Lawyers already bill $257,000 to help Seattle Port during probe

The Port of Seattle has been billed $257,000 by lawyers helping the Port prepare for a federal criminal investigation into its contracting practices.

The bills are mostly for research, interviews with Port management, talks with prosecutors, preparing a "cast of characters" and preparing for review of Port computer hard drives, according to invoices submitted to the Port.

The Port's outside lawyers started billing Jan. 7, the day news broke that the Justice Department had started an investigation. The bills account for work in January by Yarmuth Wilsdon Calfo and work in January and February by Danielson Harrigan Leyh and Tollefson. Both are Seattle firms.

More than $95,000 has been billed by two lawyers — Angelo Calfo, an expert in white-collar crime, charging $450 per hour, and Arthur Harrigan, charging $526 an hour. Altogether, outside firms have billed the Port for 850 hours of work.

The federal probe was prompted by a state audit that said the Port mismanaged construction contracts, skirted competitive bidding rules, concealed information from elected Port commissioners and wasted $97 million in public money.

In a memo to Port CEO Tay Yoshitani last month, the Port's top in-house lawyer, Craig Watson, said the outside lawyers were hired "to defend the Port's interests" in the investigation. Watson also said the lawyers "will certainly be in a position to identify flaws in the audit" and that the Port should alert federal investigators to any such flaws.

Federal prosecutors have not yet interviewed any Port employees, according to Port spokeswoman Charla Skaggs.

The Port has seven in-house staff attorneys and a 2008 legal budget of $2.9 million. If the bills exceed the budget, Skaggs said, the Port will tap contingency funds. She also said the Port expects its legal fees to be high at the beginning of the investigation, then "decline rapidly as initial discovery and disclosure work is complete."

The Port plans to pay a private lawyer, Jon Zulauf, to represent Port employees who are contacted by federal prosecutors. Zulauf hasn't submitted any bills yet, Skaggs said. The Port Commission also has hired former U.S. Attorney Mike McKay to investigate possible fraud and other wrongdoing by Port employees.

The commission hasn't set a budget for McKay's investigation. But Bill Bryant, who chairs the commission's Special Investigative Committee, said he hopes to spend less than the state audit, which cost $785,000.

Bryant said he told McKay and his team of investigators that they work for King County residents, not the Port of Seattle.

"Our job is to learn the truth, report it in public session and reduce the likelihood that problems will happen again," Bryant said.

Bob Young: 206-464-2174 or byoung@seattletimes.com