guest commentary by David Potts
Editor’s note: David Potts is a certified public accountant with more than 33 years experience. Although every effort is made to provide you accurate and timely tax information, it is general in nature and not specific to your facts and circumstances. Consult a qualified tax professional to discuss your particular case. Feel free to e-mail topic suggestions or questions to email@example.com
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Trusting people has its risk as well as its reward. Business works best when you can trust your employees to show up to work and work hard and when you can trust your vendors to deliver on what they promised.
On the opposite end of the spectrum, if you don’t trust a person or company you do business with, then a detailed contract will be required with penalties for failure to uphold the terms, additional time requirements on you or your managers to negotiate terms, and increased costs to monitor compliance.
Trust is a behavior that we often take for granted but it is pervasive in the simplest transactions in life. But what happens when trust between parties is weak?
Let’s look at a recent “transaction” between two attorneys, Matt Campbell and Daily and Woods. On the surface, it appears a simple transaction. Matt, an attorney, represents a client who has an issue with the City of Fort Smith. The attorney representing Fort Smith is Jerry Canfield who has been hired by the city Board of Directors. Canfield is backed by the law firm of Daily and Woods, a firm of which he is a partner. The transaction should be simple where each attorney keeps their time and bills that time to their client. However, in this case there was a hiccup.
This time, what should have been a simple transactions wasn’t. There was a discrepancy between each firm’s documentation of time and expense billed by Daily and Woods to the City of Fort Smith. Matt Campbell claimed that Daily and Woods billed the City of Fort Smith for telephone calls that were not real, calls Daily and Woods billed as calls with Matt Campbell that Matt Campbell claimed never happened. How the City Administration dismissed the discrepancy eventually made me question if our City Administrator, our Mayor, and our City Board of Directors take their positions of trust seriously.
Let me make it clear I am not making any allegation of wrong doing by any party. I am saying that the way Administrator Ray Gosack, Mayor Sandy Sanders, and City Directors George Catsavis, Andre Good, Mike Lorenz, Keith Lau, and Kevin Settle handled the matter lowered my trust level of their integrity to manage the city’s affairs and the city’s money appropriately. Is this decrease in my trust of their integrity appropriate? I don’t know. That’s my point. But it was caused by a lack of information and uncertainty. I, like most people, don’t like uncertainty. This uncertainty increases my perceived risk of trusting our city government.
Matt Campbell’s history is not that of a crack pot. He seems very credible. Daily and Woods has always had a reputation of competency and integrity itself. However, Matt Campbell has challenged their integrity based on invoices they submitted to the City that Campbell has obtained through the Freedom of Information Act. Campbell claims these invoices listed bogus calls to Campbell’s office. Below is a quick executive summary of the issue as I see it.
After the story was published in Matt Campbell’s blog, the Blue Hog Report, and related stories were published in The City Wire, Jerry Canfield (the City’s attorney and partner at Daily and Woods) defended his firm’s bills to the City of Fort Smith.
Eventually, City Directors Pam Weber and Phil Merry, wanted to discuss the City’s relationship with Daily and Woods and Merry requested that the next board meeting’s agenda include a review of the City’s contractual relationship with Daily and Woods and that the City hire an independent accounting firm to audit the City’s invoices from Daily and Woods received over the last 3 ½ years and to appoint a commission to review. To me this seemed like an appropriate action to take. In my mind it would most likely demonstrate Daily and Woods acted properly and that Gosack was righteous in his defense of our city attorney. But then …
The next thing I am reading was The City Wire’s report that Directors Catsavis, Good, Lorenz, Lau, and Settle voted to remove Merry’s requests from the Board’s agenda.
So why did my trust level in Gosack and our Board of Directors take a hit because of the way they handled this matter? Because an allegation that our City Attorney and his law firm Daily and Woods inappropriately billed the city is a serious allegation, one that should have been examined in some manner. If the examination showed there was no impropriety in the billings, then Daily and Woods would not only have been exonerated, but the public’s trust in their firm would have increased. As it is now the public is left to speculate, uncertain of the real facts. It is this uncertainty that makes it a higher risk proposition to trust that all is well.
Also, the vote to remove from the agenda any discussion of the matter feels orchestrated. The law prevents our Directors to get together in private to discuss matters related to the City’s administration or management. So to vote to remove this important an item from the agenda without any public discussion makes me wonder. Who was the intermediary that was able to broker this vote among the Directors. Gosack? Perhaps. No, Ray wouldn’t do that. That would infer that Ray allowed an unacceptable level of cronyism. It was charges of cronyism that back in the 1960’s moved Fort Smith, with the assistance of the law firm of Daily and Woods, from a Mayoral form of government to our current city administrator form of government.
Oh well, we will never know for sure if Daily and Woods acted properly. Maybe they did, maybe they didn’t. Besides, our Administrator and Directors didn’t think claims of improper billings was worthy of consideration and examination, I guess I shouldn’t care either. Having a city government that valued transparency is a pipe dream anyway.