Delgadillo Criticized in State Audit of Outside Legal Work

Los Angeles city attorney and attorney general candidate Rocky Delgadillo, who oversees millions of dollars the city pays private law firms, can’t document why his office selected many firms, according to a highly critical state audit released Thursday.

The auditors also found large accounting errors in the city’s calculation of how much it has paid law firms, which Los Angeles often hires to handle complex legal matters.

And they found that Delgadillo’s office has repeatedly failed to record how law firms got contracts or to require budgets from firms that won the often-lucrative deals, even as the city’s use of these firms has skyrocketed in recent years.

“Overall, we found that the attorney’s office could not provide documents to demonstrate that it had followed the policies and procedures it has in place,” the audit concluded.

Delgadillo, a Democrat elected in 2001 who is battling former Gov. Jerry Brown for the party nomination for attorney general in the June primary, said he was nonetheless pleased with the report, noting that auditors recognized progress by his office.

“I expect and demand continued improvement from all employees every day,” Delgadillo said in an interview, adding that the city’s liability payouts have declined in recent years.

But though auditors noted some positive steps, they found many more problems in how Delgadillo’s office has managed the use of outside law firms.

And they noted that the apparent reduction in liability payouts over the last five years may have been skewed because of abnormally high payouts in two cases in fiscal years 2000 and 2001.

Like many cities and governments, Los Angeles uses private law firms to handle complicated litigation, to help on large projects and to represent the city in cases where the city attorney’s office may have a conflict.

Payments to these private firms almost doubled from fiscal year 2000 to 2005 to nearly $32 million, according to the audit, which reviewed records from Delgadillo’s tenure as well as that of his predecessor, James K. Hahn, who left the city attorney’s office in 2001 to become mayor.

The audit followed a series of stories in The Times about the rising legal bills.

Much of the increase was driven by extensive use of outside attorneys to handle the planned modernization of Los Angeles International Airport and to work on litigation associated with the 2001 California energy crisis, which ensnared the Department of Water and Power.

But as the city increased its reliance on outside legal counsel, Delgadillo’s oversight of the work was consistently weak, auditors found.

The city attorney’s office repeatedly failed to produce documents to account for why firms were selected, according to the audit. In one case, the auditors found only a single e-mail indicating a discussion about hiring an outside counsel, despite internal rules calling for written justification for such decisions.

A 2004 Times investigation found that attorneys at many of the law firms that received work had given to Delgadillo’s political campaigns.

Delgadillo denied at the time there was any connection to his contracting decisions.

The same investigation led to a request from then-City Councilman Antonio Villaraigosa for an accounting of the city’s legal bills. But that accounting contained multiple errors, the auditors found.

The city underreported legal costs at the airport by $2.2 million, or 23%, over five years. It double-counted the cost of work performed by two firms at the DWP.

And it initially reported legal costs of $5.1 million for the Department of Public Works, though a subsequent investigation revealed the true cost was $24 million.

In many cases, the auditors also found that Delgadillo’s office did not require budgets from law firms for projects.

Only two of 16 contracts reviewed by the auditors included budgets.

And Delgadillo’s office, though sometimes conscientious in its review of invoices, allowed law firms to submit unclear bills through a practice known as “block billing,” according to the audit.

Brown’s campaign quickly seized on the audit to intensify attacks on Delgadillo, who is considered an underdog in the race for attorney general.

“It’s unbelievable that Rocky is looking for a promotion when he can’t even do the job he’s doing now,” Brown campaign consultant Ace Smith said in a statement.

Although Delgadillo downplayed the audit’s findings, his campaign released an upbeat news release Thursday about the city attorney’s fundraising.

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Times staff writer Patrick McGreevy contributed to this report.