June 19, 2002
Attention:

Administrative and Legal Committee

Approve contract with Hatch and Parent to continue special counsel services consistent
with the recommended budget for fiscal year 2002-2003 (Action)
Purpose
This report seeks Board approval of the contract to continue the legal and other services provided
by Hatch and Parent for fiscal year 2002-2003.
Staff recommendation
Approve the contract with Hatch and Parent for fiscal year 2002-2003 including provisions
for retainer services under the direction of the General Manager at an amount of $25,000 per
month and for additional legal services provided at a fixed hourly rate as assigned and
directed by the General Counsel.
Alternatives
1.
Do not approve the agreement and terminate the services of Hatch and Parent.
2.
Direct negotiation of an agreement upon different terms.
Fiscal impact
Funds in the amount of $300,000 for retainer services are included in the Public Affairs Department
recommended budget for fiscal year 2002-2003. The General Counsel's Office recommended
budget for fiscal year 2002-2003 appropriates $700,000 for outside legal services. These services
will be provided by a variety of firms including Hatch & Parent.
Background
Special legal and other professional services are required to assist the Authority regarding:
implementation of the SDCWA/IID conserved water transfer agreement; general water law matters;
legislative and administrative advocacy; legal and strategic program development; community
outreach and other similar matters. Hatch and Parent has been providing such special legal and
other professional services for over five years.
Previous Board Action: In June 2001 the Board approved the existing contract for legal services
with Hatch and Parent.

 Administrative and Legal Committee
June 19, 2002
Page 2 of 2

Discussion
The recommended contract would continue the services provided by Hatch and Parent for fiscal
year 2002-2003. The proposed contract would also restructure the manner in which the services are
supervised and paid to allow for more efficient management of the distinct services provided by
the firm. Under the proposed contract, specific services would be managed exclusively by the
General Manager, who would supervise retainer services provided or coordinated by Chris Frahm,
including: legislative advocacy services; local agency and community outreach and advocacy; and
strategic consultation services. The retainer services would be provided at a fixed rate of
$25,000 per month. The General Counsel would continue to supervise and direct all legal
services provided by the firm. These services would include: litigation and negotiation services
for implementing the IID/SDCWA Water Transfer Agreement; participation in the Preferential
Rights lawsuit; and other litigation, environmental law, public law, water rights and water law
matters.
For the past three years services have been provided on an hourly rate basis with an annual fee limit
of $840,000. Under the new agreement $300,000 would be paid in the form of a monthly retainer
for services under the supervision of the General Manager. Funds for these services, including
expenses, have been included in the Public Affairs budget. Fees for other legal services provided at
the direction of the General Counsel would be at the hourly rate specified in the contract. The
hourly rate under the proposed contract is consistent with the current hourly rate charged by the
firm. Funds for as assigned services are included in the budget for the General Counsel's Office.
As assigned services would be managed in the same manner as other legal service contracts using
litigation and project budgets as provided in the Authority's Standard Billing Guidelines for Legal
Services, which are incorporated into the contract.

Prepared by:

Daniel S. Hentschke, General Counsel
Maureen A. Stapleton, General Manager

Attachment(s)
Amended agreement for legal services.

 SAN DIEGO COUNTY WATER AUTHORITY
AMENDED AGREEMENT FOR PROFESSIONAL SERVICES
WITH SPECIAL COUNSEL HATCH AND PARENT
(FY 2002 – 2003)
This Amended Agreement is intended to memorialize the understanding of the
parties with regard to the continued provision of professional services to the San Diego
County Water Authority (“Authority”) by Hatch and Parent (“Special Counsel”)
concerning the matters described herein.
SCOPE OF WORK
1.
Special Counsel agrees to provide professional services, including, without
limitation, advice, counsel and representation, at the direction of the General Counsel and
at the hourly rate specified in this agreement, with respect to the following matters or
categories of service ("As Assigned Services"):
a.
Performance, administration, implementation, defense and
amendment, if any, of the Agreement for Transfer of Conserved Water
between the Imperial Irrigation District and the Authority;
b.
Performance, administration, implementation, defense and
amendment, if any, the Agreement between the Metropolitan Water District
of Southern California and the San Diego County Water Authority for the
Exchange of Water;
c.
Representation of the Authority with respect to the Petition for
Approval of a Long-Term Conserved Water Transfer Agreement and to
Change Point of Diversion and Place of Use under IID Permit 7643
(Application 7483) ("Petition"), and all amendments thereto, pending before
the State Water Resources Control Board;
d.
Representation of the Authority in that certain litigation San Diego
County Water Authority v. Metropolitan Water District, et al (“Preferential
Rights Case”) and related actions;
e.
Evaluation, negotiation, implementation and facilitation of water
transfers and other water supplies, including legislative efforts necessary or
convenient to the transfer of water and diversification of Authority water
supplies as requested by the Authority’s General Counsel;
g.
Other litigation, environmental law, public law, water rights and
water law matters as may arise from time to time during the term of this
agreement as requested by the Authority’s General Counsel.
2.
Special Counsel agrees to provide professional services, including, without
limitation, advice, counsel and representation, at direction of the General Manager at the
1

