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RPVCCA_CC_SR_2014_09_16_04_UUT_Refund_ProcessCfTYOF RANCHO PALOS VERDES MEMORANDUM TO: FROM: DATE: SUBJECT: REVIEWED: HONORABLE MAYOR & CITY COUNCIL MEMBERS DENNIS McLEAN, DIRECTOR OF FINANCE ~ CAROLL YNCH, CITY ATTORNEY SEPTEMBER 16, 2014 TELECOMMUNICATION UTILITY USER TAX REFUND PROCESS CAROLYNN PETRU, ACTING CITY MANAGE~ RECOMMENDATIONS Approve the attached agreement with Daley & Heft, LLP, and Receive and File this report. BACKGROUND On August 13, 2014, the City received a claim for utility user tax (UUT) collected and remitted by telecommunication providers since August 1, 2006 to be refunded back to the City's taxpayers. The claim cited an estimate exceeding $5 million. Actual UUT collected from telecommunication providers from August 2006 through June 2014 is about $5.9 million. However, the City's Municipal Code (subsection 3.30.150) limits claims for UUT refunds to one year preceding the date of the filing of the claim with the City. Actual UUT collected from telecommunication providers for the one-year period ended August 13, 2014 is expected to be about $700,000. The exact amount is not yet known, as the August UUT remittances are not due until September 20, 2014. There are about 15, 130 households in the City; therefore, the average amount of the possible refund per household may be about $46 for the one-year period (note: there may be multiple accounts in each household). On August 19, 2014, the City Council took action to suspend collection of UUT from telecommunication providers. During the week of August 25, 2014, Staff mailed letters directing suspension of collection of UUT to the ninety-two (92) entities that provide telecommunication services to the City's residents. Staff expects that telecommunication providers may require more than one billing cycle to suspend collection of UUT, as system re-programming and other administrative procedures may be necessary. All UUT collected 4-1 TELECOMMUNICATION UTILITY USER TAX REFUND PROCESS September 16, 2014 Page 2 of 3 from telecommunication providers since August 13, 2013, (the one-year claim period allowed by the City's Municipal Code), has been, or will be, transferred to the UUT Telecommunication Claim Account established by the City Council, and will not be recorded in the City's revenue ledger. DISCUSSION Update Regarding Refund Process -Communication with Telecommunication Providers Staff has contacted many of the telecommunication providers to gauge their willingness to directly issue refunds or billing credits to their customers. Of the providers who responded, four smaller companies are willing to issue a billing credit; two other small companies offered to issue a direct refund. However, one larger company with significant market-share in the City is reluctant to process a credit or refund directly to their customers. This provider suggested that the City set up a refund claim process for its residents. Another large telecommunications provider, who generates about one-third of the telecommunication UUT revenue for the City, has indicated it would be burdensome to issue refunds or credits given that the company has different business segments, each with their own billing systems. Therefore, Staff is not optimistic that they will facilitate direct billing credits or refunds. The City has also explored the idea of providing refunds to residents using the billing records of the telecommunication providers; however, all of the providers who responded have been unwilling to release their customers' information to the City, citing privacy concerns. Based on these inconsistent replies, it appears that the most straightforward method to refund one year of the UUT would be for the City to establish a refund claims process. Counsel for the claimant, City resident Sharon Yarber, has suggested that the class action litigation process could provide the framework for establishing notice to the claimants of the refund claim process. Discussion with Daley & Heft Pursuant to authorization received from the City Council, the City Attorney has contacted Scott Noya of the law firm of Daley & Heft, who represented the City of Chula Vista in connection with a UUT lawsuit filed by the Marks Finch firm. The City Attorney made contact to ascertain whether Mr. Noya would be interested in defending the City of Rancho Palos Verdes in connection with the lawsuit that is expected to be filed on behalf of Ms. Yarber. Mr. Noya stated that he would be interested in representing the City and has submitted a letter and retainer agreement, both of which are attached to this report. Due to Mr. Noya's expertise in this area, Staff recommends that the City Council approve the attached agreement with Daley & Heft. Refund Claim Process Staff defers to the experience and advice of Daley & Heft prior to establishing a proposed 4-2 