NATIONAL RIFLE ASSOCIATION OF AMERICA
OFFICE OF THE PRESIDENT

11250 WAPLEs MILL Roan

Flinn-ax, VIRGINIA 22o3o

ONF IDEN L41.

John Frazer
Secretary General Counsel, National Ri?e Association of America

Charles Cotton
Chairman of the Audit Committee, National Ri?e Association of America

April 18, 2019
Dear John and Charles:

As indicated in previous correSpondence, we and others centinue to be deeply concerned about
the extraordinary legal fees the NRA has incurred with Brewer Attorneys Counselors. The
amount appears to be approximately $24 million over a 13?month period, $5 million of which
apparently has been reimbursed-in connection with the Lockton settlement.

Because of the extraordinary size of the Brewer ?rm?s invoices, our NRA Board Counsel
advised us to exercise our ?duciary duty to ensure all the NRA has paid (and allegedly still owe)
the Brewer firm is reasonable, appropriate, and subject to proper oversight and accountability.
To that end, we have asked several times over the past two months for NRA management to
retain an outside, independent review of the Brewer ?rm's invoices. Thus far there has been no
action.

In order to ful?ll our ?duciary responsibilities to management, our fellow NRA board members,
our donors, the public?and to comply with New York not-for-pro?t Board Counsel
has urged us to formally request the engagement of a well-respected ethics lawyer who would
perform the long-sought outside independent examination.

Further, in separate meetings we had with Mr. Brewer on 15 and 20 March 2019, he infermed us
that the NRA has been ?lax? about ?vendor-fee management? in the past. We are deeply
concerned this ?lax management? situation is extant with respect to the Brewer ?rm?s past and
now accelerating legal fees.

There are seven reasons why the NRA must engage an independent, outside expert to review the
Brewer invoices immediately.

(703) 267?1040
(703) 267-393(5fo

First, the Brewer firm?s invoices appear__t_o_be excessive on 

 

The Brewer invoices are draining NRA cash at mindboggling speed.

Based on information provided to us over a month ago by our Secretary General Counsel, the
first 12 invoices the NRA received from the Brewer ?rm were for these amounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date Brewer Firm Invoice
March 2018 25,000.00
April 2018 1,011,184.04
May 2018 1,409,622.82
June 2018 $1,730,571.18
July 2018 1,839,535.17
August 2018 8 1,839,743.68
September 2018 1,883,351.80
October 2018 1,892,735.45
November 2018 2,043,746.51
December 2018 1,847,898.88
January 2019 1,387,452.55
February 2019 1,849,610.20
TOTAL: 19,260,452.28

 

Invoices of this size for 12 months of work appear to be excessive and pose an existential threat
to the ?nancial stability of the NRA. This is a ?scal emergency, yet we have been unable to get
management to engage an outside, independent review to ensure these bills are necessary and
reasonable.

More alarming still, are the most recent ?gures provided in the table below by our Treasurer 
Chief Financial Of?cer. His data indicates the Brewer ?rm?s invoices for let Quarter 2019 total
more than $8.8 million?over $2.9 million per month?or $97,787 per day, seven days a week,
every day of every month.

Invoices of this extraordinary magnitude deserve immediate attention, oversight, and a careful,
competent and unbiased examination. $97,000 a day is a stunning amount of money for any
organization to pay. It cries out for an outside, independent review.

Brewer Attorneys Counselors Paid Owed 2018 8: 13' 2019

 

2018 Comments
Invoiced Services Paid 15,523,390 Paid
Lockton Settlement (4,500,000) Reimbursement 
2018 Total net of reimbursements 11,023,390
.2912
Invoiced Services Paid 5,609,388 Paid
Invoiced Services a Owed 3,191,512 Accrued (owed)
Loci-{ton (651,746) Reimbursement 
Lockton Owed (617,785) Owed but not 
2019 Total net of reimbursements 7,531,370
Iota] Gross 24,324,290 Paid or owed to Brewer
Iotai?et 18,554,759 After reimbursement

Secorgi, the surroundi?gthe Brewer firm?s invoices is alarming.

 

We, and others, have made multiple requests and recommendations for an outside, independent
review of the Brewer ?rm?s invoices. All these requests have been denied. The seerecy
surrounding these large invoices causes suspicion and raises questions.

On the advice of our Board Counsel that it was our ?duciary duty to do so, we have made the
following requests regarding the Brewer invoices:

February 25, 2019, President North asked our General Counsel/Secretary to be shown
the Brewer invoices. He told President North he had been instructed not to show the
invoices.

- February 26, 2019, President North, 13t VP Richard Childress and 2rid VP Carolyn
Meadows, wrote to the Executive Vice President requesting the Brewer ?rm?s invoices.
The request was denied.

