Earlier this month, Cape Fear Community College settled with Ray Funderburk for $265,000 after roughly three years of litigation. Funderburk sued the college, alleging it violated his rights to free speech and due process.
Related: Former CFCC trustee Ray Funderburk gets $265,000 settlement, three years after being ousted
The settlement amount was paid out of CFCC’s insurance policy, as noted by the college in a public statement, but that doesn’t mean no public funds were spent on the suit.
The college’s monthly legal fees increased by an average of 80% after Funderburk filed his lawsuit in June 2023. And, it's possible that the payout could increase future insurance premium payments.
Their insurance premiums for public officials, which are separate from, for example, an umbrella policy, also appeared to have increased by over 60% between 2022-2023 and 2025-2026. This could be a sign of rising costs in general, or it could be related to the litigation. While technically New Hanover County consults on CFCC’s insurance policies, a county spokesperson said the college would be the appropriate institution for questions about cost changes; CFCC has not responded to those questions.
The Ward and Smith firm does not itemize its monthly legal bills, so the public and the trustees have no way of knowing what they are billing the college for. The firm used to produce bills with these details, but stopped after 2020, and CFCC apparently hasn't asked them to return to their old practice. Other firms that have represented governments like NHCS, however, have long been itemizing these bills.
Amanda Martin of Duke’s First Amendment Law Clinic told WHQR in 2023 that it was "unusual" for firms not to itemize bills unless that work was covered by a retainer. The retainer fee for Ward and Smith is $600 per month — CFCC’s bills far exceed that amount, with a monthly average of $6,878 since August 2021.
The college renewed its contract with Ward and Smith, P.A. in 2021. In addition to the retainer, the contract stipulates that work by the main attorney, Ken Gray, and other attorneys with more than 4 years of experience would be billed at $325 per hour. Other attorneys with four years or less bill at $275. There is also a negotiated fee for any in-depth legal issue the college wants them to take on.
While the monthly bills do encapsulate other legal advice, Ward and Smith would have included the hours the firm billed, most of which were for Gray, to support the administration and trustees throughout the duration of Funderburk’s lawsuit.
According to Funderburk, Gray was present at the depositions for his case and was the main attorney advising the board when the allegations were brought against him. However, the insurance firm, which also had a vested interest in the case, was represented by the Pettey & Partrick Law Firm.
Before Funderburk’s trustee removal hearing and lawsuit, the average monthly bill was around $4,500; thereafter, it jumped 80% to $8,000.
The same pattern emerged at the annual level. Looking at the year before Funderburk’s suit, the total bills for December 2021-2022 were $58,927. The following year (January 2022-2023), which was before Funderburk’s removal and could encapsulate other issues but covers the time when former CFCC trustee Jimmy Hopkins was taken off the board and briefly filed a lawsuit, it jumped to $105,849. It remained that high for February 2023-2024. There was a decrease in bills for March 2024-2025 at $87,129, but then, leading up to this past year, into February 2025, the bills increased to over $100,000.
The highest monthly bill from the last few years was $18,620 in October 2023, followed by $16,637 in December 2023. There were eight months with bills ranging from $8,000 to $9,000.
While the lack of detailed legal billing makes it difficult to confirm what caused fluctations in the monthly fees, some of the more expensive bills line up with events in Funderburk’s civil suit. For example, in April 2025, when former CFCC Vice Chair Jason McLeod was deposed, the legal bills totaled $11,410. And in February 2025, when the parties appeared in district court for the case, the bills totaled just over $10,000. In December 2025, Ken Gray was deposed, and the legal bills were $8,598. In November 2024, former CFCC Chairman Bill Cherry was deposed, and the bills were $8,827.
CFCC’s main insurance carrier at the time Funderburk filed suit was brokered through Surry Insurance with Employers Mutual Casualty Company. Most of the college’s policies in 2023-2024 were with that company. However, now, most of them are with Liberty Mutual Fire Company.
For their policy on public officials and employment practices liability, or "Linebacker Public Officials and Employment Practice Liability Declarations," when Funderburk filed suit, the policy provided that each loss would be covered up to $1 million, and the total per policy term would be $3 million. There is also a $25,000 deductible per claim, including defense costs. Their total premium for that policy was $26,422.
For 2025-2026, it is now "School Leaders Errors and Omissions" with Liberty Mutual Fire; the premium is now $43,446. The losses coverage is the same; however, there is a provision for defense expense amount – non-monetary relief up to $100,000. They continue to have the $25,000 deductible per “wrongful act.”
New Hanover County Risk Management consults with CFCC on its insurance policies. They also pay the premiums, and then the college reimburses them. Technically, they pay a percentage of their annual premiums as a service fee; the arrangement is optional for both the county and CFCC. A spokesperson for the county added that it has a similar agreement with the Airport Authority and the ABC boards.
Since May 6, WHQR has tried to get up-to-date insurance policy information from CFCC, but the college has not provided it. We only received CFCC insurance policies from the county, which were produced in a couple of hours. CFCC won’t confirm which specific insurance policy paid out to Funderburk, nor will it discuss why the policy premiums for public officials increased. We will update this article if and when we receive that information.
