Legal spending is up, but within budget

Costa Mesa spent 350% more on lawyers in fiscal 2011-12 than it did the year before, records show.

The city, however, remained under what it had budgeted for litigation costs, according to preliminary numbers reviewed this week.

Costa Mesa spent about $1.6 million last fiscal year on litigation — work directly related to legal cases, such as lawsuits — which is under the roughly $2 million the city had set aside for such purposes.

The amount is a three-fold increase from its average over the previous five years.

"The city is going through much needed structural change, and there are those with financial interests who disagree, and their lawsuits are driving our court costs through the roof," said Mayor Eric Bever. "Clearly, legal costs will fluctuate from year to year, but it would be my expectation that they will fall dramatically once the current labor issue is resolved."

Of the $1.6 million spent, about 62% went to the Jones Day law firm, outside counsel that charged $495 an hour. The firm is defending Costa Mesa from a lawsuit by one of its employee groups fighting its outsourcing plan. It billed the city for nearly $1 million.

"They picked one of the most expensive international law firms there is, and they send several partners to every hearing," said Jennifer Muir, Orange County Employees Assn. spokeswoman.

Though costs are up, members of the City Council's conservative majority say that the fees pale in comparison to what the city will save once its outsourcing strategies are enacted.

Councilman Steve Mensinger called legal fees "a short term, interim cost for long-term savings."

"The unions started the fire, we put it out and then they say we're spending too much money on water," he said. "The unions have two strategies. Elect a council that will get them what they want and concurrently sue people until they get what they want."

Councilwoman Wendy Leece, who opposed contracting with Jones Day, disagreed.

"Wow. Spending thousands hoping to win legal battles means we are taking money that should go to fund services to our citizens," she said. "It's taking a risk and at some point we have to stop and ask if we want to keep going down this road. I don't."

For a time, Costa Mesa looked like it was going to go vastly over its budget for litigation. The 2011-12 budget was originally approved with barely more than $1 million set aside.

Jones Day's billings quickly added up and, by March, the city's litigation funds were depleted, according to municipal data.

An extra $900,000 of general fund money — undesignated funds the city uses for day-to-day expenses — was set aside in April to cover the city for the rest of the fiscal year.

City officials said the year's total could climb higher because Jones Day and other firms could send some final bills in the next two months that apply to work during the last fiscal year.

The rest of Costa Mesa's litigation costs were divided among a few other firms for other matters, with the city's hired city attorney firm, Jones and Mayer, taking up the bulk with $568,505.24.

Litigation costs fall under the city's self-insurance fund, which includes money set aside for other spending such as workers compensation and legal settlements.

In legal spending not directly related to a court case, Costa Mesa spent about $925,000, which falls under the city attorney's department. The total exceeds that department's budget by 15% when costs for outside law firms, labor negotiations and outsourcing paperwork are included.

It's the second consecutive year the city attorney's department has exceeded its budget.

In overall legal costs, excluding legal settlements and judgments, Costa Mesa spent more than $2.5 million in 2011-12, the most it has spent in at least 12 years.

Twitter: @JosephSerna

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