The question of who will continue to represent the city of Mercedes in a trio of lawsuits against a former city attorney remained uncertain after an impasse emerged between the city’s top advisers this week.

The impasse — between interim City Manager Kevin Pagan and the city’s general counsel, Mark Sossi and Anthony Troiani — came during a special meeting of the Mercedes City Commission on Tuesday. At issue was a proposed contingency fee agreement for the city’s continued legal representation in lawsuits it filed last spring against former city attorney Juan Molina.

Troiani and Sossi, who since 2019 have served under contract as Mercedes’ city attorneys and have been litigating the lawsuits since last April, are seeking to alter their payment arrangement as they continue to pursue allegations that Molina defrauded Mercedes during his own time as city attorney.

Pagan, formerly a longtime city attorney for McAllen, excoriated Sossi and Troiani for potentially violating state law in pursuing the contingency fee agreement without providing proper public notice.

The two lawyers, meanwhile, were equally critical of Pagan, saying he may have breached Mercedes’ attorney/client privilege while “wearing the city manager hat” when he sought outside counsel from his former colleagues — attorneys still under the employ of the city of McAllen.

While both sides insisted they were doing their level best to look after the interests of the city, they exchanged several sharp words during Tuesday’s meeting.

“I want to be clear about that, because what’s on the agenda tonight, although it’s related to those lawsuits, is not about the substance of those lawsuits,” Pagan said, referring to the commission’s instructions that he “vigorously” pursue the lawsuits and make sure “the city is appropriately represented by legal counsel.”

NEW LAW

But state law surrounding a municipality’s ability to retain legal counsel on a contingency basis versus via contract changed during the last legislative session.

House Bill 2826, which was in part sponsored by state Rep. Oscar Longoria, D-Mission, made sweeping changes to Chapter 2254 of the Texas Government Code, which deals with professional and consulting services.

Prior to the bill’s passage in 2019, Chapter 2254 primarily governed how state agencies entered into such professional services contracts, including contingency-based legal representation. HB 2826 expanded the statute to encompass “political subdivisions,” such as municipalities.

And it’s that recent change that prompted Pagan to contact his former colleagues for their insight, including McAllen assistant City Attorney Mark Swaim, and Isaac Tawil, who succeeded Pagan as McAllen city attorney after Pagan retired last month.

Pagan had two primary concerns moving forward with the arrangement between the city and Troiani and Sossi — first, that the requirements of the statute had not been satisfactorily met, and second, that the two sides had yet to reach an agreement on the terms of the contingency contract itself.

“There’s a series of steps we need to go through to make sure that we’re transparent to the public about what that contingent fee agreement is going to contain. There’s certain very specific posting requirements that we have to do,” Pagan said.

Among those are public notice requirements that include listing why such a contingency fee arrangement is being sought, the desired outcome, and why it’s in the best interests of residents.

Too, the public notice must include, “the reasons the legal services cannot be adequately performed by the attorneys and supporting personnel of the political subdivision” and “the reasons the legal services cannot be reasonably obtained from attorneys in private practice under a contract providing for the payment of hourly fees without contingency…” the statute reads, in part.

After approval by the commission, the contingency agreement must then be submitted to the Texas Attorney General for approval. The agreement is considered approved if the AG does not reply to the contrary within 90 days.

THE CONFLICT

Sossi explained why he and his law partner are seeking to change the nature of their relationship with the city in this instance. It’s all about risk, he said.

“Part of what you’re being compensated for is the risk, right?” Sossi said.

“The risk of proceeding successfully on the case. In a contingency fee contract, the attorneys spend their time and spend their dollars — spend their dollars — on the expenses. And … if the case is unsuccessful, the attorneys absorb that cost,” he said.

But he demurred on expanding further, saying that doing so would require discussing the merits of the lawsuits — something which needed to be done outside of the public eye in executive session.

“I’m very concerned if we go down the path that’s being proposed, we have a waiver of attorney/client communication privilege,” Sossi said.

Swaim’s professional duties lie with McAllen, not Mercedes, and his friendship with Pagan doesn’t negate that, Sossi said.

“You’re badly misrepresenting the situation,” Pagan shot back, before saying he and Swaim had established a privileged relationship, and that Swaim had provided his insight pro bono.

Sossi questioned the veracity of that assertion, saying he had been directed to communicate with Swaim using Swaim’s official city of McAllen email address. Sossi also criticized Pagan’s stalling of the vote on the contingency fee agreement.

“I don’t think it’s posted in a manner that would allow the commission to vote on it, Mark. This entire chapter (of the government code) is about transparency, about sunshine, so that the citizens of this community can know what’s being done,” Pagan said.

In a rare moment, Troiani spoke up, urging the commission to take the discussion to executive session. But, Sossi continued to press, saying proper notice of the contingency fee agreement could timely be added to the agenda for Tuesday’s meeting, solving the concerns over statutory compliance.

At that, Pagan lobbed another criticism at the pair, calling into question their ability to both represent the city while also being a party to an ongoing negotiation.

“The matter that’s on the agenda is the contract. I don’t see how you all can go into executive session with the city commission unless you’re purporting to represent them in the contract in which you’re one of the parties. And I don’t think you can do that,” Pagan said.

“The last time I checked, we’re the attorneys of record on all three of these suits,” Sossi said.

“But the litigation is not the agenda, Mark,” Pagan replied.

Throughout the back-and-forth volleys, the commission had remained largely silent, listening as the three lawyers argued the arcane.

But after several minutes, Mayor Oscar Montoya — who campaigned on transparency and has repeatedly sought to quell the divisiveness that has previously led to contentious meetings — spoke up.

“I don’t appreciate this kind of stuff,” Montoya said of the spat.

“We haven’t done anything illegal. Again, there’s no malfeasance here. So, these little things, these little barbs get thrown out, (and) it mixes up the public,” he said, referring to Sossi’s assertions that Pagan had acted beyond his scope in seeking outside legal counsel.

In the end, Commissioner Leonel Benavidez made a motion directing the city manager to ensure his communications with other attorneys maintain the city’s confidentiality.

Before a vote could be taken, however, Sossi asked Benavidez to amend the motion to include securing the confidentiality of any communications regarding economic development projects for which McAllen is a direct competitor with Mercedes.

It is unclear what Sossi was referring to, since the three lawsuits involve two land sales that occurred a decade ago.

“I made my motion,” Benavidez said before the commission approved it unanimously.

By Friday afternoon, the agenda for the next meeting showed the commission will again discuss the issue of a contingency fee agreement.

According to the agenda, the commission may possibly take action on soliciting requests for proposals or requests for qualifications for contingent fee legal services.

However, the agenda fails to include the six elements mandated by the statute to be listed in public notice for such a contract.