On March 22, 2019, President North, VP Richard Childress and 2rid VP Carolyn
Meadows, wrote to the Audit Committee requesting that the Audit Committee retain and
oversee an outside, independent review of the Brewer invoices. As yet, there is no
response.

On March 31, 2019, President North wrote to our Executive Vice President asking that he
order an outside, independent review of the Brewer invoices. He re?ised.

On April 8, 2019, President North wrote to our Executive Vice President urging him to
end this controversy by ordering an outside, independent review of the Brewer ?rm?s
invoices. He again refused.

In Q1 2019 the NRA paid the Brewer firm more than $2.9 million per month. The fact that these
billings are being shielded from review by an outside, independent auditor is alarming. If the
bills are reasonable and properly documented, why the refusal to conduct an independent
review?

hird. the Brewer ?rm?s engagement letter is jngonsistent with indust?: standagdg,

 

The March 2018 engagement letter with the Brewer ?rm is inconsistent with industry
standards. There are several problems with the engagement letter, all to the disadvantage of the
NRA, including:

The Brewer ?rm?s engagement letter is vague regarding the scope of work that Brewer is
performing for the NRA. The letter simply says the Brewer firm is performing legal
services ?in connection with litigation and strategic needs arising from the
termination, or potential termination, of key corporate relationships by contract
counterparties in response to political pressure.? It appears that the Brewer ?rm has far
exceeded this scope?without proper written documentation. As we understand it, the
standard in the legal profession is to require engagement letters for each separate matter,
and to adequately document the scope of work that will be performed on each matter.

The Brewer ?rm?s engagement letter states it is charging the NRA ?on an hourly basis?
at ?its usual and customary rates.? But the NRA is a not-for-pro?t entity. Paying ?rack
rates? to the Brewer ?rm makes no sense. Law ?rms usually reduce rates when
representing non?pro?ts. Why no reduction for the 

The Brewer ?rm?s engagement letter states the ?rm ?requires payment of all expenses
associated with this representation, including both in?house and third?party
disbursements. ln-house charges for support services may exceed the actual cost of
providing such services.? The letter identifies messenger costs, work processing charges,
and telecommunications as examples. It makes no sense for the client of a law ?rm to
pay surcharges on ?in-house charges.?

The Brewer ?rm?s engagement letter states the ?rm uses A International, a company
which is owned by partners of the Firm, to provide document abstracting.? These costs
apparently get passed along (at a surcharge?) to the NRA, but are they commercially
reasonable? Have we looked at the market rate for such services?

The Brewer firm?s engagement letter says Texas law will apply, and that if we have a
dispute with Brewer we must resolve it through arbitration where the loser pays all
attorney fees. These provisions are not in the interests. Indeed, they are unusual
and harmful to the NRA. Texas law? No Virginia-based non-profit should agree to that.
Arbitration? That denies the leverage the NRA needs to compel honest and ethical legal
services. Loser pays? This is a concept from English law?and is not used in America.

It is obvious that in addition to the high fees and secrecy surrounding the Brewer ?rrn?s invoices,
we apparently have lax oversight regarding our engagement of the Brewer ?rm and the scope of
what the Brewer ?rm should be doing, how they are billing us and the rates they are charging.
These matters are key elements of our ?duciary duty and must be addressed by an outside,
independent review.

The Brewer ?rm?s March 2018 engagement letter should be discarded and re-written. If the
Brewer ?rm does not agree to standard terms, a non-pro?t discount, detailed billing guidelines
used by all properly managed corporations and non-pro?ts (explained below), and adequate
scope documentation for each matter on which the Brewer ?rm is w0rking, then the entire
engagement agreement should be terminated.

feeds. oversight of the Brewer ?rm is fatallv iMinistentnithE?mtleraadardsg

 

Our oversight of the Brewer firm is wholly inadequate. As we understand it, our NRA is failing
to properly oversee the Brewer ?rm in multiple ways. For example:

The NRA has failed to require the Brewer ?rm to adhere to ?billing guidelines.? These
are standard in the both the non-pro?t and for?pro?t corporate world. There are samples
on the internet. The American Bar Association provides guidance on this topic. Billing
guidelines help organizations control the costs of outside counsel. The NRA should
implement such billing guidelines immediately and direct the Brewer ?rm to follow
them. They should be part of each separate retainer agreement.

We have failed to secure a discount on Brewer?s ?high? hourly rates. Why do we allow
the Brewer ?rm to charge such high rates? NRA outside counsel at Morgan Lewis wrote
a memo to the NRA last menth stating that:

?The Brewer ?rm?s billing rates and retainer, while Ligh, are not
unheard of in the context of high-stakes corporate litigation. It may well he in
the Association?s interest to obtain a full accounting of the Brewer ?rm?s
time charges to date.? (Emphasis added.)

