Vallas vows to rein in $1B in settlements judgments, legal fees paid under Rahm

Mayoral candidate Paul Vallas vowed Wednesday to rein in settlements, judgments and outside legal fees that, together, have cost beleaguered Chicago taxpayers more than $1 billion under, what he called Mayor Rahm Emanuel’s “lousy management.”

From May 2011 through June 30 of this year, the city paid $738.4 million in settlements and judgments to plaintiffs filing lawsuits and other claims against the city. Of that, $418.3 million stemmed from allegations of police abuse, he said.

The $75.8 million shelled out during the first six months of this year puts 2018 on pace to be “one of the most costly” under Emanuel, Vallas said.

The Emanuel administration’s increasing reliance on outside counsel has compounded the cost, Vallas said.

Since Emanuel took office, the city has spent $231.4 million on outside attorneys to help litigate and settle lawsuits against the city.

Former City Corporation Counsel Steve Patton tried to reduce those costs and handle more cases in-house.

But Vallas said it didn’t work. His research shows city spending on outside counsel has risen every year under Emanuel — from $26.7 million in 2011 to $37.7 million in 2017 and $23.4 million through the first seven months of this year.

The rise in recent years stems, in part, from the U.S. Justice Department investigation of the Chicago Police Department triggered by the police shooting of Laquan McDonald.

That was followed by nearly a year of negotiations with Illinois Attorney General Lisa Madigan that produced a now-pending consent decree outlining terms of federal court oversight of CPD.

“Chicago sadly leads the nation on spending to address what ultimately comes down to bad management. … With roughly $1 billion spent to resolve, not only police cases, but a host of other matters, lousy management has become a huge driver of the cost of local government,” Vallas was quoted as saying in a press release.

“The practices of recent years have been a bonanza to many in Chicago’s legal community while taxpayers are left holding the bag. It has become a veritable cottage industry for many of the city’s law firms.”

Vallas’ plan to rein in outside legal fees and stop shoveling money out the door in settlements is multi-faceted, just like all his plans.

If he’s elected, the 326-employee, $30.6 million-a-year Law Department would be re-structured to include attorneys specializing in risk management.

They would be charged with establishing “risk management protocols” and rooting out “systemic deficiencies” in all city departments that “needlessly expose” the city to liability risks.

Experts from the insurance and legal industries would help the city drive down costs. And City Hall would join the Claims and Litigation Management Alliance, which Vallas called the “premier professional insurance association.”

Vallas also would create a Special Litigations Division within the Law Department and staff it with “experienced lawyers who can strategically and aggressively defend the city’s financial interests.”

Instead of paying outside counsel up to “six times” the hourly rate of city attorneys, Vallas vowed to hire more experienced attorneys “at more competitive salaries.”

In his final budget, Emanuel proposed raising the annual salary of Corporation Counsel Ed Siskel from $173,664 to $178,872. Siskel is the Law Department’s highest-paid employee.

Vallas did not say how high he intends to raise Law Department salaries.

But he proposed that attorneys assigned to the new Special Litigations Division have “full authority” to choose outside law firms “only when needed based strictly on their relevant experience and billing rates to eliminate potential conflicts.”

Instead of treating outside counsel as “functionally separate entities,” those private law firms would be “directly subordinate” to the Special Litigations Division.

Law Department spokesman Bill McCaffrey pushed back against Vallas’ mismanagement claims.

In an emailed statement, McCaffrey said the Law Department “vigorously defends” lawsuits filed against the city and its employees and, “This may include hiring outside counsel for its expertise in specific areas of law.”

“We only settle cases when it is in the best interest of taxpayers. And we firmly believe the continued adoption of police reforms and improved training will have a positive impact on the number of lawsuits filed against the City and police officers,” McCaffrey wrote.

As for the tidal wave of settlements under Emanuel, Patton once blamed the steady stream of settlements tied to the Jon Burge torture era on “serious, ugly exposures” inherited from and frozen by former Mayor Richard M. Daley. Daley was mayor when Burge was fired, but state’s attorney during much of the alleged torture.

Patton set out to clear the decks of those cases and painstakingly negotiated a deal that awarded $5.5 million in reparations that was divided among victims tortured by Burge and his co-horts.

He also implemented an “early assessment procedure” for every suit filed against the city. That’s tailor-made to minimize legal costs by quickly determining whether a suit should be settled or brought to trial.