Dorsey & Whitney Dropped as MN Chief Bond Counsel

The state's Attorney General's office has terminated Dorsey & Whitney as Minnesota's chief bond counsel, citing ethical conflicts during the state government shutdown in July, and replaced it with an Omaha law firm.

Minnesota Attorney General Lori Swanson has dropped Dorsey & Whitney, LLP, as the state's chief bond counsel, citing ethical conflicts during the state government shutdown.

According to the Star Tribune, Swanson in July gave the Minneapolis-based law firm-which had served as the state's bond counsel for decades-a seven-day termination notice. Her office reportedly released a detailed explanation of why she terminated Dorsey & Whitney as bond counsel for Minnesota Management and Budget, the state's main financial office, and for the Minnesota Housing Finance Agency.

Swanson's office reportedly cited three instances in July when the law firm sought a conflict waiver because it was acting as bond counsel for a state agency and representing a client that had business before the same agency.

Swanson's office also said the move was driven in part by Dorsey's refusal to substantially reduce its hourly rates in light of the state's fiscal crisis. A spokesperson for the attorney general's office told the Star Tribune that Dorsey attorneys who represented the Minnesota Housing Finance Agency and charged between $423 and $465 an hour offered to reduce their rates by only $11 per hour.

Swanson has replaced Dorsey with Kutak Rock, an Omaha-based law firm specializing in bond counsel work.

Ben Wogsland, a spokesman for Swanson's office, told the Star Tribune that the most noteworthy episode of “serious and irreconcilable conflict of interest” emerged when the “tobacco bonds” proposal surfaced on July 14-the day of the budget agreement between Governor Mark Dayton and Republican legislative leaders-because Dorsey had represented the tobacco industry in the State of Minnesota's landmark 1998 lawsuit against Philip Morris and other tobacco companies.

However, Dorsey reportedly contends that the issue was a “red herring” created by Swanson and said that the firm's lawyers “have not represented the tobacco industry in a major way for a decade or more.”

Dorsey also reportedly denied having ever being told why it was dropped as the state's bond counsel.

To read more in the Star Tribune about how the Swanson's office reacted to the conflicts during the shutdown, and how people familiar with Dorsey & Whitney are reacting to the termination, click here.