2012 lawsuit uncovers Alacourt contract withheld by state

The Mobile-based IT company that was awarded a lucrative 15-year contract with the Alabama Administrative Office of the Courts (AOC) in 2010 has earned tens of millions of dollars from the arrangement, according to an initial analysis of the document and related public information. In response to a public records request last month, AOC declined to produce its contract with On-Line Information Services Inc. (OLIS), citing an exemption for “critical infrastructure.”

OLIS is co-owned by Neal Buchman, Steven Olensky and former Alabama Lt. Gov. Steve Windom, and provides a suite of software products for the statewide e-filing system, which essentially digitizes state court records, data and procedure. As Lagniappe previously reported, a contract between OLIS and the state of West Virginia was readily provided in response to a public records request, while states including Florida and Texas voluntarily post the contracts for their e-filing systems online.

After the records request was denied in Alabama, Lagniappe obtained the contract from an attorney who noted it was filed as an exhibit in a 2012 civil lawsuit against OLIS over “convenience fees” charged to customers who use the system. The plaintiff in the case, Kevin Geeslin, argued the fees collected over and above what are statutorily defined as filing fees in the court system “amounted to an illegal tax.” A separate lawsuit filed against OLIS in federal court the same year argued the convenience fees were a civil rights violation. Both cases were eventually dismissed “with only minor relief,” according to Birmingham-based attorney Daniel Evans.

Evans also told Lagniappe, contrary to a statement provided by Windom in August, the contract was not bid. Rather, it was freely awarded after a years-long pilot project — implemented in only a handful of counties — proved fruitful.

RELATED: Court records confirm no-bid contract for Windom’s e-filing contract

Indeed, in the agreement for licensing and services signed in August 2010, the parties acknowledge OLIS and AOC had been jointly developing the e-filing system since January 2004, and since the relationship developed, “there is no other vendor of software programming services that could duplicate the services provided to the AOC by OLIS without seriously disrupting the operation of the critical, essential services provided by to the Uniform Judicial System and others who depend on this system for access to court data and documents.”

Windom, whose wife, Mary, is an associate justice on the Alabama Court of Criminal Appeals, unsuccessfully ran for governor in 2002. In one campaign ad, he pledged to “stop the crooked no-bid contracts.” Windom acknowledged OLIS has done business with the state since 1998, the year he was elected lieutenant governor.

Windom is also a partner in a law firm that is a registered lobbyist for such business interests as Alabama Power, Johnson & Johnson, Blue Cross and Blue Shield of Alabama, UAB Health, USA Health, Volkert, OLIS and others.

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According to a 2012 article in Crain’s Chicago Business, OLIS engaged in a similar contract with the courts in Cook County, Illinois. There, after the firm completed a pilot project for an e-filing system, it was found to be the only one qualified after seven firms responded to a subsequent request for qualifications. For the service, which still exists, OLIS charged a fee of $4.95 for every document filed, keeping one-third for itself and distributing two-thirds to Cook County, according to the article.

In Alabama, it appears some portions of the contract between AOC and OLIS are similar to terms struck in West Virginia and Illinois, but additional financial provisions appear to favor OLIS overwhelmingly. For example, while the system is provided to AOC for free, the contract allows OLIS to collect a convenience charge of 4 percent, or a minimum of $1 per transaction, on all court-ordered monies paid through software known as AlaPay. The contract defines AlaPay as “the computer programs and services through which payments due to the AOC may be electronically paid to and received by AOC.”

AOC’s most recent annual report, for fiscal year 2018, noted more than $62.9 million was generated through AlaPay, meaning OLIS earned at least $2.5 million based on the 4 percent fee. Additionally, the contract states “OLIS shall retain 33.3 percent of all fees, compensation and revenues received from authorized users, special authorized users, bulk data customers and web services customers” with the exception of programming fees charged by OLIS for bulk data collection and the sale of images (documents).

The sale of images and bulk data are not itemized in AOC’s annual reports and representatives from OLIS and AOC would not respond to requests for more information, but in 2014, AOC reported “AlaFile revenue to date is over $192.7 million.” AlaFile is defined as “the computer programs and services which allow all litigants in Alabama court cases to electronically file court documents with a clerk’s office by means of an online computer transmission of the document in electronic form.” If split 33.3 percent according to the contract, OLIS may have retained as much as $63.5 million between 2009-14, leaving $127.1 million for the state.

But OLIS did appear to make some concessions. The contract notes during the parties’ previous relationship, OLIS was permitted to develop basic, enhanced or value-added services for subscribers “that created revenue that would not be shared with AOC.” Those products include such features as Attorney Tracker, Name Tracker and Case Monitor, “which generated significant revenue to OLIS,” according to the contract. However, AOC wanted a piece of that pie, so the parties agreed OLIS would retain a six-month average of the revenues prior to the agreement being signed — a $70,000 monthly base — plus an additional 33.3 percent of revenues above the monthly base.

Further, the state wished to establish up to 1,500 Special Authorized User accounts for the Department of Human Resources, for which AOC collects the revenue. The contract states “it was originally the intent of the parties to share this revenue in accordance with the contractual split provisions.” OLIS agreed to waive its split, “to the extent it does not exceed $1.68 million annually.”

Meanwhile, nothing in the contract appears to meet the definition of “critical infrastructure” as defined in a federal law, which encompasses “systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters.”

Alabama’s Open Records Act allows for exemptions to the public disclosure of information related to critical infrastructure if “it could reasonably be expected to be detrimental to the public safety or welfare” or “would otherwise be detrimental to the best interests of the public.”

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STATE CONTRACT - On-Line and AOC (1)