It should be noted that not all of the Brewer firm?s work is ?high?stakes corporate
litigation.? First, NRA is a non-profit association, rather than a corporation. Second,
some of the matters the Brewer ?rm apparently handles are uncomplicated, routine
matters such as vendor contracts that were not properly managed in years past and
responding to Congressional letters.

Thus far, we have failed to require any outside, independent review of the Brewer
invoices. There are services that perform this function?and we easily could find an
outside expert to perform the function at very little cost. Morgan Lewis opined in its
memo that it may be in our interest to do so. Why would we not do so?

 i?h. judges in cases in which the Brewer ?rmltas thatMr:
Brewer has engaged in ugethical conning: gt}, a EglegaLJudge in Virginia ejected
him from representing the NRA in litigation.

 

 

 

 

Mr. Brewer was found by a Federal District Judge in Virginia to have misled the court, an
offense that led the court to eject Mr. Brewer from participating in a case for the NRA. In that
case, after a special hearing to determine why Mr. Brewer failed to disclose his prior disciplinary
problem in Texas, the Judge in the US. District Court for the Eastern District of Virginia
decided on September 13, 2013 to revoke his standing to participate in the case. The Virginia
federal court stated:

?[T]he Court of Appeals [in Texas] went on to af?rm the ?ndings
of Judge Reyes that Mr. Brewer?s actions were not a negligent act,
or a mistake, or the result of poor judgment, but they were in bad
faith, unprofessional, and unethical, highly prejudicial to the
fair trial of an impartial jury.

And, of course, we?re talking about this push poll that Mr. Brewer
admitted he had reviewed and approved betbre it was used by the
polling company. Disrespeetful to the judicial system.
Threatening the integrity of thejudicial system. Incompatible with
a fair trial. The poll was designed to improperly in?uence the jury
pool. And that the conduct impacted the right of a trial by
impartial jurors. And that it was intentional and in bad faith. And
that the quote, ?it is undisputed that the trial Court's ability to
impanel an impartial jury and to try a case before unintimidated
witnesses are core functions of the Court.?

Had I known about these Opinions, notwithstanding that there is
further appeals ongoing, I wouldn?t have signed the pro hac vice
form and would not have admitted Mr. Brewer to the Eastern
District of Virginia. They are very serious allegations. They are
?ndings of bad faith that go to the core of a fair and impartial
rendering of a jury verdict. And now having reviewed them?and
I realize that the NRA will be inconvenienced and, if necessary,
there might have to be some adjustment to the discovery process
ongoing?but I ?nd that Mr. Brewer?s pro hac vice admission
should be revoked and that he should not be admitted to
proceed further in this case.?

added).

Indeed, the Texas court sanctioned Mr. Brewer on January 22, 2016, writing:

?[T]he manner in which Mr. Brewer has responded to the sanctions
motions and allegations therein is concerning to this Court. Mr.
Brewer?s demeanor was nonchalant and uncaring. Additionally,
Mr. Brewer was repeatedly evasive in answering questions when
he was on the witness stand. This Court sustained multiple
objections for non?responsiveness, instructed Mr. Brewer to
answer the questions being asked of him by counsel, and before
taking more aggressive steps, this Court took a recess during Mr.
Brewer?s examination seeking the assistance of Mr. Brewer?s
attorney. The Court asked Mr. Pridmore [Mr Brewer?s attorney]
to step outside the courtroom and advise Mr. Brewer to follow the
Court?s instructions and be responsive to questions being asked of
him. It was the desire and hope of this Court to highlight to Mr.
Brewer that the matter at hand was of extreme importance and with
potentially grave consequences. . . . The Court ?nds Mr.
Brewer?s actions were not merely a negligent act, a mistake or
the result of poor judgment, and Mr. Brewer?s explanation
that he hears clean hands . . . is insulting to this Court. The
Court further finds Mr. Brewer's attempt to avoid
responsibility and accountability for his conduct to be at the
very least unpersuasive and at the worst in bad faith,
unprofessional, and unethical.?

Ruling from Judge Reyes, Teeluy, Tite?ex, Case No. 2012-504 (Lubbock, TX), January 22,
2016, pages 1?2 (emphasis added). As the Virginia federal court noted, the Texas Court of
Appeals affirmed Judge Reyes?s sanction of Mr. Brewer.

The NRA cannot ignore such findings. We understand that the ethical problem Mr. Brewer has
in Texas is on appeal to the Texas Supreme Court. But the fact is, his honesty and ethics have
been questioned by courts in Texas and Virginia. This record adds to the urgency of the requests
that the NRA immediately conduct an outside, independent review of the millions in fees the
Brewer ?rm has charged to the NRA, . . . fees which appear to be excessive . . . and fees which
appear to have been paid at a rate of more than $97,000 per day in Q1 2019.

