Wednesday, June 1, 2011

Daley joining law firm he previously hired for city's meter deal and other privatization work

Posted By on 06.01.11 at 08:42 AM

Katten Muchin Rosenman, a law firm that the city has paid more than $1.2 million for work on privatization deals and other matters since 2005, announced this morning that it's adding a new attorney: former Mayor Richard M. Daley.

The move, first reported by Crain's, was announced in a statement on the firm's website. "Mayor Daley, who joined Katten after 22 years as mayor and more than 40 years in government, will be Of Counsel to the firm and, in that role, will draw on his vast knowledge, experience and relationships globally to contribute to the continued growth of the firm," the statement says. "Daley will not participate in any work at Katten involving the City of Chicago or any of its affiliate city agencies."

But when he was mayor Daley steered key work Katten's way, most of it on the city's big privatization efforts. Best known is the $662,760 the firm received for researching and writing the parking meter lease agreement, but the city also paid Katten $100,000 for its work on the Skyway privatization, $60,000 to help lease out the downtown parking garages, at least $75,000 for the aborted privatization of Midway airport, and more than $217,000 for the attempted privatization of the city's three garbage and recycling sorting centers, according to city records.

The city does not have a bidding process or other formal rules for selecting outside counsel. They're chosen by top law department officials, who are picked by and answer to the mayor.

This is the latest step in Daley's ongoing privatization of himself. The Sun-Times has reported that he's setting up a business with his son to work on foreign investment in infrastructure, and last week he accepted an appointment as a "distinguished senior fellow" at the University of Chicago.

His move to Katten shouldn't be a huge shock, since Daley has personal ties to the firm as well—one of its top partners is his best pal Terry Newman, the guy Daley went sailing with in the Virgin Islands during the municipal election in February.

Here's what Ben Joravsky and I wrote about Katten in our 2009 investigation of the law firms and financial advisers hired by the city to carry out the meter deal:

Since the 2005 Hired Truck scandal, when the Sun-Times revealed that politically connected trucking firms were paid millions to do little or no work, the city has been sending a letter to contractors warning them that it "prohibits bidders, contractors and subcontractors from making political contributions to the Mayor or his fundraising committee." But law firms hired by the city aren't covered by these contracting rules, and according to state campaign finance records, since 2001 attorneys with Katten have written Daley checks adding up to more than $33,000. Meanwhile the city paid the firm a total of $160,000 for legal work on the leases of the Skyway and downtown parking garages.

But if Katten has a special connection to Mayor Daley, it's through partner Terry Newman. According to the Katten Web site, Newman's legal specialty is "real estate taxation," but he's known around town as one of the mayor's best friends. Before joining the firm he worked as a prosecutor under the mayor, then the Cook County state's attorney. Over the last 15 years, Newman has been mentioned frequently in local gossip columns as a regular at Daley's private parties. "As often as three nights a week Daley indulges in a 'boys' night out,'" Fran Spielman wrote in the Sun-Times in 1995. "Around the dinner table at Carlucci's, Marche or Parrinello's is what one friend calls a 'floating crap game of associates.' The list almost always includes Loop attorney Terry Newman, a jovial type considered one of the mayor's closet friends."

In 1992 the mayor appointed Newman to the board of trustees of the City Colleges of Chicago; he's now its secretary. He's also the chairman of the board of directors for After School Matters. In November 2006 Newman cohosted a $1,000-a-ticket fund-raiser for Daley.

Incidentally, after its work on Chicago's meter deal, Katten was hired by officials in Pittsburgh to work on the proposed privatization of their parking meter system. Pitt also brought on Scott Balice Strategies, a Chicago-based financial firm led at the time by Lois Scott, now Chicago's chief financial officer under Mayor Rahm Emanuel. The Pittsburgh meter plan stalled after officials studied Chicago's example and got cold feet.

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