TELECOMMUNICATION UTILITY USER TAX REFUND PROCESS September 16, 2014 Page 3 of 3 refund claim process for consideration by the City Council. Through a refund claim process, a claimant could submit verification (such as one invoice) to the City documenting that the resident paid UUT to the City during the 2013-2014 claim period. The tax collected per the single invoice submitted by the claimant multiplied times 12 months could establish the refund claim amount (and reduce the taxpayer burden to provide proof of tax paid). As an alternative, the average annual UUT that was collected from each household for telecommunication (about $46) could be established as the claim amount that is paid by the City. Mr. Noya has stated that the class action certification and settlement did provide an effective mechanism for providing notice of a claim process to residents of Chula Vista. If the City Council approves Staff's recommendation of hiring Mr. Noya to represent the City in connectic;m with the lawsuit that is expected to be filed on behalf of City resident Sharon Yarber, Mr. Noya could provide guidance to Staff regarding the establishment of the claim process, as well as a recommendation of an independent third-party claim administrator, if necessary. Staff would work closely with Mr. Noya, as well as any claim administrator, to develop the notice, the claim form (including a web-based claim system) and documentation of the payment of the claim by the City. Again, this process also could be developed in connection with the certification and settlement of a class action lawsuit. FISCAL IMPACT The fiscal impact for the loss of FY13-14 UUT revenue was outlined and offset with other budget adjustments in the September 2, 2014 Staff Report titled "FY13-14 Fiscal Year-End Budget Adjustments and Continuing Appropriations". Staff will return to the City Council with proposed budget adjustments to offset the loss of UUT for FY14-15 at a forthcoming City Council meeting If the City establishes a refund process that necessitates hiring a third-party claims administrator, and the cost of that service cannot be absorbed by the current budget, Staff will return to the City Council with a report regarding that issue and a proposed budget adjustment. The cost of the potential third-party claims administrator is not known at this time. Assuming that the Marks Finch firm will file a lawsuit against the City on behalf of Ms. Yarber, the City will incur the attorney's fees that are necessary to defend and/or settle that case, including the establishment of the claim process. Attachments: Letter from Scott Noya, Esq. and proposed retainer agreement. 4-3 DENNIS W. DALEY t ROBERT R. HEFT RICHARD J. SCHNEIDER ROBERT W. BROCKMAN, JR. MITCHELL D. DEAN DAVID P. BERMAN SCOTTNOYA* ROBERTH. QUAYLE. IV LEEH. ROISTACHER 1' MATTHEW E. BENNETT SAMUELC. GAZZO ~t SHIV A E. STEIN MATTHEWT. RACINE RACHEL B. KUSHNER REECE A. ROMAN SUZANA I. SINATRA HEATHERE. PARADIS AMBERH-T. GARDINA STEPHANIE M. SKEES CHRISTOPHER M. RIDGEWAY MICHELLE L. GEARHART TERRA M. DAVENPORT BRIANA MONAHAN PENDERGRASS JEFFREY W. TYE CHRISTOPHER A. HEIM VIA PDF/EMAIL Carol W. Lynch llJIDALEY • ; I &HEFT LLP ATTORNEYS AT LAW 462 STEVENS A VE. SUITE 201 SOLANA BEACH, CALIFORNIA 92075-2099 TELEPHONE (858) 755-5666> FAX (858) 755-7870 WWW.DALEYHEFT.COM September 9, 2014 RICHARDS, WATSON & GERSHON 355 SOUTH GRAND A VE., 40TH FLOOR Los ANGELES, CA 90071 RON J. BEVERIDGE OF COUNSEL CATALINA V. SHOATE DIRECTOR OF ADMINISTRATION f also admitted in Washington * also admitted in Hawaii !! also admitted in Iowa + Certified Appellate Specialist by the State Bar of California Board of Legal Specialization WRITER'S E-MAIL SNOY A@DALEYHEFT.COM Re: Proposal to Provide Legal Defense Services to City of Rancho Palos Verdes - UUT Refund Claim and Anticipated Class Action Litigation Dear Ms. Lynch: Daley & Heft, LLP is pleased to submit this proposal to defend the City of Rancho Palos Verdes in the recent class claim seeking Utility User's Tax (UUT) refund, submitted on behalf of Sharon Yarber and all similarly situated taxpayers, and the threatened/anticipated class action litigation challenging City of Rancho Palos Verdes' UUT ordinance as applied to telecommunications services. Brief Description of Daley & Heft Daley & Heft is a San Diego County based firm with a statewide reputation in the field of public entity law. Daley & Heft has been in existence since 1980 (34 years). We represent all types of public entities including cities, districts, and agencies throughout California. 