A recent Los Angeles Times story, “CalPERS’ $11-Million Legal Bill Raises Eyebrows” reports that the California Public Employees’ Retirement System (CalPERS) paid $11 million in attorney fees to Steptoe & Johnson to conduct an internal review, an amount that has some of the fund’s own directors proposing more stringent oversight of outside legal fees.  CalPERS is the nation’s largest public pension fund, with over $232 billion in the fund.

CalPERS disclosed the $11 million payment to Steptoe in response to a March 18 request from the Los Angeles Times.  Executives said they negotiated a special rate of no more than $400 an hour per lawyer, but they declined to say how many lawyers worked on the case.  Still, the legal bill needs to be closely scrutinized, said California State Controller John Chiang, a CalPERS board member.  The controller “wants to see a full accounting of the dollars spent,” his spokesman Garin Casaleggio said.

Critics of the legal bill said the internal review of the CalPERS could have been done by the California attorney general’s office.  Others say they were underwhelmed by the Steptoe investigation’s findings, many of which had been previously reported by the media.  Others point to the close relationship of the Steptoe firm and CalPERS, pointing to previous work the firm did for the pension fund.  “Normally, when you hire an outside law firm to do an investigation of this type, you want someone who doesn’t have a relationship with the company and the management of the company or, in this case, a government agency,” said Keith Bishop, securities lawyer and former California Department of Corporations commissioner.