 monthly retainer specified in this agreement, with respect to the following matters or
categories of service ("Retainer Services"):
a.
Legislative and administrative agency advocacy (lobbying) services
as directed by the Authority General Manager and subject to the provisions
of paragraph 4;
b.
Local agency and community outreach and advocacy as directed by
the Authority General Manager;
c.
Legal and strategic consulting, counsel, evaluation, and position
development and facilitation services to the Authority General Manager,
General Counsel and other executive level management as requested by the
General Manager regarding activities, actions, policies and plans of the
Metropolitan Water District of Southern California, including, without
limitation, Metropolitan’s governance, services, rates, supplies, programs
and positions regarding activities, actions, policies and plans of the
Metropolitan Water District of Southern California;
d.
Legal and strategic consulting, counsel, evaluation, and position
development and facilitation services to the Authority General Manager,
General Counsel and other executive level management as requested by the
General Manager for government relations and strategy development
relating to water supply and delivery and other related legislative and
administrative issues impacting the Authority’s operations, property,
programs or purposes;
e.
Participation in the development and facilitation of Authority
legislative and community outreach positions, including, but not limited to
document review and preparation.
PROVISIONS APPLICABLE TO AS ASSIGNED SERVICES

3.
As Assigned Services will be provided or coordinated by Scott S. Slater or
as otherwise directed by the General Counsel.
4.
The hourly rate for As Assigned Services by Special Counsel will be
determined according to the Attorney Fee Schedule attached hereto and incorporated
herein by this reference. Rates for services Special Counsel attorneys and other
professional employees as approved by the General Counsel and not shown on the
Attorney Fee Schedule shall be at the standard hourly rate for generally charged by
Special Counsel to public agency clients for similar work. The rates fixed by this
agreement shall apply during the Authority fiscal year 2002 – 2003 (July 1, 2002 – June
30, 2003).

2

 5.
The Authority Standard Billing Guidelines for Legal Services attached
hereto, are incorporated into this Agreement by this reference, and shall apply to the
provision of As Assigned Services, provided, however, that the provisions of paragraphs
1 through 21, inclusive, of this Agreement shall prevail over any contrary provision of the
Standard Billing Guidelines to the extent of any inconsistency. In addition to providing
litigation budgets according to the Standard Billing Guidelines, Special Counsel agrees to
provide the Authority’s General Counsel with confidential general work plans as the
General Counsel may deem appropriate from time-to-time for other matters within the
scope of As Assigned Services.
PROVISIONS APPLICABLE TO RETAINER SERVICES
6.
Retainer Services will be provided or coordinated by Christine M. Frahm or
as otherwise directed by the General Manager.
7.
Special Counsel shall receive a retainer fee of $25,000 per month for all
Retainer Services. The General Manager and Special Counsel will prepare confidential
work plans to further define the general types of activities that will be expected to be
performed under the scope of Retainer Services as described in Paragraph 2. The work
plans will be based on an assumed monthly reservation by Special Counsel of
approximately 75 -- 90 hours for Christine M. Frahm and of approximately 10 -- 20 hours
for Jennifer Carbuccia, but work performed in any particular month may be more or less
than may be more or less than the assumed monthly reservation. Authority and Special
Counsel agree that with respect to Retainer Services, the Authority has contracted for
Special Counsel’s availability, expertise and counsel without regard to the amount of time
actually spent on any particular assignment. The retainer fee shall cover all professional
fees, costs, and expenses for the provision of Retainer Services. However, in addition to
the retainer, Special Counsel shall be reimbursed, in arrears, for actual, necessary
expenses of travel incurred in connection with the provision of Retainer Services.
8.
The monthly retainer shall be due as of the fifteen day of each calendar
month. Invoices will include the retainer fee for the current month plus the amount of
reimbursable travel expenses incurred during the prior month. Along with a monthly
invoice, Special Counsel will submit a separate description of work performed during the
prior month. The separate statement shall be marked “Confidential”.
9.
Performance of Retainer Services may require lobbyist registration under
the Political Reform Act or local ordinance of a city or county. Special Counsel shall be
solely responsible for compliance with the Political Reform Act and other federal, state or
local laws governing lobbying, including lobbyist registration and reporting requirements,
necessary for the performance of Retainer Services pursuant to this agreement. Special
Counsel shall keep records and assist the Authority in meeting any filing requirements
3