4-4 Carol W. Lynch Re: Proposal to Provide Legal Defense Services to City of Rancho Palos Verdes - UUT Refund Claim and Anticipated Class Action Litigation September 9, 2014 Page2 More information about Daley & Heft is available at our website: www.daleyheft.com Please consider the undersigned, Scott Noya, Partner, as the point of contact for legal services by Daley & Heft in connection with this proposal. Daley & Heft Attorneys proposed to defend City of Rancho Palos Verdes in the UUT Claim Scott Noya (biography attached) is proposed as Daley & Heft's lead UUT class action defense litigator for this matter. Associate Terra Davenport will assist, with other Daley & Heft lawyers available as needed. Terra Davenport is a member of the firm's civil litigation practice group with an emphasis in public entity defense . . In the course of over 25 years of practice at Daley & Heft the undersigned has successfully defended numerous public agencies at trial and on appeal in a wide array of complex matters. A list of trial and appellate actions litigated in federal, Hawaii and California courts is available upon request. My prior relevant experience includes defending City of Chula Vista in a significant "UUT" class action matter claiming illegal municipal taxation of telecommunication services. From 2011 through the present I handled Chula Vista's defense in that similar class action lawsuit, and successfully resolved the case through mediation. In the process I gained invaluable expertise in the highly complex technical issues involving cellular and other communications technology. The class action UUT lawsuit was brought challenging City of Chula Vista's taxation of wireless and other telephone service charges paid for intrastate, interstate and international communication services. The class contended City of Chula Vista's utility user's tax ordinance is illegal as applied to wireless and other telecommunication services because, among other arguments, such services are exempt from federal taxation under section 4251 of the Internal Revenue Code. The Chula Vista UUT ordinance has many similarities to those of other municipalities, including City of Rancho Palos Verdes' Telephone User Tax. The allegations of the Chula Vista class action are very similar to the claims against City of Rancho Palos Verdes. Handling City of Chula Vista's defense to the UUT class action case involved conducting extensive research on federal communications laws as well as relevant provisions of state statutes, including the Public Utilities Code. Chula Vista's defense also consisted of working closely with various telecommunications experts, conducting discovery with telecommunications providers regarding proprietary UUT collection methodology, and handling class certification and notice procedures. During this complex process I developed expertise on various legal and technical issues (such as VoIP, bundled services, etc.) directly impacting the permissible scope of taxation of telecommunication services. Our defense team also monitored UUT refund actions pending in other courts, and coordinated with public agency counsel in those matters. Through 4-5 Carol W. Lynch Re: Proposal to Provide Legal Defense Services to City of Rancho Palos Verdes - UUT Refund Claim and Anticipated Class Action Litigation September 9, 2014 Page 3 every stage of the litigation we vigorously defended the legal validity of City of Chula Vista's UUT ordinance, and its application to modem telephone services, including wireless telecommunications. Our office played a major role in negotiating the settlement reached in the Chula Vista matter, drafting the settlement agreement terms, motions for preliminary and final approval, the class refund terms, notices to class claimants, publication of notice of the settlement, and all other aspects of the process. Our services to the City of Chula Vista also included preparing UUT ordinance· amendments, related staff reports, supporting administrative record information, and resolutions (adopted by Chula Vista in August 2014) to further limit exposure and risk of UUT challenges going forward. · Feel free to contact Bart Miesfeld, Senior Assistant City Attorney at Chula Vista (619) 585- 5684), to discuss our handling of Chula Vista's defense in their UUT class action case. This background of handling UUT class action claims provides specific expertise that is directly transferable to benefit the City of Rancho Palos Verdes' defense in the pending claim and anticipated class action litigation. Proposed Legal Personnel Rates As public agency attorneys, we are mindful of the fiscal constraints such agencies face. As such, we make every attempt to keep our costs and expenses as reasonable as possible. Daley & Heft maintains accurate, daily entries of its legal services. Attorney and paralegal time is charged in 1/lOth hour increments. The time entries are comprehensive, allowing the client to analyze the work performed and amount of time spent on specific tasks. Fees quoted include all office and administrative support services. ·We do not bill for word processing time. Reimbursement of costs advanced by Daley & Heft will be billed at our actual expenses related to City