LA bleeding money on outside legal fees — despite a $150M in-house payroll

Los Angeles City Hall is bleeding taxpayer money on outside private law firms — even as it already bankrolls one of the largest and most expensive municipal legal operations in the nation.

The City Attorney’s Office oversees more than 500 attorneys, backed by an in-house operation that costs taxpayers approximately $150 million a year.

But despite that legal firepower, the department expects to spend an eye-watering $26.63 million on outside counsel — almost five times more than what City Hall budgeted.

The City Attorney’s Office was allocated just $5.98 million for outside counsel in the FY 2025–26 budget, department spokesperson Hydee Feldstein Soto said, calling that figure “significantly lower” than what the office requested.

To keep bills paid, money has been siphoned from the city’s unappropriated balance — and even from the City Attorney’s own salaries account.

City officials say the ballooning cost is unavoidable, pointing to a rise in what they describe as “complex litigation.”

However, a review of contracts by The Post paints a less dramatic picture.

Many of the cases being farmed out are routine municipal disputes — not rare, high-stakes legal battles that clearly exceed the capacity of an office already stacked with lawyers.

The spending was the most explosive in the high-profile LA Alliance for Human Rights lawsuit, which accused the city of failing to address homelessness by not providing shelter and services to vagrants.

In May, Los Angeles hired elite firm Gibson, Dunn & Crutcher under a contract capped at $900,000 over a two-year period. That ceiling didn’t bend — it vaporized.

By August, just three months later, the firm billed the city $1.8 million for just two weeks of work — with 15 attorneys charging nearly $1,300 an hour.

Soon after, the total ballooned to a whopping $3.2 million.

Councilmembers erupted, complaining they had approved a capped contract and demanded regular updates — neither of which materialized.

Still, the City Council voted 10–3 to supercharge the deal, boosting the contract to nearly $5 million for a single year, through June 2026.

Councilmember Tim McOsker blasted the move as “bad fiscal management.”

Outside City Hall, critics questioned why taxpayers were footing premium legal bills to fight a case centered on government accountability.

“The Alliance case was a fight for our city and county residents — an attempt to force multi-million-dollar government entities into accountability,” said Julie Mulligan, a former Santa Monica attorney who closely tracks city spending.

“Why would a city fight accountability with more of our money? That’s a hundred-million-dollar question.”

Feldstein Soto defended the spending at the time, saying her office contributed $1 million from its own budget, with the remaining $4 million pulled from the city’s unappropriated balance — funds that otherwise could have gone to basic services.

Her office says several factors are driving costs: a 20% year-over-year increase in case volume, lingering obligations from past settlements with multi-year injunctions, and a hiring freeze from January 2024 through July 2025 that left the department understaffed.

While the City Attorney’s total budget almost tops $150 million, the office notes that only 222 of its 943 employees — about 24%, or roughly $35 million — are assigned to civil litigation.

For now, the spending spree shows no signs of slowing.

In December, the Budget and Finance Committee approved more than $12 million in new transfers for outside legal counsel, including funding boosts and multi-year extensions for more than two dozen private law firms — even as City Hall continues to plead poverty on police hiring, firefighters, and basic city services.