 imposed upon the Authority under the Political Reform Act or any other federal, state or
local laws governing lobbying, including, without limitation, records necessary or
convenient to the permit the Authority to file reports under Government Code §§ 86115,
86116 or 86116.5. Special Counsel agrees separately account to the Authority each
month for any Retainer Services work that is direct communication, other than
administrative testimony, with one or more qualifying officials for the purpose of
influencing legislative or administrative action. The accounting will be based on an
hourly rate for Christine Frahm of $275 per hour and for Jennifer Carbuccia of $100 per
hour. The provisions of 2 Cal. Code of Reg. § 18239 shall apply to interpretation of this
paragraph.
GENERAL PROVISIONS APPLICABLE TO ALL SERVICES
10.
Special Counsel acknowledges that the Authority has retained its services to
obtain the highest quality service at a reasonable price. Consequently, Special Counsel
will endeavor to provide services as economically as reasonable, consistent with the
provision of high caliber legal services and its professional responsibilities. Special
Counsel hereby undertakes to diligently perform legal services more particularly
described above. Although Special Counsel promises to perform its professional services
on the Authority’s behalf to the best of its attorney’s abilities, it cannot make and has not
made any guarantees regarding the outcome. Expressions about the outcome of the
matter are professional estimates only, and are limited by the knowledge at the time those
expressions are made. Special Counsel will be compensated for the time and effort it
devotes on the Authority’s behalf and not for any particular result.
11.
Communications between Special Counsel and the Authority are privileged.
Special Counsel will provide to the Authority upon request all information and material
acquired and generated by Special Counsel in the course of this matter, including work
product, identities and opinions of consultants and expert witnesses, and any other
information pertaining to this matter. Special Counsel agrees to protect confidential
information and communications against disclosure, unless such disclosure is authorized
in writing by the Authority General Manager or General Counsel or compelled by duly
issued subpoena. Special Counsel shall advise the Authority of any request for disclosure
of information or of any actual or potential disclosure of information. Special Counsel
will protect such information using a reasonable degree of care as is used to protect its
own confidential information of like nature. Special Counsel agrees to protect
confidential information disclosed under this agreement in both (a) a tangible form,
clearly labeled confidential at the time of disclosure, and (b) in non-tangible form,
pertaining to matters disclosed in writing or orally which protect or enhance the position
of the Authority. This agreement covers all confidential information Special Counsel has
obtain from the Authority before execution of the agreement and may obtain in the future.
Special Counsel’s obligations regarding confidential information shall survive the
4

 termination of this agreement. The provisions of this paragraph shall apply to all of
Special Counsel’s officers, employees and agents.
12.
During the course of this engagement, communications may occur through
sending, receiving or exchanging electronic versions of documents and e-mails using
commercially available computer software and Internet access. Authority intends that these
communications be and remain confidential unless disclosure is specifically and
intentionally authorized by the Authority. Also, Special Counsel and the Authority
acknowledge that the Internet is occasionally victimized by the creation and dissemination
of so-called viruses, or similar destructive electronic programs. Special Counsel and the
Authority take issues raised by these viruses seriously and have invested in document and email scanning software that identifies and rejects files containing known viruses. Special
Counsel agrees to update its system with the software vendor’s most current releases at
regular intervals. Because of the virus scanning software the respective computer systems
of the parties may occasionally reject a communication. The parties acknowledge that this
occurrence is to be expected as part of the ordinary course of business. Because the virus
protection industry is generally one or two steps behind new viruses, neither party can
guarantee that its respective communications and documents will be virus free.
Occasionally, a virus will escape and go undetected as it is passed from system to system.
Although each party will use all reasonable efforts to assure that its communications are
virus free, neither party warrants that its documents will be virus free. Each party agrees to
advise the other if it discovers a virus in its respective system that may have been
communicated to the other party.
13.
Special Counsel agrees to defend, indemnify and hold harmless Authority
and Authority’s officers, employees and agents from an against any claim, demand,
liability, action, or proceeding arising from the performance by Special Counsel under
this Agreement, except claims, demands, liabilities, actions or proceedings arising solely
from the active negligence of the Authority or an Authority officer, employee or agent.
This provision shall survive the termination of this Agreement. Without limitation of the
foregoing, Special Counsel shall maintain in full force and effect during the term of this
Agreement and for a period of five years thereafter, professional malpractice insurance in
the amount of not less than $2,000,000, with an insurance carrier authorized to do
business in California and approved by the Authority. This provision shall survive the
termination of this Agreement.
14.
Special Counsel is an independent contractor and neither it nor its officers,
employees, subcontractors or agents are employees of the Authority for any purpose
whatsoever. Special Counsel and its officers, employees, subcontractors and agents have
no right or authority to assume or create any obligation or responsibility, express or
implied, on behalf of the Authority, unless expressly authorized in a written document
signed by the Authority’s General Manager or General Counsel. Authority has
5

