Law Firm Agrees to $4M San Diego Pension Mess Settlement

June 16, 2008 ( - A Houston law firm that was brought into San Diego's ongoing pension mess has agreed to a $4.35-million settlement with city officials.

According to the San Diego Union-Tribune, City Attorney Michael   Aguirre sued Vinson & Elkins in 2006 over accusations the firm was incompetent in trying to solve the city’s pension problems (See Internal San Diego Report Clears Officials of Wrongdoing ).Aguirre charged in the suit that the firm’s failures led to three years of unfinished audits and forced the city to hire a second firm, Kroll Inc., for $20 million, to straighten things out.

Vinson & Elkins admitted no wrongdoing but agreed to pay back $3.25 million to the city and forgive $1.1 million in outstanding bills, Aguirre said.

According to the news report, the city hired the firm in December 2003 as a consultant with a $27,000 contract. The firm was eventually charged with investigating the city’s pension crisis and financial disclosure practices as well as representing the city before the Securities and Exchange Commission (SEC).

However, KPMG, the city’s auditing firm, and the SEC considered Vinson & Elkins’ reports unacceptable because of the conflict over the fact that the law firm’s aggressive investigation would hamper San Diego’s efforts to defend against the SEC inquiry.

The news report said a second outside law firm that also worked on the case will get about a third of the settlement.