Tenn. Lottery bypasses rules to hire Memphis law firm

Nov 26, 2003, 4:29 am (Post a comment)

Tennessee Lottery

A Memphis law firm selected to provide legal counsel for the Tennessee Lottery was actually formed the day the selections were announced, and was chosen despite the fact that it did not meet minimum requirements outlined by the Lottery's board of directors.

The Memphis-based, two-man firm of Spence & Wade PLLC was one of the firms included in a consortium of four law firms chosen by the Nashville-based Tennessee Education Lottery Corp. to provide general legal services and corporate counsel in August.

The consortium, led by the Nashville-based firm of Waller Lansden Dortch & Davis PLLC, also included the Memphis firm of Burch Porter & Johnson PLLC and Tallahassee, Fla.-based Metz Hauser & Husband PA.

The firms work at an hourly rate of $240, a rate negotiated by state attorney general Paul Summers, who, along with Gov. Phil Bredesen, approved the their selection as recommended by the TELC board.

According to records filed with the Tennessee Secretary of State's office, Spence & Wade, for which Memphis City Attorney Robert Spence and City Council Attorney Allen Wade are the only partners, was formed Aug. 18, 2003 -- the same day that the TELC named the winners of the lucrative legal services contract.

That would appear to put the firm at odds with the minimum eligibility requirements outlined in the TELC Request for Proposals issued in July, which stipulated that in order to be considered, a law firm "must have been in business for a minimum of 3 years."

At least two other well-established Memphis firms answered the Lottery RFP and submitted their own proposals that were ultimately rejected, despite meeting the 3-year minimum requirement.

Lottery spokesman Kym Gerlock says the apparent discrepancy regarding Spence & Wade's business history and the minimum 3-year requirement would be checked on.

"We have a contract with the main firm (Waller Lansden), but we will be taking a closer look at this issue," Gerlock says.

Gerlock says the TELC received proposals from "about a dozen" law firms and that the entire board reviewed all of the proposals before choosing the Waller Lansden consortium. At the time, Spence & Wade were included in the consortium at the TELC's request, Gerlock says.

Spence & Wade is the only minority-owned firm in the consortium. As such, they fulfill a key mandate of the TELC policy statement that calls for a minimum 15% minority participation level in all lottery affairs. Spence and Wade co-authored the TELC policy statement on minority participation, which Spence presented to the board Aug. 25.

Gerlock says providing minority representation was a factor in the decision to invite Spence & Wade to join the consortium, a fact that Wade says his firm was aware of and subsequently made use of.

Memphis Business Journal

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