 determined, based on the scope of the services to be provided by Special Counsel under
this Agreement, that this agreement does not confer on any of Special Counsel’s attorneys
or other firm personnel status as a member, officer, employee or consultant of the
Authority, a local governmental agency, for the purposes of the Authority’s Local
Conflict of Interest Code and the California Political Reform Act. This Agreement does
not require or permit Special Counsel, or any of its attorneys or other personnel to make a
governmental decision as specified in 2 Cal. Code of Regs. § 18701, subdiv. (a)(2)(A), or
serve in a staff capacity as specified in 2 Cal. Code of Regs. § 18701, subdiv. (a)(2)(B).
Special Counsel agrees that it will not make representations inconsistent with the
provisions of this section.
15.
The Specific Notice Regarding Potential Conflicts provided by Special
Counsel attached hereto is acknowledged by the Authority. As to matters disclosed in the
Specific Notice Regarding Potential Conflicts, the Authority confirms that it does not
object to representation by Special Counsel of clients on matters where their
governmental or political objectives or positions may be different from or adverse to the
Authority’s. The Authority waives any conflict of interest with respect to representation
of clients by Special Counsel as set forth in the Specific Notice Regarding Potential
Conflicts, and the Authority will not assert a conflict of interest for the purpose of
disqualifying Special Counsel from representing clients as set forth in the Specific Notice
Regarding Potential Conflicts. Special Counsel represents and warrants that nothing in
any contract, express or implied, with any of its current clients requires Special Counsel
to disclose any confidential information of the Authority. Except as otherwise stated in
the Specific Notice Regarding Potential Conflicts, Special Counsel is unaware of any
facts, to the best of Special Counsel's actual knowledge, that would require Special
Counsel to believe it has or has had (a) any legal, business, financial, professional or
personal relationship with any party, witness, person, or entity that would preclude
Special Counsel from fully performing this agreement, or (b) any interest in the subject
matter of this representation the disclosure of which is required by Rule 3-310.
16.
Special Counsel represents and warrants that during the term of this
agreement it will not undertake to provide service to any new client, or new service to an
existing client, on matters where the client’s governmental or political objective or
position with respect to the service may be different from or adverse to the Authority’s
without the prior consent of the Authority. In the event of authorized provision of
services to clients with competing or conflicting, or potentially competing or conflicting
interests, Special Counsel agrees that it will not knowingly use information gained from
one for the detriment of another.
17.
The Authority reserves the right to discharge Special Counsel at any time
upon delivery of a written notice. With respect to Retainer Services either party may

6

 terminate this agreement for convenience upon 60 days advance written notice to the
other party.
18.
The laws of the State of California govern this Agreement. Venue for all
purposes is in the State Courts of the County of San Diego, California. This Agreement
constitutes the entire agreement between the Authority and Special Counsel regarding the
terms and conditions of this engagement. No other agreement or change or modification
of this Agreement will be enforceable unless it is in a writing signed by Special Counsel
and the Authority’s General Counsel, or other duly authorized Authority official.
19.
All invoices for services, including invoices and statements required by paragraph
8 for Retainer Services, will be submitted to the General Counsel. Except for payment of
the monthly retainer, which is due on the fifteen day of each calendar month, the
Authority generally will process and pay bills within 30 days from receipt. For purposes
of administering billing questions, issues and payment the General Counsel will
coordinate with Special Counsel's Santa Barbara offices. Travel costs, including
transportation and meals, will be reimbursed at actual cost subject to the Authority’s
policy for reimbursement of travel and meal expenses for executive employees. Any
travel with an estimated expense of $1,000 or more requires advance approval of the
General Counsel for As Assigned Services and the General Manager for Retainer
Services. Travel expenses incurred for services within the county of the home office of
the Special Counsel attorney or employee incurring the travel expense is not
reimbursable.
20.
Special Counsel shall not assign, delegate or subcontract this agreement, in
whole or in part, without the express written consent of the Authority.
21.
This fee Agreement may be executed in counterparts, which together will
constitute the entire agreement.

