LOS ANGELES – The city of Los Angeles is grappling with a mounting fiscal challenge, intensified by an unprecedented surge in legal settlements and jury verdicts. In the fiscal year 2024, the city disbursed a staggering $289 million in payouts to resolve legal claims, a figure that represents a sharp escalation compared to previous years and casts a long shadow over the city’s financial stability.
This year’s total marks a dramatic increase from just two years prior, when payouts totaled $91.3 million. The contrast becomes even starker when compared to a decade ago, in 2014, when the city’s legal expenditures amounted to only $64 million. The figure for the preceding year, 2023, also indicates this upward trajectory, standing at $254 million, highlighting that the current record is part of a sustained trend.
Understanding the Surge in Legal Costs
The precipitous rise in annual legal payouts is attributed to a confluence of factors, presenting a complex challenge for city administrators and legal professionals. Among the primary drivers cited are the increasing strain on the city’s aging infrastructure, which gives rise to claims related to dangerous conditions, as well as a landscape where larger jury awards have become more common in successful lawsuits against municipalities.
Additionally, observers point to a potential shift in the city attorney’s legal strategy under the current administration. Coupled with these internal and external legal environment factors, there has been an overall increase in the number of lawsuits filed against the city of Los Angeles, adding to the volume and potential cost of litigation.
Breakdown of Payout Categories
A review of legal payouts over the past five years reveals specific areas where the city is most vulnerable to costly litigation. The largest category of payouts, accounting for a significant 32% of the total, stems from claims related to “dangerous conditions”. These cases typically involve injuries or damages resulting from faulty or poorly maintained city infrastructure, such as sidewalks, streets, or public property.
Other substantial categories include claims related to civil rights violations and unlawful uses of force, which together constituted 18% of the total payouts. This figure underscores the ongoing legal challenges tied to policing and governmental authority. Similarly, traffic collisions involving city vehicles also accounted for 18% of the payouts, highlighting risks associated with the city’s operational fleet.
Fiscal Impact on City Budget
The escalating cost of legal settlements and verdicts has been identified by city officials as a major contributing factor to the city’s projected financial deficit. Los Angeles faces a looming budget shortfall estimated at nearly $1-billion for the fiscal year 2025-26. The necessity to allocate ever-larger sums to legal resolutions directly impacts the city’s ability to fund essential services and invest in future projects.
This budget crisis has already necessitated difficult financial decisions, including layoffs within the city workforce and significant spending cuts across various departments, as administrators attempt to balance the budget under increasing pressure.
Perspectives and Accountability
The surge in legal costs has also become a point of contention and debate within city hall and among legal experts. Some critics have placed blame on the current City Attorney, Hydee Feldstein Soto, who took office in December 2022. They question her office’s approach to managing and litigating cases, suggesting that strategic decisions may be contributing to the higher settlement and verdict amounts.
City Attorney Feldstein Soto, however, offers a different perspective. She attributes a significant portion of the recent costs to a backlog of cases that accumulated during the COVID-19 pandemic, which delayed trials and resolutions. Furthermore, she points to what she describes as antagonistic juries, suggesting that juries are increasingly inclined to award larger damages against the city, regardless of her office’s litigation strategy. The debate over accountability and underlying causes continues as the city seeks solutions to rein in these escalating expenditures.
The Road Ahead
The dramatic rise in legal payouts presents a formidable challenge for Los Angeles as it navigates its budget crisis. Addressing the root causes – from infrastructure deficiencies to litigation strategies and jury trends – will be critical for the city to regain fiscal stability and ensure that taxpayer money is used effectively for public services rather than legal liabilities.