of Rancho Palos Verdes matters, including some long distance telephone charges, photocopy charges at the rate of $.10 per page, and any costs of reproducing photographs, documents and other items necessary for legal representation. Mileage reimbursement is charged at the prevailing IRS rate. Daley & Heft proposes hourly fee rates for legal personnel in this matter as follows: Partners $250/hour; Associates $225/hour; Paralegals $110/hour. Daley & Heft recognizes that hiring top-notch attorneys is a significant investment. We believe our experience and expertise in public agency law allows us to perform efficiently and competitively in the comparative legal market, resulting in delivery of high quality service and value to our clients. 4-6 <;!~ol w. ~yncb Re: Ptrip~§al to Pi;9\lj4e J.,eg~lPe(e~se S~tces to City of:Q.~eho P~os Verdes - U'(J'I' Re:t\ir\d Clmtn and Anticipated Class Action Litigatj()n SeptemQer 9. 2014 :P.ige4 · We loo'k forward to the opportunity to assist in defending the City of Rancho Palos Verd.es and working with you. If you have any questions or would like additional infonnation, please do not hesitate to contact me directly. SN/mek Enclosure Very truly yo , CWi Scott Noya 4-7 Scott Noya Partner 11111 DALEY •ll&HEFTLLP 462 Stevens A venue, Suite 201 Solana Beach, CA 92075 Phone: (858) 755-5666, Ext. 7222 Fax: (858) 755-7870 SNoya@DaleyHeft.com Edy cation •University of San Diego School of Law, J.D., cum laude, 1988 •Loyola University, B.A., 1984 ExPfrience Daley & Heft, LLP, Solana Beach, California Partner i995 -Present; Associate 1988 -1995 • Strong background representing governmental, public and quasi-public agencies, and working with a diverse array of regulatory boards and commissions. Extensive experience as lead trial counsel, managing attorneys, paralegals, and legal support staff teams in litigated matters. • Handle wide range of complex litigation in federal, state and appellate courts in California and Hawaii, including conducting numerous jury trials in eminent domain, inverse condemnation, quiet title, boundary disputes, general civil litigation, tort defense, employment practices, and product liability claims. • Advise public agencies, non-profit and private companies in real property acquisition and development projects, commercial transactions, leasing, construction contracting disputes, contract claims, business matters and class action claims. • Contributing author and invited speaker for variety of real estate organizations, including the International Right of Way Association, California Redevelopment Association, and California Land Surveyors Association. • Representative public agency clients include the City of San Diego, San Diego Unified Port District, San Diego County Water Authority, and City of Chula Vista. • Published appellate opinions include City of San Diego v. Sobke, a landmark decision on valuation of loss of business goodwill in eminent domain. Bonon{Affiliations • State Bar of California • State Bar of Hawaii • U.S. District Court, Southern District of California • U.S. District Court, Eastern District of California • Member, San Diego County Bar Association • Member, San Diego Defense Lawyers • Member, North County Bar Association • Member, International Right of Way Association • AV® Preeminent™ Peer Review Rated, Martindale-Hubbell • President, School Board, Stella Maris Academy, La Jolla • Board of Directors, Rest Haven Children's Health Fund, San Diego 4-8 DALEY & HEFT, LLP 462 Stevens Avenue, Suite 201 Solana Beach, CA 92075 (858) 755-5666 ATTORNEY-CLIENT RETAINER AGREEMENT This is the written retainer agreement ("Agreement") that California law requires attorneys to have with their clients. Daley & Heft ("Attorney") will provide legal services to City of Rancho Palos Verdes ("Client") on the terms set forth below. 1. CONDITIONS. This Agreement will not take effect, and Attorney will have no obligation to provide legal services, until client returns a signed copy of this Agreement. 2. SCOPE OF SERVICES. Client hires Attorney to assist in the defense of a class claim dated August 13, 2014, submitted on behalf of Sharon Yarber and all similarly situated taxpayers, seeking Utility User's Tax (UUT) refimd and the threatened/anticipated class action litigation challenging City of Rancho Palos Verdes' utility user tax (UUT) ordinance as applied to telecommunications services. Attorney will provide those leg.al services reasonably required to ·represent Client, in association with the Richards, Watson & Gershon law firm, as counsel for Client. 3. RETENTION OF FIRM RATHER THAN PARTICULAR ATTORNEY. Client is retaining the law firm of Daley & Heft, LLP. The partner primarily responsible for Client's matter(s) is Scott Noya. However, Client is retaining Daley & Heft, LLP and not any particular attorney, and the attorney services to be provided will not necessarily be performed by any particular attorney. 