[Space intentionally left blank. Document continues on next page.]

7

 IN WITNESS WHEREOF, the parties have executed this agreement as of the date
written below, to be operative commencing on July 1, 2002.

San Diego County Water Authority:

Dated: _____________________

By:_____________________________
General Counsel

Dates: ______________________

By:_____________________________
General Manager

Dated: _____________________

Special Counsel:
By:____________________________
Christine M. Frahm
By:_____________________________
Scott S. Slater

8

 STANDARD BILLING GUIDELINES FOR LEGAL SERVICES
1.
Invoices shall be submitted monthly for services performed in the prior
month. Except for representation provided in cases in which the General Counsel's Office is
ethically disqualified, bills shall be submitted to the General Counsel. Except for cases
where a disqualification exists, the General Counsel will review and approve, conditionally
approve or disapprove all bills prior sending the bills to the Controller for payment. In the
event of a disqualification of the General Counsel's Office, bills shall be submitted to the
General Manager.
2.

All billing shall be done in 0.10-hour increments.

3.
Each bill shall include an invoice showing the amount of services rendered
during the billing period, the fee for such services and the amount of reimbursable
expenses. The invoice shall be accompanied by a separate invoice support statement that
briefly describes each item of work performed, the identity of the person who performed the
work and itemized reimbursable expenses. The invoice support statement shall be marked
“Confidential -- Attorney-Client Privilege.” The invoice may be subject to disclosure
pursuant to the California Public Records Act.
4.
Each month's bill should include a total to date for attorneys' fees, other
professional fees and costs. That total should provide, at a glance, the total fees and costs
incurred to date for the case. This will facilitate our approach of cost-effective legal service
management. If the totals cannot be produced by your computerized billing system, please
provide the total-to-date information on the transmittal letter or other document submitted
with the bill. If the totals to date are not provided, the bills will not be paid and they will be
returned to you.
5.
Special services such as mock appellate panels and other similar services
shall be approved in advance by the General Counsel if the cost of such services is to be
passed on to the Authority.
6.
In-house photocopying charges are billable on a per-copy basis. The
maximum charge is $0.15 per page for the copying of documents less than 25 pages and
$0.10 per page for the copying of documents 25 pages or greater, including any time spent
making the copies. We encourage you to use outside copying services, if the cost of doing
so is less expensive to the Authority.
7.
Long distance telephone, cellular phone, facsimile transmission and postage
charges are billable at actual cost. Federal Express and similar delivery services should be
avoided without the prior approval of the General Counsel. Charges associated with

9

 delivery of materials, service of subpoenas and other documents, and filing by messenger
services may be billed at actual cost.
8.
The Authority does not pay administrative charges, secretarial time or
secretarial overtime, word processing charges, insurance costs and other similar charges.
The Authority does not pay attorneys or paralegals for secretarial tasks or tasks that should
be subsumed into overhead. For example, time spent faxing, mailing, arranging for
messengers, file opening or file closing, and calendaring are not acceptable charges.
9.
Travel costs will be reimbursed at actual costs when approved in advance by
the General Counsel. The policy for reimbursement of travel expenses of Authority
employees will apply to Special Counsel.
10.
Meals are not billable to the Authority, except for meals necessarily incurred
in connection with approved travel. The Authority pays for meals according to a policy
applicable to Authority officers and employees. The Authority does not pay for alcoholic
beverages.
11.
receipt.