Sixth, Mr. Brewer has been actively trying to stop an outside, independent review of his
firm?s invoices.

 

It is even more shunting to learn that Mr. Brewer has personally been actively working to stop an
outside, independent review of his own invoices. Certainly the Brewer ?rm has a conflict of
interest regarding the review of its own bills when it works to resist an outside, independent review
of its own bills.

Seventh, the NRA Board of Directors has a ?duciary dutv?gversee mgssiygegpenditures
QEHBAl?oatls

 

The NRA is a non-pro?t registered in New York. It is regulated by the New York Attorney
General. The New York Attorney General has published guidance on the ?nancial management
of non?pro?ts. We must follow this guidance and the laws governing non-pro?ts in the State of
New York. Multiple guidance memoranda from the New York Attorney General can be found at
B?,gh?ljll?3?15?n. One particularly relevant piece of guidance is titled:

CONTROLS AND FINANCIAL ACCOUNTABILITY FOR NOT-FOR-PROFIT
It states:

primary responsibility of a nonpro?t?s board of directors
is to ensure that the organization is accountable for its
Programs and finances to its contributors, members, the public
and government regulators.?

To ful?ll our directors? ?duciary duties and responsibilities as stewards of our non-pro?t
organization, we must insist on full disclosure, preper oversight, and an outside, independent
review. If we do not, we are bound by our ?duciary duties to do what is right?and to push
further for review and oversight of these extraordinary, multi-million-dollar expenditures. This
is a matter of conscience for both of us.

We want to be clear that we raise concerns about the Brewer ?rm?s multi-million?dollar fees for
only one reason: it is our ?duciary duty to make sure the NRA responsibly uses the funds it
raises from members and the public. We fully support the compliance work the Brewer ?rm has
performed for the NRA. We fully support and expect 100% compliance with all rules,
regulations and laws applicable to non-pro?ts. But this includes compliance in all NRA
contractual relationships with vendors, including the Brewer ?rm. If the NRA Audit Committee
fails to order an outside, independent review, then the NRA Board of Directors, in ful?llment of
its ?duciary duty, should do so.

Conclusion

The decision to permit an outside, independent review of the Brewer legal fees should not be
dif?cult. In fact, it is a ?no-brainer? when one considers the totality of current circumstances:

Over the last 13 months Brewer has billed the NRA approximately $24,000,000, more than $18.5
million net after reimbursements from Lockton. His retainer agreement is flawed, inconsistent
with standards in the industry, and contains provisions clearly harmful to the NRA.

The bills he submitted are not subject to customary ?billing guidelines? used by non?pro?ts and
public corporations. He provides no discount from his ?nermal? billing rates to NRA. He
provides no budget of costs going forward. And the ?scope? of his work is vague and does not
include the projects for which he is billing the NRA.

Despite repeated requests to ful?ll our Board of Directors? ?duciary responsibilities by
conducting an outside, independent review of the Brewer ?rm?s billing details, our efforts have
been unsuccessful. Based on his 1st Quarter 2019 invoices, each day going forward will require
the NRA to expend almost $100,000 with the Brewer ?rm.

Lastly, all of the above should be considered in the context that the lawyer whose bills are in
question has had encounters with Judges who have taken action against him, ?nding ethical
lapses in a Texas court and a false statement to a Federal Judge in Virginia, the result of which
was that Mr. Brewer was ejected from the Virginia proceeding and prohibited from continuing to
represent NRA in the ongoing litigation ?led there.

For all the reasons above, and as we have articulated orallyr and in previous correspondence, we
should retain an outside, independent reviewer of the Brewer ?rm?s billings prior to our Board of
Directors meeting on 29 April in Indianapolis. Failing that, we plan to address the points above
to our Board in person, so they are aware of their ?duciary duties, our efforts to protect this
organization and its members, and let our Board Members decide how they want to proceed.

Charles, hopefully, the agenda for your Audit Committee meeting on Sunday, 28 April will
permit including this document for discussion under ?new business? in executive session. If that
is not possible, please advise and we will plan to introduce this letter during our Board of
Directors meeting on 29 April 2019.

John, please pass a copy of this document as OFFICIAL CORRESPONDENCE to our Executive
Vice President/CEO and inform him that if the Audit Committee takes a pass on retaining the
services of an outside, independent reviewer acceptable to us, then it is our intention to seek
approval for such a review of these massive expenditures frOm the Board Members in
attendance.

 

 

Semper Fidelis,
Oliver North Childress
NRA President NRA 15: Vice President

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