise be entitled under this Agreement, the amounts due to SL Environmental under this Agreement shall be such court- awarded fees and costs, and the City shall receive all other amounts awarded in a Legal Action. I. NEGOTIATED FEE. The City is informed that the Attorneys’ Fees provided for herein are not set by law but rather are negotiable between SL Environmental and the City. J. DIVISION OF FEES. 1. Division of Fees; Disclosure. SL Environmental may divide the fees and/or costs to which it is entitled under this Agreement with another attorney or law firm retained as associate counsel. The terms of such additional division, if any, shall be disclosed to the City. the City is informed that, under the Rules of Professional Conduct of the State Bar of California, such a division may be made only with the City’s written consent after a full disclosure to the City in writing that a division of fees shall be made and of the terms of such division. 2. Retention of Associate Counsel. SL Environmental may retain associate counsel to assist with litigating a Legal Action pursuant to this Agreement. The attorney or law firm selected by SL Environmental shall be subject to the City’s approval. K. COSTS. 1. Costs Advanced by SL Environmental; Interest. SL Environmental shall advance all Costs incurred in connection with SL Environmental’s representation of the City under this Agreement. Costs shall be advanced by SL Environmental and then paid by the City from any Net Recovery. Interest at the rate of six percent (6%) per year shall accrue on all Costs advanced by SL Environmental, from the date of each advance to the date of reimbursement. SL Environmental shall notify the City of the total amount of Costs advanced every quarter. 2. Reimbursement; Risk of Loss. SL Environmental shall be reimbursed for any Costs before any distribution to the City. If there is no Net Recovery or the Net Recovery is insufficient to reimburse SL Environmental in full for Costs advanced, SL Environmental shall bear the loss for any Costs not reimbursed under this Agreement. 3. Defense of Attorneys’ Fees and Costs to Third Party. Notwithstanding any provision of this Agreement to the contrary, SL Environmental shall defend the City in any motion seeking an award of Attorneys’ Fees or Costs against the City in any Legal Action brought under this Agreement. Any costs incurred in such defense shall be treated as Costs for purposes of, and in the manner provided by, this Agreement. IV. REPRESENTATION OF ADVERSE INTERESTS A. DISCLOSURE. 1. Duty to Disclose; No Conflicts Identified. If SL Environmental has a relationship with another party with interests adverse to the City, or with someone who would be substantially affected by any action taken under this Agreement, the Rules of Professional Conduct require SL Environmental to disclose that to the City so the City can evaluate whether that relationship causes the City to have any concerns regarding SL Environmental’s loyalty, objectivity, or ability to protect the City’s confidential information. SL Environmental is not aware of having any relationship with anyone who would be substantially affected by any action taken under this Agreement. 2. Representation of Other Clients; Waiver of Potential Conflicts. The City understands that currently, and from time to time, SL Environmental represents other municipalities, governmental agencies, governmental subdivisions, or investor-owned public water utilities in other actions or similar litigation, and that such work is the focus of SL Environmental’s practice. Further, the City understands that SL Environmental represents other clients in actions similar to what would be brought under this Agreement and against the same potential defendants. The City understands that a recovery obtained on behalf of another client in a similar suit against the same defendants could, in theory, reduce the total pool of funds available from these same defendants to pay damages in a Legal Action brought under this Agreement. The City understands that SL Environmental would not take on this engagement if the City required SL Environmental to forgo representations like those described above. The City has conferred with its own separate and independent counsel about this matter, and has determined that it is in its own best interests to waive any and all potential or actual conflicts of interest that may occur as the result of SL Environmental’s current and continuing representation of cities and other water suppliers in similar litigations, because such waiver enables the City to obtain the benefits of SL Environmental’s experience and expertise. Therefore, the City consents that SL Environmental may continue to handle such work, and may take on similar new clients and matters, without disclosing each such new matter to the City or seeking the consent of the City while representing it. SL Environmental shall not, of course, take on such other work if it requires SL Environmental to be directly adverse to the City while SL Environmental is still representing the City under this Agreement. V. TERMINATION A. DISCHARGE OF ATTORNEY. 