Proposal to Shift City Legal Work Criticized : Budget: Mayor’s aide says increased use of private lawyers should be considered. But Administration denies that a plan is in place.

In an unusual clash, Los Angeles City Atty. James K. Hahn has rebuked his client, the Riordan Administration, for what he says is an ill-advised plan to take much of the city’s legal business away from his office and give it to costly private lawyers.

The Riordan Administration denies the existence of such a plan.

Hahn had harsh words for Mayor Richard Riordan, a former corporate lawyer, saying in a letter late last month: “Your intention to have the city use outside counsel as much as possible and to encourage (other city) departments to demand the use of outside counsel . . . seems to indicate either a lack of understanding of the legally mandated role and function of the city attorney or, worse, a refusal to acknowledge the legitimacy of that role.

“In addition,” Hahn wrote, “the strategy of contracting out legal work is not justified by any credible evidence that it will save money. In fact, all available evidence points to a contrary conclusion.”

Hahn, a three-term city attorney who like Riordan was elected citywide, vowed to resist eroding the power of his office, which serves as lawyer for all city agencies.

He was responding to a letter from Riordan’s assistant chief of staff, Deputy Mayor Michael Keeley, who is functioning as the mayor’s designated enforcer for budget preparations. Keeley’s job is to goad city department heads to slash their budget requests for next year to make up for an anticipated $200-million deficit.

In his letter to Hahn, Keeley repeatedly urged the city attorney to explore possibilities for saving money by using outside lawyers whose hourly rates might be higher, but who might be able to save the city money in the long run by producing better results.

According to city budget figures provided by Riordan’s office, the cost of disposing of legal actions against the city has risen dramatically recently, more than tripling in the last seven years. In the late 1980s, the cost of settling the claims averaged about $15 million per year. In the 1990s, that cost had risen to more than $50 million.

Offering some money-saving suggestions, Keeley asked Hahn to do a comparative study of the cost of using public versus private attorneys.

Many lawyers in the city attorney’s office make $70,000 to $90,000 per year--half or less what many private attorneys make.

But Keeley said that “measuring hourly rates . . . only looks at one side of the equation. Higher legal expense is acceptable if it results in lower claims expense and an aggregate cost (legal costs plus claims costs) that is overall lower.”

Hahn viewed Keeley’s suggestion as anything but benign.

One reason may be that it came from Keeley, an ex-partner in the mayor’s Downtown corporate law firm, Riordan & McKinzie, who has a reputation as brilliant but sometimes tactless, and has clashed with lawyers in the city attorney’s office over the quality of their work. In one memorable exchange that has been retold with relish in the city attorney’s office, the University of Michigan-trained Keeley reportedly grew so irritated at what he considered the obtuseness of a city lawyer that he demanded, “Where did you go to law school?” Keeley declined comment.

Another top Riordan associate, senior policy adviser and city Airport Commission President Ted Stein, has also expressed displeasure with city attorneys’ work, Hahn said, and pushed through the hiring of an expensive private firm to help the city in an important dispute with airlines over landing fees.

Now Stein, whose City Hall office is a few feet away from the mayor’s, is exploring the possibility of running against Hahn in 1997, according to several consultants and politicians in Los Angeles.

Asked whether Riordan is so displeased with Hahn’s performance that he is helping launch a Stein candidacy, Deputy Mayor Robin Kramer, Riordan’s chief political adviser on staff, said: “No. Stein is doing this on his own, strictly on his own.”

Stein, an Encino lawyer and developer, did not respond to requests for comment. Hahn, who said Stein once told him he wanted to be city attorney, said he knew nothing about the current exploration.

The view that the city attorney’s office does not always have the best lawyers also appears to be shared by City Council. When council members recently were sued personally--accused of fostering police brutality by paying judgments for officers found to have used excessive force--they insisted on having a private attorney represent them. “We were not going to have the city attorney defend our houses,” said one member, who spoke on condition of anonymity.

Even the harshest critics of the city attorney’s office acknowledge that there is a wide spectrum of talent there, ranging from lawyers who are excellent and committed to those who are untalented and lazy.

Hahn says his office has a winning record in civil trials, which end with courts giving plaintiffs no damages about three-quarters of the time. Critics say this is misleading because the city attorney settles many cases and is afraid of taking certain plaintiffs’ lawyers to trial.

Keeley said in an interview that Hahn seems unwilling to find out whether increased use of private lawyers would turn out to save the city money.

“From his response, the city attorney seems to be uninterested in this evaluation,” Keeley said.

Hahn said, on the contrary, he is willing to make a comparison, but unwilling to sacrifice his City Charter authority to decide himself when outside help is needed.

Hahn currently spends about $7 million a year for outside lawyers, compared to an overall budget of $63 million. Most of the private attorneys are hired because they specialize in arcane areas or because the city attorney has a conflict of interest.