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Mike Nowatzki, Published October 04 2009

Legal payments take chunk of liability fund

The city of Fargo has spent more than $1.4 million dealing with liability claims since 2006, and nearly 30 percent of it has gone toward legal fees, figures show.

As the only major North Dakota city with a self-insured liability plan, Fargo has to pay its own legal fees, which is one reason the city is abandoning the plan and looking at joining the North Dakota Insurance Reserve Fund.

The city pays liability claims and related legal fees from its self-insurance reserve fund through a third-party administrator, Atlanta-based Broadspire.

A list – requested by The Forum and compiled by Broadspire – of payments made from the reserve fund since Jan. 1, 2006, shows that $424,748, or 43 percent, of the $984,441 spent was for legal fees.

However, the list didn’t include a $450,000 settlement paid last summer to the family of an 8-year-old girl who died in a Dec. 10 accident blamed on a rut in South University Drive.

With the settlement payment included, legal fees account for 29.6 percent of the total.

The next largest payment categories were $360,752 for property damage claims and $152,174 for bodily injury claims.

All of the legal fees were paid to two firms that provide legal services for the city: Serkland Law Firm and Solberg, Stewart, Miller and Tjon.

Fargo’s city attorney is Erik Johnson, who opened his own legal practice, Erik R. Johnson & Associates Ltd., in 2003.

Johnson was previously assistant city attorney to Garylle Stewart of Solberg, Stewart, Miller and Tjon.

Stewart stepped down in 2007.

Johnson has an assistant city attorney, Butch McConn, in his firm, and he also oversees two city prosecutors.

The city attorney’s office will receive a 34 percent budget increase next year, from $385,000 to $517,000.

About $90,000 of the increase will be spent on adding a third full-time attorney who Johnson said will split time between prosecuting municipal cases and helping with “city attorney” work, which includes work done for city departments and the City Commission.

The remainder of the increase will pay for office space rental, additional contracted services and a $13,000 bump built into the city attorney’s contract.

Johnson noted his office, which received a midyear budget adjustment of $50,000 this year, has been hiring part-time help for the past six months.

He said the actual number of cases being handled by the city is probably down right now, but the workload is up.

“We have had some high-profile cases,” he said.


Legal fees large share of liability claim costs

Below is a categorical breakdown of payments made since Jan. 1, 2006, from the self-insurance reserve fund that Fargo uses to pay costs associated with liability claims against the city.

Category Payments

Legal fees...................$424,748

Property damage..............$360,752

Bodily injury................$152,174

Collision.....................$17,750

Experts.......................$14,459

Appraisers.....................$9,734

Miscellaneous..................$3,088

Miscellaneous legal expenses...$1,737

Total........................$984,441*

* Does not include about $38,600 in small claims or $450,000 settlement paid to family of victim in Dec. 10 fatal crash on South University Drive, both paid directly by city.

Sources: Broadspire, Forum research


Readers can reach Forum reporter Mike Nowatzki at (701) 241-5528