The chairman of the Nebraska Republican Party has done contract work for Attorney General Jon Bruning since 2005, and his law firm has earned $136,700 representing the state Labor Department in one lawsuit over the past two years.
Mark Fahleson, a partner at the Rembolt Ludtke law firm, lists himself as a “special assistant attorney general since 2005” on his firm’s website. According to a 2010 letter, Bruning appointed Fahleson and two other lawyers at his firm to represent the state Labor Department in a lawsuit over changes the labor commissioner made to an old Labor Department retirement plan. The letter says the lawyers “are subject to the supervision and direction of the attorney general.”
A spokeswoman for the attorney general’s office, Shannon Kingery, said Fahleson does not have a contract with the attorney general, but with the Labor Department. And she noted Fahleson is not housed in the attorney general’s office.
Fahleson said his law firm has been hired by the attorney general on a case-by-case basis since 2005. Asked how many cases he’s worked on, he said, “I think three.” Asked how much his law firm has been paid, he said, “I have no idea.”
“When the attorney general has a conflict, they appoint other firms to handle cases,” he said.
Jim Rogers, executive director of the Nebraska Democratic Party, said Fahleson’s appointment looks like “a special favor for a political friend.”
“It certainly creates the question, given Bruning’s behavior that he’s exhibited doling out political favors… right and left,” Rogers said. “A political activist doing work in the AG’s office… certainly can be called into question.”
Fahleson has expertise in litigation and employment labor law. He has been chairman of the state party since 2009, and noted that he began taking cases for the state long before that. He said there is “zip, zero, zilch” potential for a conflict of interest for the party chairman to do contract work for Bruning – a fellow Republican. He suggested “someone with an axe to grind” was peddling the story.
“There’s nothing out of ordinary in the process,” he said. “There’s nothing improper in our firm’s representation.”
He said people surely didn’t expect him to stop practicing law when he accepted the volunteer position as chairman of the GOP. His firm has done work for local, state and federal government in its 42 years, he said.
Labor Commissioner Catherine Lang said Fahleson’s firm has been paid $136,700 for work on the case, which has been paid by her department. The issue of farming out lawsuit costs to departments has been an flashpoint in the U.S. Senate campaign, with Bruning accusing his chief Republican opponent, Don Stenberg, of making his budget look smaller by passing lawsuit costs on to state agencies when Stenberg was attorney general.
In fact, Bruning came out with a TV ad today in which he says, “In the past, outside law firms did much of the AG’s work, hiding the cost from taxpayers. Not on my watch.”
Coincidentally, on Friday District Judge Paul Merritt dismissed the labor lawsuit that Fahleson’s firm has been working on for the past two years — which Fahleson called a “great result for the state and taxpayers.” Former employees of the Labor Department sued Lang for terminating the pension plan and eliminating cost-of-living-adjustments to their pensions. A virtually identical class action complaint was dismissed in federal court.
The defined benefit plan was established in 1961 under the direction of the federal government because at the time the state didn’t have a retirement program for the employees. Employees stopped contributing money to the retirement plan in 1994 because it was fully funded. Only employees who began working for the department before 1984 are still covered by the plan; it was closed to new members in 1984.
The plan largely operated under the radar until 2008, when it was hit hard by the recession and was only funding 68 percent of its pension liability, with a shortfall estimated at $30 to $40 million. Lang, who took the reins at the Labor Department in 2008, called the retirement plan a “deep, dark secret” and started making changes to try to shore up the badly underfunded plan. She began requiring active employees to contribute to the plan and halted cost-of-living increases until the plan is fully funded. Those changes are what prompted the lawsuits that Fahleson worked on.
Fahleson said he has also been appointed by Bruning to do work for the state Game and Parks Commission and State Bar Commission.
Deena Winter covers congressional campaigns for the Franklin Center for Government and Public Integrity.