PORTLAND, Ore. (CN) — After the entire court system of Oregon moved its public records online with software from a private vendor, the county government in Portland hired the same company, Tyler Technologies, to upgrade its criminal case management system. But that initiative hit a $1 million snag that stalled the project and has now sparked a federal lawsuit.
Tyler Technologies, a rapidly growing company based in Plano, Texas, is raking in the public’s dollars, with a $13 billion market cap and over $1 billion in revenue last year, according to the company’s 2019 annual report. Going back almost a decade ago, the company and the Oregon courts agreed in 2011 to set up an electronic filing, storage and retrieval system for a projected price of $31 million.
Based on that contract, the Oregon Judicial Department first put an electronic system in place in Yamhill County Circuit Court in 2012. Administrators added three more small county courts before launching courts in groups of five every few months. As each county went live, they switched over to Tyler’s support team for maintenance and help, and to implement additional features. The state’s three largest counties — Multnomah, Washington and Clackamas — implemented the new system one at a time. Mandatory e-filing followed on Dec. 1, 2014.
In a separate deal in August of 2016, Multnomah County hired Tyler to replace the district attorney’s aging criminal case management system with Odyssey software from Tyler. The county agreed to pay $1.3 million for over 8,000 hours of professional services, $249,000 in software licensing fees and $52,000 for the first annual maintenance fee, according to county records. But after a series of evidently acrimonious negotiations with the Portland area’s county government, Tyler sued Multnomah County in federal court this week. The suit claims the county refused to pay for customized features in a software upgrade to its prosecutorial records system.
Tyler says the county initially agreed to buy a ready-made program called “Odyssey Attorney Manager,” that Tyler refers to as a “commercial off-the-shelf” or “COTS” product — which Tyler says are cheaper than its custom-made software programs.Tyler says in the complaint that it uses a standardized system that it adjusts for each client, rather than creating entirely custom software for every client, whether it’s for a court, a school district or a prison.
But the county repeatedly asked for additional functions that nearly doubled custom development work and increased the price by almost half a million dollars, Tyler claims. At the same time, Multnomah County allegedly told Tyler it didn’t have the staff to complete its own work for the implementation scheduled for April 2018. So Tyler says it agreed to do the work the county was supposed to do.
Records provided by Multnomah County to Courthouse News show the county agreeing in August 2016 to an initial $1.3 million deal, as the lawsuit claims. And the county signed amendments and subsequent service agreements in 2017, 2018 and 2019, agreeing to a series of additional fees for customized software features beyond the scope of the original plan. Those additional fees total over $1 million.
Tyler invoiced the county in March 2019 in preparation for the project’s final steps. Days later, the county sent a letter to Tyler “vaguely alleging that Tyler had breached the agreement” and claiming that the steps Tyler had taken so far “were not complete,” according to the complaint. The county did not provide its correspondence with Tyler by press time.
Tyler alleges a breach of contract based on the county’s refusal to make a partial payment. “The agreement expressly provides for payment of each part and piece along the way, not for payment only at the completion of the project,” the lawsuit states.
Tyler says a change in leadership at Multnomah County was another reason for the breakdown.
“Tyler encouraged Multnomah to adhere to the original scope of the project, warning that efforts to significantly customize the software would add major costs and delay the project,” says the complaint signed by John Rothermich with K&L Gates in Portland. “Multnomah, however, had changed leadership since the original agreement was executed and new leadership insisted on expanding the project’s scope. All told, Multnomah almost doubled custom development work.”
Tyler and the county met several times last summer, trying to amend their agreement. But in July, the county pulled out — leaving an unpaid bill of over $1 million, Tyler claims.
“Work on the implementation ceased at Multnomah’s request,” the lawsuit states. “Tyler made repeated attempts to offer alternative paths towards re-engagement. Although Multnomah would initially express a willingness to entertain those paths, Multnomah ultimately rejected each of Tyler’s attempts.”
The contract was signed in 2016, with the new software originally planned to roll out in 2018. Multnomah County District Attorney Rod Underhill has been in his role since 2013. He stepped down July 31 to make way for newly elected DA Mike Schmidt. And Deborah Kafoury has been chair of the Multnomah County Commission since 2014.
Multnomah County Presiding Judge Nan Waller, who oversaw the earlier transition via Tyler to the statewide electronic filing, storage and retrieval system, stepped down at the end of 2018 when her six-year term came to an end. Judge Stephen Bushong replaced Waller as presiding judge when she returned to the general bench.
Jenny Madkour, the attorney representing Multnomah County in the case, did not respond to several phone calls requesting comment. County spokeswoman Julie Sullivan-Springhetti said the county could not comment on pending litigation.
Oregon is one of many states around the nation where the courts have put their public records in the hands of a private vendor. Other states that like Oregon have committed their entire state court filing and records systems to Tyler include Minnesota, New Hampshire, New Mexico, Indiana and North and South Dakota. The arrangements often allow the company to control the digital road into the courthouse, charging lawyers for e-filing, while also in some states allowing the company to control the statewide public access system through Tyler’s re:Search websites.
The agreements with the state courts generally lock the courts into costly service agreements that require hefty annual fees to run the company’s proprietary software — such as a 10-year, $85 million “software-as-a-service” contract Tyler signed in 2019 with North Carolina. Tyler announced similar deals last year with Bexar County, Texas, valued at $20 million, and a $7.7 million ongoing contract with the District of Columbia.
Tyler announced last year that it had signed an agreement with Amazon Web Services “to lay the groundwork for the future of cloud services for the public sector,” according to Tyler’s annual report. The company also said it had acquired the development platform MircoPact, with which it said it could enter the federal market.
The state court service agreement appears to be the type of agreement Tyler signed with Multnomah County. The contract commits the county to annual licensing fees of over $52,000 and describes ongoing “maintenance and support” through the “Tyler Help Desk” that the company will continue to provide after the software goes live and the transition project is closed out.
“Oregon sought to replace its current court software with a single-solution provider model, choosing to have one vendor,” Tyler said in a 2011 press release announcing its agreement with Oregon.
But it doesn’t need to be that way. The federal courts have developed and now operate their own e-filing and public access system without relying on a private vendor. A growing number of states have also developed their own in-house digital systems to handle the flow of legal documents going through their courthouses. Hawaii, Colorado, Connecticut, Kentucky, Mississippi, Missouri, New Jersey, New York and Wisconsin all have their own, homegrown systems for e-filing in every court in their state.
And major counties in other states have e-filing systems that don’t tether them to indefinite annual fees. Among them are Cuyahoga County in Ohio, home to Cleveland; Philadelphia County; King County, Washington, where Seattle is, and Orange County in California, home to Disneyland.
The former chief court administrator for Pennsylvania, in charge during his court’s transition to e-filing, explained in a memo to the president judges of the Pennsylvania Courts of Common Pleas that homegrown systems like Philadelphia’s are vastly preferable to those controlled and administered by a third-party vendor.
“Systems should use or support applications based upon nationally accepted standards, rather than proprietary solutions,” former Chief Court Administrator Zygmont Pines wrote in his memo. “While the latter usefully is accomplished more quickly and at a lesser cost, the court — to its potential detriment — becomes dependent on the viability and future success of a single vendor’s product.”
“We want to avoid the painful lesson of being pennywise but pound foolish,” he added.