The Authority generally will process and pay bills within 30 days from

12.
The bills should list the names of each attorney or paralegal working on the
matter. Each entry should delineate provide complete, brief descriptions of tasks performed
and identify who has done what work via initials or some other method.
13.
The Authority's auditors may send a request for an auditor response letter
annually. Please respond to these promptly. The response should not take longer than 2.5
hours per case, although usually not more than one hour is required. In complicated cases
where more than 2.5 hours is required, please contact the General Counsel before drafting
your response. The response is billable. The response should be limited to providing only
the specific information requested in accordance with the protocol referenced in the letter.
Please indicate in the response that the information provided is confidential and shall not be
disclosed by the auditor to any person other than designated officials of the Authority or
used by the auditor for purposes other than preparation of the audit.
14.
Special Counsel shall submit a litigation cost budget to the General Counsel,
within 20 days following receipt of the file. The litigation cost budget may be revised from
time-to-time with the prior approval of the General Counsel. Expenditures should be
consistent with the litigation cost budget.

10

 HATCH AND PARENT
HOURLY FEE SCHEDULE FOR SDCWA
2002-20031

HATCH AND PARENT
HOURLY FEE SCHEDULE FOR SDCWA
2002-2003

Scott S. Slater, member
Chris Frahm, “of counsel”
Susan F. Petrovich, member
Peter N. Brown, member
Steve A. Amerikaner, member
Stanley M. Roden, member
Jeffery H. Speich, member
Robert J. Saperstein, associate
Stephanie Osler Hastings, associate
Sarah J. Knecht, associate
Michael T. Fife, associate
Kenneth J. Richardson, associate
Heather A. Halsey, associate
Russell M. McGlothlin, associate
Tamlyn M. Hunt, associate

$350
$300
$300
$300
$300
$250
$250
$225
$200
$200
$200
$200
$200
$180
$170

Other members
Other associates

$185-$300
$125-$200

1

The rates for legal services quoted in this schedule reflect a discount from Hatch and Parent’s
prevailing rates by a substantial margin in some cases to reflect client loyalty and volume discounts.

11

 LAW OFFICES

STANLEY C. HATCH

HATCH and PARENT

STEPHANIE OSLER HASTINGS

GERALD B. PARENT

BRADLEY E. LUNDGREN

S. TIMOTHY BUYNAK

DEBORAH L. MARTIN

SUSAN F. PETROVICH

MICHELLE L. PICKETT

PETER N. BROWN

ROBIN L. LEWIS

STANLEY M. RODEN

TIMOTHY C. HALE

SCOTT S. SLATER

GRAHAM M. LYONS

STEVEN A. AMERIKANER

MICHAEL T. FIFE

GARY M. KVISTAD

MINDY A. WOLFE

CHRISTOPHER A. JACOBS

CAROLYN L. TROKEY

JEFFREY A. DINKIN

RUSSELL M. McGLOTHLIN

JEFFERY H. SPEICH

STEVEN A. JUNG

ROBERT J. SAPERSTEIN

TRAVIS PANANIDES

LORI LEWIS PERRY

ERIC M. TOKUYAMA

JOSEF D. HOUSKA

KENNETH J. RICHARDSON

SARAH J. KNECHT

CHRISTINE E. RAY

A PROFESSIONAL CORPORATION
-----------------------MAILING ADDRESS:
POST OFFICE DRAWER 720
S A N T A B A R B A R A , C A L I F O R N I A 9 3 1 0 2 - 0720
------------------------21 EAST CARRILLO STREET
S A N T A B A R B A R A , C A L I F O R N I A 9 3 1 0 1 - 2782
T E L E P H O N E : ( 8 0 5 ) 9 6 3 - 7000
F A C S I M I L E : ( 8 0 5 ) 9 6 5 - 4333
WWW.HATCHPARENT.COM

Of Counsel
CHRIS FRAHM
KIRK R. WILSON
STEVEN L. HOCH
GEORGE SHORT
JAN A. GREBEN

-------------------

KEVIN J. NEESE
1959 – 1999

LOS ANGELES
11911 SAN VICENTE BLVD.
SUITE 350
LOS ANGELES, CA 90049
TELEPHONE: (310) 440-9996
------------------------SAN DIEGO
110 WEST C STREET, SUITE 2200
SAN DIEGO, CA 92101
TELEPHONE: (619) 702-6100
-----------------------SOUTH LAKE TAHOE
THE SUMMIT
SOUTH LAKE TAHOE, CA 96150
TELEPHONE: (530) 542-7800
OUR FILE #
DIRECT DIAL #
INTERNET:

(805) 882-1407
SAmerikaner
@HatchParent.com

June 19, 2002
By Facsimile
Daniel S. Hentschke
General Counsel
San Diego County Water Authority
4677 Overland Avenue
San Diego, CA 92123-1233
Re:

