Los Angeles is grappling with a financial crisis as legal payouts have surged to $289 million in 2024, up from $91.3 million two years prior. The city’s legal expenses have been cited as a significant factor in a nearly $1 billion budget shortfall for the fiscal year 2025-26, leading to layoffs and spending cuts. The largest payouts were for lawsuits related to dangerous conditions, civil rights violations, and traffic collisions involving city vehicles, according to the Los Angeles Times.
City Attorney Hydee Feldstein Soto, who took office in December 2022, attributes the rising costs to a backlog of cases from the COVID-19 pandemic and increasingly antagonistic juries. Feldstein Soto also pointed to structured settlements negotiated by her predecessor, Mike Feuer, as a contributing factor. However, some critics argue that Feldstein Soto’s legal strategies, which involve taking more cases to trial, are driving up costs. Feldstein Soto has defended her approach, emphasizing the need to address risky behavior and interpersonal disputes that lead to lawsuits.
The city has increased its allocation for liability payouts to $187 million for the upcoming fiscal year, still falling short of recent expenditures. The LAist reports that the Los Angeles Police Department (LAPD) accounts for the highest liability payouts, with $100 million in claims in fiscal year 2024. Public works follow with $45 million in claims. Councilmember Katy Yaroslavsky has called for more realistic budgeting and reforms to reduce risk and improve public safety.
City Controller Kenneth Mejia warned that continued overspending and revenue shortfalls could extend the city’s hiring freeze and lead to service reductions. The city began its hiring freeze in January 2024, followed by cuts to over 1,700 positions last July. As Los Angeles navigates this financial crisis, city officials are under pressure to find solutions that balance legal obligations with fiscal responsibility.
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