The University of Louisville hit a stumbling block in its attempted turnaround Monday when a legislative committee rejected its plan to spend $1.25 million on outside lawyers.
Five of eight members of the government contract review committee rejected the school’s amended legal contract. The legislators cited the millions of dollars that have already been approved in the wake of a scathing forensic investigation of the nonprofit U of L Foundation.
The committee on Monday also deferred U of L’s request to spend $400,000 more on a search firm contract, which doesn’t include the impending presidential search.
All the money previously allocated for legal bills has been spent, U of L’s attorneys said. At least half of the legal money was earmarked for potential litigation against former leaders and board members accused of misspending the endowment.
“The problem with the foundation itself was that it was overspending. I can tell you I hear from taxpayers all the time that tell us that we are overspending over here as well,” said Rep. Stan Lee, co-chair of the committee. “This is one time I don’t think we’re ready to do that.”
Amy Shoemaker, an attorney with U of L’s general counsel’s office, said the school is reviewing its options to appeal the decision. Craig Dilger, an attorney with Stoll Keenon Ogden, said his firm will continue to represent U of L in the interim.
Dilger noted his firm considers U of L to be an important client with an important mission. The firm is paid a state-mandated rate, which is less than a third of his typical hourly rate.
“If it was about the money — at the state rate– we wouldn’t do the work,” Dilger said.
Nonetheless, Dilger noted, litigation is expensive. He said the Alvarez and Marsal investigation gave the university a sound legal basis to try to recover what he’s estimated as $40 million to $100 million misspent by former employees, officers or board members at the foundation. But whether the university’s leaders decide to proceed is up to them, Dilger said.
Kate Howard can be reached at firstname.lastname@example.org and (502) 814.6546.
Disclosures: In 2015, the University of Louisville, which for years has donated to Louisville Public Media, earmarked $3,000 to KyCIR as part of a larger LPM donation. University board member Sandra Frazier and former member Stephen Campbell have donated.
This story will be updated.