Amended Agreement for Legal Services with Special Counsel Hatch and Parent
(FY 2002-2003); Acknowledgement, Consent and Waiver of Conflict of Interest

Dear Mr. Hentschke:
This letter is sent in conjunction with the above-referenced Amended Agreement for
Legal Services between this firm and the San Diego County Water Authority (“Authority”). The
purpose of the letter is to disclose to the Authority information held by the firm concerning
actual and potential conflicts of interest relating to our simultaneous representation of the
Authority and other clients who may be involved in transactions or litigation with the Authority.
This letter confirms and supplements prior discussions and documentation regarding this matter
between you and representatives of Hatch and Parent.
As has previously been discussed, the Authority understands that Hatch and Parent
represents numerous private and public agency clients active in the governmental and public
policy process throughout California, as well as on a federal and international basis. We
currently represent a number of cities and special districts as general and special counsel, and are
engaged in numerous matters throughout California relating to water law and policy. Hatch and
Parent provides a variety of professional services for its clients, including general counsel
services, litigation, legislative advocacy, regulatory agency representation, political and strategic
advice, coalition building and other services. The clients who receive these services include, but
are not limited to, American States Water Company, Southern California Water Company,
Central Basin Association, Central Coast Water Authority, City of Bakersfield, City of Fresno,
City of Oxnard, City of San Luis Obispo, Santa Clara Valley Water District and many others.

SB 302106 v 1:007710.0011 Updated

 Daniel S. Hentschke
June 19, 2002
Page 2

Given the specialized nature and geographical reach of Hatch and Parent’s water and
public agency practice, it is foreseeable that Hatch and Parent attorneys will be involved in
projects for other clients having different project, governmental or political objectives, beliefs or
views than those of the Authority. Since we began representing the Authority several years ago,
we have diligently sought to avoid representing the Authority and another client in the same
matter where the interests of the two clients did not agree, without first securing informed written
consent from both clients. One purpose of this letter is to provide to the Authority a clear
statement of the current actual and potential conflicts that we have identified, and to secure the
Authority’s written acknowledgment of that disclosure and waiver of any current conflicts of
interest.
At the same time, we recognize that other potential and actual conflicts may arise in the
future, given the scope of the firm’s activity in California water law and policy. Should we
become aware that our representation of any current or future client may create an actual conflict
of interest with our representation of the Authority, it is our intent to promptly so advise you so
that the Authority may decide whether it wishes to obtain independent counsel concerning that
matter or consent to Hatch and Parent’s continued representation of the Authority.
As of June 19, 2002, we are aware of no actual conflicts, except as follows.
(1)
As we have previously disclosed to the Authority, Hatch and Parent represents the
City of Beverly Hills, the City of Burbank and the City of Glendale, each of which is a member
agency of the Metropolitan Water District (“Metropolitan”). The firm does not represent any of
these three clients in any matters in which the Authority is an adverse party. Hatch and Parent
has disclosed to each of these clients its relationship with the Authority, and each of these clients
has executed an Acknowledgement, Consent and Waiver of any conflict of interest that may
arise as a result of the firm’s representation of the Authority.
One particular matter deserves special mention: the Authority’s pending litigation against
Metropolitan concerning “preferential rights.”
The Authority’s recently-filed amended
complaint names the three cities listed above as defendants. Hatch and Parent is listed on that
pleading as counsel of record for the Authority, although there is another law firm which is
taking the lead role with respect to that case.
Hatch and Parent possesses no confidential
information from the three listed cities that is relevant to the case. By signing this letter, the
Authority acknowledges the disclosure of the above information and waives any conflict of
interest which exists or may exist in the future by virtue of those facts.
(2)
The Authority has been advised that Hatch and Parent represents the Chino Basin
Watermaster, which manages the largest adjudicated groundwater basin in California. It is
located largely in San Bernardino County. The Watermaster was created by order of the San
Bernardino Superior Court.
Hatch and Parent advises the Watermaster on groundwater
management and project implementation, and the firm’s decision to accept the Watermaster as a
client followed a rigorous in-firm screening to identify potential conflicts of interest. Since the

