By Jac Perry

It appears that a major conflict of interest to the tune of $9.2 million in COLA attorney fees has gone disregarded at the Guam Legislature.

Guam News Factor previously covered the confusion several COLA recipients experienced when they received their COLA checks with a 10% reduction taken out to pay their class attorney. We followed up the story with a breakdown of what that amounted to in total, for the entire $92 million judgment – some $9.2 million. Calculated at Attorney Mike Phillips' estimated 2,000 work hours (performed by him and his staff), that comes out to about $4,500 per hour.

However, the exorbitant fee charged by the attorney tells only part of the story. In follow up research, GNF staff spoke to several attorneys who, on the condition of anonymity, explained the process of seeking judgments for payment against the Government of Guam, or any government for that matter.

According to the attorneys we spoke to, a judgment for payment against a government is unlike a typical collection case, where an attorney is required to first secure a judgment and then must pursue the collection of the amount owed. This latter task is considered by the legal community as the more difficult and time consuming of the two.

In the case of seeking a judgment against a government, as in the COLA case, there is no actual collection process that can be followed. The attorney can secure the judgment against the government but has no mechanism for collecting against that judgment. The common opinion from the attorneys with whom we spoke was that the government will pay against the judgment whenever it decides to pay, which can become the most lengthy and difficult part of the entire process.

Therefore, it can be assumed that Attorney Phillips’s $9.2 million was earned only for securing the judgment, and he had no work to do in collecting against the government. Right? Maybe.

The court judgment was clear that COLA payments were overdue and had to be paid. However, questions are beginning to surface as to whether Attorney Phillips’ fee is representative of the work he did on behalf of his clients, especially when this fee is taken directly from the COLA recipients, who earned the full amount of the judgment.

In an interesting chain of events and relationships, Attorney Phillips may have influenced the collection of the $92 million in COLA payments, through Senator Ben Pangelinan, who has worked as an “advisor” for Attorney Phillips in another case.

Where this issue becomes interesting is that prior to his advisory business arrangement with Phillips, Pangelinan showed no interest in securing past due COLA payments for GovGuam’s retirees. Yet, since  then,  Pangelinan has been a vocal and fervent advocate for paying out the past due COLA.

Why the sudden change of heart? Why has Senator Pangelinan become champion of the COLA class?

The timing of Pangelinan’s newfound urgency in addressing the COLA payments coincides conveniently with the judgment approving Attorney Phillips’s 10% fee. Prior to the judgment, Pangelinan paid no attention to the matter. It was not until after Phillips won the court decision, against the government’s claim, to pay himself 10% of the award that the COLA payment skyrocketed to the top of Pangelinan’s legislative agenda.

As the Chairman of the Legislature’s Committee on Appropriations, Senator Pangelinan forced the government to borrow for the COLA before any borrowing could occur for the new landfill. Several weeks of intense debate ensued and, after a successful letting of the bonds, the retirees finally are getting their checks. Clearly, Pangelinan was instrumental at securing the funding, not Phillips. This distinction is critical because it raises questions about the level of compensation merited by Phillips if he did not do any work to secure the funding.

In his capacity as Appropriations Chair, Pangelinan has the fiduciary obligation to fund GovGuam’s operations and pay its debts in a manner that serves the public good.  Paying the COLA debt was necessary. Paying the COLA lawyer for the work he did not do is irresponsible.

Yet, Senator Pangelinan never called on Phillips to reduce his fees to more appropriately reflect the work Phillips performed. He never questioned the $4,500-per-hour rate that Phillips’s fee amounts to.

The fact that Phillips is Pangelinan’s friend, business associate and attorney only adds to the specter of conflict on Pangelinan’s part. After all, why would he stand up and do the right thing if it would hurt his friend and business associate Mike Phillips?

Reducing Phillips’s fee would mean more of the award money would have gone back to the retirees, rather than into Phillips’ pockets. Pangelinan’s silence on this matter only victimizes the very group he purports to defend.

It is clear, that this senator, who has spent his career bullying others and hurling allegations of conflicts of interest should take a step back, look in the mirror and explain to himself and the rest of our community what his real role was in this COLA payout. If he is not willing to do so, then we call upon the Legislature to convene an ethics commission panel and get to the bottom of this matter.

Our Man’Amko deserve a truthful explanation from Senator Pangelinan. Our voters deserve to know the intentions behind the man they elected. And every taxpayer who places their trust in our elected officials to put the needs of the general population before the enrichment of themselves deserves an honest and forthright investigation into this apparent $9.2 million conflict of interest.

John Dela Rosa contributed to this report.

Read the Guam News Factor story, "Guam-COLA's $4,500-Per-Hour Lawyer", June 28, 2009.

Read the Guam News Factor story, "Guam Man'Amko SHOCKED At COLA Lawyer Costs!", June 26, 2009.