L.A. to Review Cost of Outside Legal Counsel

Alarmed at skyrocketing bills for outside attorneys, Los Angeles officials on Monday launched a review of the increased spending and whether the city has adequate controls to prevent taxpayer funds from being wasted.

City Councilman Antonio Villaraigosa, who requested the review, cited a recent story in The Times that reported the city paid $18.9 million last year to 71 law firms -- double the amount spent five years ago for outside legal counsel.

“I’m concerned about the escalating cost associated with hiring outside counsel and that there doesn’t seem to be any control or accountability,” Villaraigosa said.

The councilman said he was also troubled that, during the recent budget deliberations, the council was only told about spending on outside attorneys by some city departments, not by the semi-independent harbor, airport, and water and power departments.

“Upon initial review, it appears the city does not systematically monitor how much is spent on outside legal services, nor is this information reported in aggregate to the City Council,” Villaraigosa wrote in a letter Monday to the city’s top two administrators, who are conducting the review.

City Administrative Officer William Fujioka, who ordered his staff to begin the review, said he shared Villaraigosa’s concerns that the city may rely too much on costly outside legal help.

“He is right on point,” Fujioka said. “If you can do it in-house at a cheaper price, that’s something I would push for.”

City Atty. Rocky Delgadillo, who signs off on all outside legal contracts, said many of the requests come because the complexity of the case and the need for attorneys exceeds what the city can handle.

On Monday, Delgadillo defended the use of outside law firms, saying they helped cut the cost of settlements and judgments stemming from lawsuits against the city.

Those payouts by council-controlled departments went from $52 million five years ago to $92 million in 2000-01 fiscal year, the year before Delgadillo took office, and back down to $50 million last year. This year, Delgadillo projects the city may pay out $45 million. The city attorney’s office did not have payout totals for the harbor, Los Angeles International Airport or the Department of Water and Power readily available.

“I intend to continue our record of success to free up funds for more police officers and other vital services,” Delgadillo said.

He declined to comment directly on the review launched by Fujioka.

Internal city documents show that using in-house counsel can be much less expensive. On one civil case involving the Democratic National Convention protests, the city hired three more attorneys and four paralegals who handled the case for $500,000. An analysis by the city attorney’s office shows the same billable hours would have cost the city $1.6 million if the case had gone to a private law firm.

The Times reported that the 100% increase in bills from outside law firms came even as the staffing in the city attorney’s office increased from 781 to 820 employees in the last five years.

Eric Moses, a spokesman for Delgadillo, said the increase primarily involved criminal prosecutors, who are not used to defend the city in civil suits.

Delgadillo said there are some cases his office is just not equipped to handle.

“We don’t have the ability to staff up 100 lawyers to go out and handle depositions all across the country,” Delgadillo said in a recent interview, referring to a contract with O’Melveny & Myers that started at $850,000 but increased to $6.3 million.

Delgadillo formerly worked for O’Melveny, and that firm and others have given tens of thousands of dollars to Delgadillo’s political committees.

The city attorney has said there was no link between political contributions and contracts approved by his office.

Instead, Delgadillo said, the increase in legal bills stemmed from several major legal matters, ranging from a flurry of environmental lawsuits at the port to the proposal for a $9-billion overhaul of LAX, which required specialized attorneys to navigate the complex environmental law.

Councilman Dennis Zine said he supported a review of whether taxpayers could get a better deal hiring in-house attorneys instead of paying $275 or more an hour to private attorneys.

“I would question it,” Zine said of the amount being spent. “It seems like a lot of money.”

To ensure a review is conducted, Villaraigosa convinced the City Council recently to delay another major increase in a city contract -- a proposal to bump the DWP’s contract with Van Ness Feldman from $5.3 million to $12.8 million. The contract, to help the city attorney defend the DWP in energy crisis cases, started out at $3 million.

Delgadillo defended the use of the law firm, saying it helped the DWP win its case. The extension was requested before federal regulators closed their probe of the DWP, and Delgadillo said the law firm was no longer needed.

Villaraigosa said a review of contracting was needed to determine whether better planning could avoid situations, such as the DWP contract, where costs continued to escalate.