A Duluth law firm is betting against the house that it will recover Fond-du-Luth Casino revenues for the city.
Maki & Overom has agreed not to seek payment of future legal fees in its case against the Fond du Lac Band of Chippewa unless and until the city prevails. If there's no payout for its client, the city of Duluth, the firm walks away empty-handed.
"We think that's a very generous offer," said City Attorney Gunnar Johnson as he described the arrangement to the City Council on Monday night. Johnson said he views the agreement as an indication of just how confident the legal team is in the strength of the city's case.
The delayed payments could take some of the sting out of the mounting legal costs of the case. Johnson estimated the city already has spent nearly $460,000, prompting him to ask the council for authority to spend up to another $300,000 Monday night. He said the money will not be used to pay Maki & Overom but will go to cover other costs, such as expert testimony, as the case moves forward.
The council voted 7-1 in support of dedicating another $300,000 to the case, bringing the total authorization up to a maximum of $760,000. Councilor Jim Stauber was the sole dissenter. Councilor Patrick Boyle, who serves as a nurse practitioner for the band abstained.
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Stauber asked Johnson if there was any cap on what the city was willing to spend on the case.
Johnson said he didn't support placing a "cap" on what the city would pay to pursue its complicated case against the band.
"We're talking about $150 million at stake here, at a minimum," he said. "You need to continue to fight that fight because of what's
at stake."
Bob Maki, one of the firm's principal partners, explained his motivation for making the delayed-
payment offer to the city. The deal is intended to help cushion the council from the considerable sticker shock associated with such an involved and protracted case. Quite likely, the dispute will play out on three fronts: in the federal court system, before an arbitrator and before the National Indian Gaming Commission. A final resolution could well be a year in the making, Maki said.
"They (the band) could take this to the highest court and the last appeal, because there's so much money at stake. But I've been telling the city: You have a good case, and you have to do this," Maki said.
"I feel so strongly the court will correct this matter that I'm willing to share the risk in order to help keep the city in the case," he explained.
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If the city were to become too fixated on the short-term costs of the case, Maki fears there might be a tendency to cut corners, and that could be dangerous.
"If you make a mistake at this level, you pay dearly. I want to do this right and use the best experts in the country," he said.
Councilor Jay Fosle pointed out that the same law firm, Maki & Overom, had been involved in negotiating the first casino agreement between the band and the city.
"What better attorneys to have than the ones that wrote the original contract?" Fosle said, voicing his support for the city bringing in the best legal experts it could to work on the current case.
Stauber expressed concern that if Maki & Overom didn't submit ongoing bills, the council and public might be kept in the dark about the true cost of the case until after the fact.
Johnson agreed to provide the council with monthly updates about the growing cost of the case.