4. INSURANCE DISCLOSURE. Attorney maintains errors and omissions (malpractice) insurance coverage. 5. CLIENT'S DUTIES. Client agrees to be truthful with Attorney, to cooperate, to keep Attorney informed of any information or developments which may come to Client's attention, to abide by this agreement, and to pay Attorney's bills. Client will assist Attorney in providing information and documents necessary for the representation in the described matter( s ). 6. LEGAL FEES AND. BILLING PRACTICES. You agree to pay by the hour at our prevailing rates for time spent on your matter by our legal personnel. Our current hourly rates for legal personnel (and other billing rates) are set forth on the attached Rate Schedule. We will charge you for the time we spend on telephone calls relating to your matter, including calls with you, opposing counsel, or court personnel. The legal personnel assigned to your matter will confer among themselves about the matter, as required. When they do confer, each person will charge for the time expended. Likewise, if more than one of our legal personnel attends· a meeting, court hearing, or other proceeding, each will charge for the time spent. We will charge for waiting time in court and elsewhere and for travel time, both local and out of town. 1 4-9 7. COSTS AND OTHER CHARGES. (a) In General. We will incur various costs and expenses in performing legal services under this agreement You agree to pay for those costs and expenses in addition to the hourly fees. The costs and expenses commonly include process servers' fees, fees fixed by law or assessed by courts and other agencies, court reporters' fees, jury fees, private investigation fees, photographer/graphic artist fees, mediator, arbitrator or special master fees, long distance telephone calls, messenger and other delivery fees, postage, parking and other local travel expenses, photocopying and other reproduction costs, clerical staff overtime, word processing charges, charges for computer time, and other similar items. Except for the items listed on the Rate Schedule, all costs and expenses will be charged at our cost. (b) Out of Town Travel. Client agrees to pay transportation, meals, lodging and all other costs of any necessary out of town travel by Attorney's personnel. Client will also be charged the hourly rates for the time legal personnel spent traveling. (c) Consultants and Investigators. To aid in the representation in Client's matter, it may become necessary to hire consultants or investigators. Client agrees to pay such fees and charges. Attorney will select any consultants or investigators to be hired and Client will be informed of persons chosen and their charges. (d) Client's Responsibility re Costs. Attorney may advance such costs and expenses on Client's behalf, but is not obligated to do so. Client agrees to reimburse Attorney upon demand for any such advances. Client is responsible for such reimbursement regardless of the status or outcome of the litigation, or the amount of any recovery. ( e) Client Further Agrees. That if monies are maintained in Attorney's trust account for the purpose of paying fees and costs as incurred, Attorney is authoriz@d without the prior consent of Clients to transfer sufficient funds from trust to pay current as well as past due fees and costs upon mailing of bills for fees and costs in the ordinary course of business. (f) Court Ordered Sanctions. Client agrees to pay all court ordered sanctions levied as a result of legal positions taken in the action by counsel on Client's behalf where counsel has apprised Client of a potential risk that sanctions could be awarded as a result of a particular legal position taken. Examples of such legal positions could be, but are not limited to, causes of action asserted, assertion of privileges on behalf of client or assertions of legal objections to disclosure or production of evidence. Client is not responsible for sanctions awarded specifically against counsel for counsel's personal misconduct or actions. 8. BILLING STATEMENTS. Attorney will send Client periodic statements for fees and costs incurred. Each statement will be payable within 60 days of its mailing date and Client agrees to make its best efforts to make payment within that time. Client may request a statement at intervals of no less than 30 days. If client so requests, Attorney will provide one within I 0 days. The statements shall include the amount, rate, basis of calculation or other method of determination of the fees and costs, which costs will be clearly identified by item and 2 4-10 amount. If Client does not object in writing to specific charges within 60 days of the date of an invoice, the charges will be deemed reasonable and necessary. 