1. Right to Discharge. The City may discharge SL Environmental at any time, with or without cause, by written notice effective when received by SL Environmental. The City shall have the right to terminate this Agreement with cause upon SL Environmental’s breach of this Agreement or its failure to strictly adhere to the California Rules of Professional Conduct. Unless specifically agreed by SL Environmental and the City, SL Environmental shall provide no further services and advance no further Costs on the City’s behalf after receipt of the notice. If SL Environmental is the City’s attorney of record in any proceeding, the City shall execute and return a substitution-of-attorney form immediately upon receipt from SL Environmental. 2. Reimbursement of Costs; Fees. In the event SL Environmental is discharged without cause before the conclusion of a Legal Action, the City shall (i) reimburse SL Environmental for any and all Costs advanced by SL Environmental for such Legal Action not later than thirty (30) days from receipt of a reasonably detailed final cost accounting from SL Environmental, and (ii) upon the conclusion of the Legal Action, pay SL Environmental Reasonable Attorneys’ Fees for services performed up to the point of the discharge. Nothing herein shall be construed to limit the City’s rights and remedies in the event of a discharge of SL Environmental for cause. B. WITHDRAWAL OF ATTORNEY. 1. Right to Withdraw. SL Environmental may withdraw from representation of the City (i) with the City’s consent, (ii) upon court approval, or (iii) if no Legal Action is filed, for good cause upon reasonable notice to the City. Good cause includes the City’s breach of this Agreement, the City’s unreasonable refusal to cooperate with SL Environmental or to follow SL Environmental’s advice on a material matter, or any other fact or circumstance that would render SL Environmental’s continuing representation unlawful or unethical. Notwithstanding SL Environmental’s withdrawal for good cause, the City shall remain obligated to pay SL Environmental and any associate counsel, out of the Net Recovery, a Reasonable Fee for all services provided and to reimburse SL Environmental for all reasonable Costs advanced before the withdrawal. 2. Withdrawal Without Cause. SL Environmental may terminate this Agreement at any time, without cause, by giving the City not less than sixty (60) days prior written notice of termination, said notice to specify the effective date of the termination. Where SL Environmental terminates this Agreement without cause, SL Environmental shall not be entitled to the recovery of any amount, regardless of the status of any pending Legal Action, and regardless of whether any amounts have been or are subsequently received by the City. VI. MISCELLANEOUS A. LIEN. The City hereby grants SL Environmental a lien on any and all claims or causes of action that are the subject of SL Environmental’s Contingent Fee and/or Costs advanced under this Agreement. SL Environmental’s lien shall be for sums owed to SL Environmental for any unpaid Contingent Fee or Costs at the conclusion of SL Environmental’s services. The lien shall attach to any Net Recovery the City may obtain. B. RELEASE OF THE CITY’S PAPERS AND PROPERTY. Upon the conclusion of services under this Agreement, SL Environmental shall release promptly to the City on request all of the City’s papers and property. The term “the City’s papers and property” includes correspondence, deposition transcripts, exhibits, experts’ reports, legal documents, physical evidence, and other items reasonably necessary to the City’s representation, regardless of whether the City has paid for said documents or property. C. INDEPENDENT CONTRACTOR. The relationship to the City of SL Environmental, and any associate counsel or paralegal provided through SL Environmental, in the performance of services hereunder, is that of independent contractor and not that of employee of the City, and no other wording of this Agreement shall stand in derogation. The fees and expenses paid to SL Environmental hereunder shall be deemed revenues or expense reimbursements of SL Environmental’s law office practice and not remuneration for individual employment apart from the business of SL Environmental’s law office. D. NOTICES. All written notices and communications to the City