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Authority has no relationship with Watermaster, that screening did not identify the Authority as a
potentially adverse party requiring disclosure.
Recent events raise the possibility of a future conflict of interest that should be addressed.
The Authority recently expressed an interest in responding to a Request for Proposals (RFP) to
participate in Chino Basin groundwater storage and management programs. If Chino Basin
Watermaster elects to continue with the program, and the Authority remains interested and
submits a proposal, then an actual conflict of interest would arise due to the fact that Hatch and
Parent represents Watermaster and would take an active role in evaluating the various RFP
responses and completing a transaction with the selected applicant, even though Hatch and
Parent does not possess any confidential information from either Watermaster or the Authority
that is relevant to the RFP.
By executing this letter, the Authority (i) acknowledges Hatch and Parent’s disclosure of
its relationship with the Watermaster, (ii) consents to Hatch and Parent’s continued
representation of Watermaster with respect to the RFP responses and (iii) waives any conflict of
interest which may arise from such possible future events.
You have asked us to address one other issue pertaining to potential conflicts of interest
involving other clients of the firm, and that is regarding the other clients we represent who are
located in San Diego County.
Within San Diego County, the firm currently represents the City of Oceanside and the
City of San Diego. The firm’s current work for these clients primarily involves groundwater,
local water rights and regulatory issues. The firm does not currently represent either City with
respect to the Authority’s Emergency Storage Project, rate structure, wheeling through Authority
facilities or other similar internal matters of Authority business.
To the best of our
understanding, the work currently underway at Hatch and Parent does not place these clients in a
position adverse to the Authority, nor is Hatch and Parent in possession of any confidential
information relating to one client that is relevant to the matter and would be of benefit to another
client.
At the same time, it is foreseeable that a conflict of interest may arise in the future. For
example, if the Authority enters into contractual arrangements with either city, Hatch and Parent
could not represent any party to that contract without the informed written consent of all clients.
Likewise, if the Authority elects to compete with San Diego or Oceanside and engage in the
retail distribution of water or assert control over local groundwater or surface water resources
historically used or claimed by the cities over their objection, a conflict may arise.
By signing this letter and returning it to us, the Authority acknowledges that we have
fully disclosed the foregoing matters to the Authority. Further, the Authority confirms that it
consents to Hatch and Parent’s representation of clients on matters in which the client’s project,
governmental or political objectives and/or positions are different from that of the Authority, and
the Authority specifically waives any right to seek disqualification of Hatch and Parent as a

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result of any such difference. Further, the Authority waives any right to seek disqualification of
Hatch and Parent with respect to our representation of any client with regard to the specific client
matters discussed herein, and consents to any such representation. The Authority further
confirms that it will not assert any conflict of interest concerning such representation or attempt
to disqualify this firm from representing such clients, notwithstanding such difference.
We very much value our relationship with the Authority, and recognize that the Authority
is free to terminate its engagement of Hatch and Parent at any time.
As you well know, actual and potential conflicts of interest are a common situation for
law firms specializing in the water practice area and/or working in the governmental or political
arenas. We have made a substantial effort to be responsive to the Authority’s wishes, including
relinquishing and foregoing representation of particular clients at your request even when actual
conflicts of interest were not presented. The firm took these extraordinary steps because it
considers the Authority to be an important client.
Should you have any questions regarding this letter, please contact me at any time. We
respectfully request that you sign and return the enclosed copy of this letter at your earliest
convenience.
Sincerely,

Steven A. Amerikaner
For HATCH AND PARENT

Acknowledgement, Consent and Waiver of Conflict of Interest
I have read and understand the foregoing letter from Hatch and Parent dated August 23,
2001 regarding actual and potential conflicts of interest between the San Diego County Water
Authority and other clients of Hatch and Parent. Specifically, I acknowledge that Hatch and
Parent has disclosed its relationships with the cities of Beverly Hills, Burbank and Glendale,
including but not limited to their status as member agencies of the Metropolitan Water District
and as defendants in the litigation filed by the Authority titled San Diego County Water

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Authority, et al. v. Metropolitan Water District of Southern California, et al. (San Francisco
Superior Court No. 320217). Further, that Hatch and Parent has disclosed its relationships with
the Chino Basin Watermaster, Poseidon Resources Corporation, City of Oceanside and City of
San Diego.
The San Diego County Water Authority confirms its engagement of Hatch and Parent
according to the written terms of their agreement, expressly waives any actual or potential
conflict of interest that may be presented by the firm’s representation of the Authority and its
simultaneous representation of other clients in connection with matters disclosed in the foregoing
letter, and expressly consents to any such representation.
The undersigned is authorized to execute this letter in behalf of the San Diego County
Water Authority.

San Diego County Water Authority

By:

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______________________________________
Daniel S. Hentschke
General Counsel