Since she became a board supervisor 14 years ago, Gloria Molina has been concerned about the rising cost of lawsuits against Los Angeles County.

But one day about five years ago, she “blew a gasket.”

“We had a lawsuit that came to us for settlement, and the legal fees were much more than the original claim against us,” said Molina. “It was nonsense. If we were a business, we wouldn’t be allowed to pursue a lawsuit by paying more for legal fees than the claim is. That’s when I realized there wasn’t any kind of risk management in county counsel.”

Today, the county estimated that it has reduced its litigation costs to $26 million annually, from $168 million five years ago. Those costs include legal fees, motions for discovery, expert witnesses, judgments and settlements.

The reductions are in contrast to the City Attorney’s Office in Los Angeles, which faces increased scrutiny over the handling of its outside legal expenses. California State Auditor Elaine Howle began looking into the city’s contracts with outside law firms after state Sen. Richard Alarcon, D-Van Nuys, raised questions about why the costs of legal fees have doubled in five years.

The City Attorney’s Office maintains that while costs have risen, the department has reduced its payouts in settlements and judgments against the city. But the divergent city and county costs point to stark differences in how each government agency manages its legal expenses.

“They both do a really good job about it, but I’ve got to say, the county has watchdogs, and their teeth are sharp,” said Steve Manning, a partner at Manning & Marder LLP, which represents both agencies in civil suits. “They really guard the county treasury.”

Roundtable discussions


Hundreds of claims are filed against the county each year, although the supervisors, who approve all settlements, usually don’t get involved in cases of less than $100,000. Those cases, which are often personal injury claims, go to the county’s claims board.

In the past, the county lawyer at each department was charged with logging all settlements, judgments and other costs for each case. That lawyer served as the point person charged with watching costs, but few of them were really monitoring the bills.

Molina established two new positions that would be better equipped to assess how much the county spent on legal costs.

Robert Nagle, the litigation cost manager, supervised outside legal costs for Farmers Insurance Group for about a decade before joining the county in 2003. His first task was to integrate the various computer systems at six county departments so that he could track all the cases.

Now, county lawyers regularly notify him about cases that get resolved either by getting dismissed, settled, or because of judgments against the county. (Not included are the lawyers in cases involving foster care, workers’ compensation and probate matters because those departments’ budgets are funded by federal and state funds.)

“L.A. County was under severe criticism for the excessive costs being paid out in legal fees,” Nagle said. Now, he said, “we’re limiting their activity on what they can spend money on and can’t spend money on.”

To do that, Molina instituted roundtable discussions for each case. Those roundtables are attended by Nagle, county counsel, outside lawyers hired for the case and the head of the department being sued. At those meetings, the group collectively decides whether to mediate, settle or go to trial.

The quarterly meetings “are a big deal,” Manning said. “We tell them we have the opportunity to take this legal action, to hire this expert, or take this deposition or file this motion. They make the determination on the cost effectiveness of it. They definitely are hands on.”

The reductions have not adversely impacted the county’s success in cases, however. Of the 32 lawsuits that went to trial in the past year, six ended in judgments against the city and only one of those was for more than $500,000.

“I’d rather we train our lawyers and train our law firm to be more conscientious rather than bringing an outside approach of looking over the shoulders to see how they’re doing it,” Molina said. “It’s a better long-term arrangement that will work well for our lawyers, and some of the numbers we’re seeing tell us that dramatically is making a difference.”

While the county has reduced its legal costs, the City of Los Angeles has faced questions over its supervision of outside legal bills. According to media reports, the city shelled out almost $19 million last year to outside law firms, twice as much as it paid five years ago.

A state audit is reviewing outside legal costs from 1998 to 2004 to determine how the city selects outside counsel, monitors those services and controls billings.

“Our outside counsel costs are fairly stable in terms of rates, but the amount has increased,” said City Chief Administrative Officer Bill Fujioka. However, he said the increases are a matter of having more cases, such as the multiple claims that followed the scandal involving the Los Angeles Police Department’s Rampart division.

The CAO monitors the costs of outside legal firms for cases in which the City Attorney’s Office has a conflict of interest, such as when a city employee has a dispute with his or her employer. But other cases, such as those needing specialized expertise or those that are too numerous for the city’s lawyers to handle, need outside legal firms to do the job.

City Councilman Bernard Parks, chairman of the budget and finance committee, said he recently asked the City Attorney’s Office to compile a list of outside lawyers working for the city, regardless of whether they are paid through the city’s general fund or other departments.

Parks said the City Council only receives information about outside legal bills on a sporadic basis, and has concerns that the City Attorney’s Office may not be choosing the best and most affordable firms.

The City Attorney’s Office, while admitting costs have gone up, says hiring outside firms has reduced the amount it pays in judgments and settlements.

“The focus is on trying to get bang for the money,” said Pete Echeverria, acting chief deputy at the City Attorney’s Office.

Liability payouts, which include judgments and settlements, have decreased to $45 million last year from $92 million in fiscal year 2001. (Those payouts do not include the pension department or the three proprietary departments, the DWP, the airport and the harbor, which generate their own revenues).

“We do look to get the best monetary value we need, but we won’t use a firm that’s inexpensive in handling a case that is complicated simply because they charge less,” Echeverria said. “If we need a brain surgeon, we pick a brain surgeon, not a general practitioner.”