relating to this Agreement shall be mailed to or personally delivered to the City, addressed to: The City of Arcadia, c/o Eric Vail, City Attorney, 445 E. Florida Avenue, Arcadia, CA 92543. Written notices and communications to SL Environmental relating hereto shall be mailed to or personally delivered to SL Environmental at its office, addressed to: Alexander Leff, SL Environmental Law Group PC, 201 Filbert Street, Suite 401, San Francisco, CA 94133, unless and until SL Environmental shall have given written notice to the City of a change in such office address. E. CONFIDENTIALITY. This Agreement establishes the relation of attorney- client between the parties hereto. SL Environmental shall hold all money and property of the City in trust for the City’s benefit, with all funds deposited and managed in SL Environmental’s client trust account as required by law. SL Environmental shall not divulge the City’s confidences and shall be entitled to the candid cooperation of all the City’s employees in all matters related to the assigned files and any related actions. Furthermore, this Agreement is an attorney-client communication and shall not be disclosed by the City or SL Environmental to any third party, except as may otherwise be required by law. In the event of a request, demand, or lawsuit to compel the City to provide a copy of this Agreement or a description of its terms, SL Environmental shall work with the City to provide an appropriate response and SL Environmental shall defend any such litigation at SL Environmental’s cost. Nothing herein shall preclude SL Environmental and the City from agreeing together to disclose the Agreement or its terms. F. DISCLAIMER OF GUARANTEE. Although SL Environmental may offer an opinion about possible results regarding the subject matter of this Agreement, SL Environmental cannot guarantee any particular result. The City acknowledges that SL Environmental has made no promises about the outcome and that any opinion offered by SL Environmental in the future shall not constitute a guarantee. G. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the parties. No other agreement, statement, or promise made on or before the effective date of this Agreement shall be binding on the parties. H. SEVERABILITY IN EVENT OF PARTIAL INVALIDITY. If any provision of this Agreement is held in whole or in part to be unenforceable for any reason, the remainder of that provision and of the entire agreement shall be severable and remain in effect. I. MODIFICATION BY SUBSEQUENT AGREEMENT. This Agreement may be modified by subsequent agreement of the parties only by an instrument in writing, approved and executed in the same manner as the initial Agreement. J. RECITALS; TITLES, SUBTITLES, HEADINGS. The recitals to this Agreement are part of this Agreement, but all titles, subtitles, or headings in this Agreement have been inserted for convenience, and shall not be deemed to affect the meaning or construction of any of the terms or provisions of this Agreement. K. ARBITRATION OF DISPUTES. Notwithstanding any other provision of this Agreement, any disputes relating to SL Environmental’s Contingent Fee and/or arising out of this Agreement may first be submitted to the State Bar’s program for arbitration of fee disputes pursuant to Business and Professions Code section 6200 et seq. If a fee dispute arises, SL Environmental shall provide the City with information about the State Bar program. L. VENUE IN ACTION ON AGREEMENT. In any dispute relating to SL Environmental’s Contingent Fee and/or arising out of this Agreement, the venue shall be San Francisco County, California. M. GOVERNING LAW. The terms and provisions of this Agreement and the performance of the parties hereunder shall be interpreted in accordance with, and governed by, the laws of the State of California. N. EFFECTIVE DATE OF AGREEMENT. The effective date of this Agreement shall be the date when, having been executed by the City, one copy of the agreement is received by SL Environmental. Once effective, this Agreement shall, however, apply to services provided by SL Environmental on this matter before its effective date. O. AUTHORITY OF PARTIES. Each of the signatories to this Agreement warrants that he or she has the authority to enter into and execute this Agreement and to bind the entity or entities on whose behalf each signs. P. EXECUTION. This Agreement may be executed by transmittal of electronic (.pdf) signature counterparts. The foregoing is agreed to by: THE CITY OF ARCADIA Dated: ___________________ By _________________________________________ Its: ___________________________________ SL ENVIRONMENTAL LAW GROUP PC Dated: ___________________ By _____________________________ ALEXANDER LEFF Principal