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Anyone worried that the District’s newest elected office wouldn’t adapt quickly to the realities of District politics can set their minds at ease. Several nights a week, all five would-be attorneys general put Wilson Building regulars to shame with their sharp elbows at candidate forums. OG AG candidate Paul Zukerberg slams his opponents as mere “aspirational” to his “perspirational” campaign, while Edward “Smitty” Smith never fails to bring up his hardscrabble Anacostia upbringing. Hopeful Lorie Masters even has a TV ad.
But maybe no one is better positioned to enjoy the new office than Karl Racine, who’s taken a leave of absence from white-shoe law firm Venable to run for the job. With a gushing endorsement from the Washington Post editorial board and an election board’s lottery victory that gave him the first spot on the ballot, Racine is well-positioned in the little-watched race. They’re both killer advantages that Racine makes sure to note on his street signs.
Racine isn’t betting everything on Post diehards and chance, though. He’s also loaned or given his campaign $450,000 since the race began, giving him a $40,000 cash advantage over his nearest rival as of Oct. 10.
Racine, 51, has another asset: six years as the managing partner at Venable. While Masters and Zukerberg rival him in years of experience, Racine has the best claim to replicating his abilities overseeing hundreds of lawyers in the Office of the Attorney General.
“I have the right experience for the job,” Racine said at a forum Monday. “And don’t be fooled, it’s a big job.”
Racine’s legal prominence isn’t without its downsides. He defended disgraced ex-Councilmember Harry Thomas Jr. after Thomas stole grant money meant for kids, a fact that inspired a parody Twitter account to dub him “Korrupt Karl.” Venable’s work on behalf of District contractor Whiting-Turner Contracting looks to be the main target of an “ethics pledge” from Smitty’s campaign that Racine refused to sign. (Then again, neither did the other three candidates.)
None of that has managed to diminish Racine’s other advantages. But federal and District reports on Venable’s billing suggest that Racine’s management of the firm may not be the asset that he claims it is. While Racine ran the firm, according to the audits, Venable overbilled its clients—including the District—by hundreds of thousands of dollars.
When Venable partners elected Racine to be managing partner in 2006, they also made him the first African-American managing partner of one of the country’s top 100 law firms.
It was a historic “first” that came with staggering amounts of responsibility. According to the American Bar Association’s Law Practice magazine, a managing partner’s duties including monitoring a firm’s billing, ethics, and finances, as well as supervising staff. Seeing all that Racine handled for six years, LL can hardly begrudge him $450,000 to toss away on political ambition. (Neither Racine nor Venable would comment for this article.)
To hear Racine tell it, he used his position to recruit more black lawyers, all while managing Venable through a recession. But the audits suggest that not everything was always well at Venable—at least not for some of its clients.
In 2009, with Racine almost three years into his position as managing partner, the Treasury Department’s Troubled Asset Relief Program hired Venable to work on its post-financial crisis bank bailouts. The resulting collaboration would become a model in how not to handle outside legal work on the program.
In 2011, an inspector general looked into whether Venable’s billing to the Treasury Department could be substantiated. Venable submitted bills that were with “vague and inadequate” work descriptions, according to the report, as well as expenses that weren’t allowed under the terms of the contract.
When the inspector general audited $1,027,049 worth of payments to Venable, it questioned $676,840 worth of payments—which amounted to two-thirds of the audited fees. The investigation found many expenses, according to the report, that should have had more documentation.
Venable’s billing practices under Racine affected the District’s local government, too. Back when the Nationals didn’t even have a stadium, much less a regular playoff berth, the District used eminent domain to take land in the 20-acre footprint for what’s now city-financed Nationals Park.
As landowners filed lawsuits over the seizure, the District hired Venable in October 2005 to help fight for the land. (Racine became managing partner seven months later.) The baseball stadium fight would turn out to be a boon for Venable’s staff and their stomachs, even if not for District taxpayers.
A 2007 report from the D.C. Auditor found issues similar to what TARP’s inspector general would find four years later. Venable’s contract with the District, initially budgeted at $1.87 million, had ballooned by February 2007 to $2.4 million. Those Venable eminent domain expenses alone, the auditor warned, would contribute to putting the stadium construction over its $611 million maximum budget.
Those legal services weren’t an example of the legal battle just running longer than expected, though. Instead, the cost overruns were blamed in part on Venable doing work “in violation of the terms of the contract,” according to the audit. Venable’s misdeeds, according to the audit, included billing at the wrong hourly rates and billing for the work of employees who had never been approved by the District.
Venable employees weren’t just remunerated with cash. The audit also found them inappropriately billing for 28 lunch and dinner orders, for a total of $1,737.70 in meals. District taxpayers picked up the check.
In total, the audit found $261,953.80 in questionable hourly billing, with more than half of the invoices on the project filed after Racine became managing partner. Venable’s handling of the eminent domain cases was so suspect that the auditor recommended that the Office of the Attorney General consider breaking its contract with Venable. The auditor even fretted that the contract could have broken federal and D.C. laws on spending money that hasn’t been appropriated by the government. After the auditor published its report, Venable took around $300,000 off its bill to the District.
In fairness to Venable and its old managing partner, both investigations found that the government officials appointed to monitor Venable were just as clumsy. Some of the TARP fees would never have been approved if the TARP overseers were doing their jobs, according to the federal investigation. The D.C. Auditor report found that OAG had never proven that it needed Venable’s help, and never appointed a project manager to monitor the firm.
Racine stepped down as managing partner in 2012, but voters could send him back into management in November. He looks to be ready for it: In a 2010 interview with the Post, he described spending more time on business instead of “good works” as his biggest regret.
LL can’t blame him. So far, public service has been very good to Venable.
Photo by Darrow Montgomery