Tuesday, September 1, 2009

The city's legal bills—high and likely to get higher

Posted By on 09.01.09 at 03:36 PM

Suddenly lots of people are talking about how much local taxpayers are paying for city legal bills. But don't count on them getting smaller anytime soon.

As I reported last week, the city paid more than $52 million to outside law firms from 2005 through April of this year to aid in the defense against lawsuits that ended up costing taxpayers another $256 million in settlements and judgments. Then NBC 5's Steve Rhodes noted that the roster of firms that profited from the work—which the city awards without a bidding process—includes some of the most clout-heavy, including Winston & Strawn, home of former governor Jim Thompson. (Is it me or is Thompson in the middle of all kinds of stuff these days?)

The AmLaw Daily also picked up on the findings but didn't find them terribly shocking, noting that New York City spent $64 million on outside counsel in 2008 alone. That's true, but it's not a fair comparison. NYC has nearly three times the population, and more important, its city government covers far more functions, including hospital and jail systems, which here are part of the county's responsibility.

The key problem in Chicago is litigation against the police department, and this weekend the Sun-Times reported that the city is changing its legal strategy in a bid to deter frivolous suits and empower officers who fear they have to back down on enforcement to avoid ending up in court. According to the paper, police chief Jody Weis and law department spokeswoman Jenny Hoyle have both announced that the city will vigorously fight lawsuits asking for even small payouts. "We believe that taking a more aggressive approach in these cases will lead to a decrease in the number of lawsuits being filed," Hoyle is quoted as saying.

It may—over time. What's likely to happen, at least in the short run, attorneys say, is that the city will be tied up in more litigation than ever before, and time is definitely money in this business. Even if the city starts paying outside counsel by the case instead of the hour, as Hoyle says it has, that will cost taxpayers money on top of the cases involving bigger sums. Because while the little cases do add up, a relatively small number account for the greatest expense.

For example, in 2008, the city paid out about $78 million in settlements and judgments for 550 lawsuits involving the police department. But just 20 cases accounted for $65 million—or about 83 percent of the total. And the payments were reached through different means: eight of those cases were decided by verdict; the other 12 were settled out of court.

Similarly, out of that $52 million in outside counsel costs from January 2005 through April 2009, about $38 million went toward cases involving police. And just 50 cases—an average of about 12 a year—racked up $30 million of that total. The other $8 million went toward 177 cases. And all were cases the city thought worth defending even before its new policy.

In other words, the city might be able to shave off some of its legal expenses over the coming years by sending a message that they're not just going to pay any old mope who files a nonsense lawsuit. But the real money is going toward cases that the city spends a lot fighting—and then spends even more to settle or lose in court.

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