9. DISCHARGE AND WITHDRAW AL. Client may discharge Attorney at any time. Attorney may withdraw with Client's consent or for good cause. Good cause includes Client's breach of this agreement, refusal to cooperate or to follow Attorney's advice on a material matter or any fact or circumstance that would render Attorney's continuing representation unlawful or unethical. When Attorney's services conclude, all unpaid charges will immediately become due and payable. After services conclude, Attorney will, upon Client's request, deliver Client's file and property in Attorney's possession, whether or not Client has paid for all services. 10. DISCLAIMER OF GUARANTEE AND ESTIMATES. Nothing in this agreement and nothing in Attorney's statements to Client will be construed as a promise or guarantee about the outcome of any matter. Attorney makes n.o such promises or guarantees. Attorney's· comments about the outcome of any matter are expressions of opinion only. Any estimate of fees given by Attorney shall not be a guarantee. Actual fees may vary from estimates given. 11. LIEN. You hereby grant us a lien on any and all claims or causes of aetion that are the subject of our representation under this agreement. Our lien will be for any sums owing to us at the conclusion of our services. The lien will attach to any recovery you may obtain, whether by arbitration award, judgment, settlement or otherwise. 12. ENTIRE AGREEMENT. This Agreement contains the entire Agreement of the parties. No other agreement, statement, or promise made on or before the effective date of this Agreement will be binding on the parties. 13. SEVERABILITY IN EVENT OF PARTIAL INVALIDITY. If any provision of this Agreement is held in whole or in part to be unenforceable for any reason, the remainder of that provision and of the entire Agreement will he severable and remain in effect. 14. MODIFICATION BY SUBSEQUENT AGREEMENT. This Agreement may be modified by subsequent Agreement of the parties only by an instrument in writing signed by both of them or any oral agreement only to the extent that the parties carry it out. 15. ARBITRATION OF DISPUTES. If a dispute arises between Client and Attorney regarding fees/costs due or legal services in connection with the claim(s) covered by this Agreement, such dispute shall be submitted to binding arbitration. This includes an.y claim against Attorney for breach of contract, negligence, breach of fiduciary duty or other wrongdoing. Such arbitration shall be conducted in accordance with the rules of the American Arbitration Association. YOUR INITIALS BELOW SIGNIFY YOUR ACKNOWLEDGMENT OF THE FOLLOWING EXPLANATION: You acknowledge that Attorney has explained to you that such binding arbitration may deprive you of various rights that you otherwise might have in a legal action, 3 4-11 including, without limitation, the right to a jury trial, the right to appeal, and full discovery rights. _______ (Client's initials) 16. EFFECTIVE DATES. This Agreement will take effect when you have performed the conditions stated in Paragraph 1, but its effective date will be retroactive to the date we first performed services. The date at the beginning of this agreement is for reference only. Even if this agreement does not take effect, you will be obligated to pay us the reasonable value of any services we may have performed for you. THE PARTIES HA VE READ AND UNDERSTOOD THE FOREGOING TERMS AND AGREE TO THEM AS OF THE DATE ATTORNEY FIRST.PROVIDED SERVICES. IF MORE THAN ONE .CLIENT SIGNS BELOW, EACH AGREES TO BE LIABLE, JOINTLY AND SEVERALLY, FOR ALL OBLIGATIONS UNDER THIS AGREEMENT. THE CLIENT SHALL RECEIVE A FULLY EXECUTED DUPLICATE OF THIS' AGREEMENT. Dated: _________ _ Dated: September 12_, 2014 By: ____________ ,[Name] ___________ ,[Title] ___________ [Address] ____________ [,Phone] ___________ _..Email] cott Noya, Esq. 462 Stevens Avenue, S 'te 201 SolanaBeach, CA 92075 Tel: (858) 755-5666, Ext. 7222 Email: SNoya@daleyheft.com 4 4-12 RATE SCHEDULE A. Identification Client: City of Rancho Palos Verdes Matter. Client hires Attorney to assist in the defense of a class claim dated August 13, 2014, submitted on behalf of Sharon Yarber and all similarly situated taxpayers, seeking Utility User's Tax (UUT) refund and the threatened/anticipated class action litigation challenging City of Rancho Palos Verdes' utility user tax (UUT) ordinance as applied to telecommunications services. Attomey will provide those legal services reasonably required to represent Client, in association with the Richards, Watson & Gershon law firm, as counsel for Client. B. Hourly rates for legal personnel Partners Associates Paralegals C. Standard charges $250/hour $225/hour $110/hour We charge for our time in minimum units of .10 hours. D. Costs and expenses In-office ph.otocopying Mileage E. Subject to change .10/page Applicable current I.R.S. rate The rates on this schedule are subject to change on 30 days' written notice, subject to Client approvaVacceptance. 5 4-13