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MY VIEW - It is a game as old as the hills. Some call it the salami tactic, whereby giving it away slice-by-slice the salami slowly disappears. Others liken it to a camel getting its nose under the tent. First the nose burrows in, then the head, then the camel takes up all the space. The results are always the same.
I have witnessed this distraction and have warned repeatedly against it. Having served on multiple boards for many years I observed the procedure large law firms use to hook unwary government. First sole source/ low fee, then the exorbitant hourly rates are presented, overcharges and surcharges follow. Unsuspecting and lazy bureaucrats accept the billing, and the extravagant expenses are ingested. In a fleeting time, the salami disappears. The taxpayer is left to choke on the exorbitant costs.
When the City of Los Angeles faced litigation due to purported inactions and policies that allegedly created a hazardous environment in the Skid Row area, what actions did it take? It hired the best attorneys money could buy—powerful and well connected—to defend itself. And all of this came at a time when the city faced a $1 billion deficit and projected layoffs and cuts in services.
Basically, the city was accused of having failed to fulfill its commitment to the homelessness crisis and was sued by LA Alliance for Human Rights. Despite a settlement in 2022 promising nearly 13,000 new shelter beds by June 2027, the city repeatedly fell short—prompting stern criticism from U.S. District Judge David O. Carter who is overseeing the case.
Facing potential intervention by a third-party receiver, the city voted in May to provide Gibson Dunn & Crutcher LLP with $900,000 for up to three years of work. But over the following three months, the law firm roared way past that amount, amassing $3.2 million in bills.
Now City Attorney Hydee Feldstein Soto has asked the council to increase the contract with the law firm six times, raising the cost to $5.9 million
The city council should invite the city attorney to discuss and answer questions publicly regarding this contract and provide a summary of all other sole source contracts and associated fees so there will be no more surprises.
Not so fast, responded the city council, sending the request to the Budget and Finance Committee for further examination after meeting behind closed doors for more than 90 minutes. This was a welcome response from a council not known for its leadership culture. More praise may be justified if a reasonable decision results in which the unreasonable attorneys bill to the city is reconciled.
Although Feldstein Soto did not comment on the council’s action, she had earlier praised the law firm for delivering “exceptional results and seamless representation.”
The increased billing to the city came without council notice. Councilmember Bob Blumenfeld said that if the initial amount was going to be exceeded the council was to be notified. “It was written in the contract,” he said, “we are not happy and not ready to pay a bill that we didn’t bargain for.” He sits on the budget and finance committee and wants assurances that the taxpayers are better served, although he did not offer a timeline for taking up the request.
Blumenfeld’s hope is that “the City Attorney and reasonable folks at GD&C will sit down and figure out an alternative bill, " he said in a statement. "We must pursue appropriate cost review based on the fact that this is the public’s money, that every dime spent on lawyers is one less dime spent on homeless interventions, as well as the fact that they exceeded the limits without authorization."
But Councilmember Monica Rodriguez said she was “enraged” by the amount of money being spent on a settlement reached years ago between the city and downtown businesses owners and residents.
“The city should be more focused on becoming compliant and housing individuals,” Rodriguez said. Holding the bill for further review keeps the issue unresolved and enables bad behavior, she said. Her colleagues were “kicking the can down the road.”
“We have targets to meet, and we should be investing our very precious limited dollars in fulfilling those obligations and being compliant with this settlement agreement so that we can be done with it in 2027,” Rodriguez added.
An attorney representing the L.A. Alliance, Matthew Umhofer, said he is "heartened that the city didn't give this misadventure a blank check." He added that the important question is whether spending $6 million on an outside firm to avoid accountability is good use of taxpayer funds.
It is my understanding that LAist, the rebranded former KPCC, L.A.’s National Public Radio station, sought release of additional invoices from the law firm from the City Attorney’s Office, but the request was denied.
Has GD&C been paid for its work to date? According to the City Controller’s Office payments are not authorized until the costs are approved by the City Council.
This troubling episode involving an elite law firm and its staggering fees is not an isolated case. In the past, diligent investigative journalism might have slowed these questionable decisions, but today, that critical oversight is notably absent, leaving city dealings unchecked. Without thorough analysis, the rationale behind sole-source contracts, especially when other qualified options exist, remains a mystery. There is also little clarity about whether, during the city’s budget deliberations, officials truly examined excessive costs or simply chose the path of least resistance. Confronted with a $1 billion deficit, did the budget committee hold hearings to investigate these high fees and identify savings, or did they find it easier to cut jobs and reduce services?
Public outrage was swift when there was a proposal for a $30-per-hour wage for workers, but there is barely a whisper when the city pays privileged law firms $1,350 an hour.
Maybe this sad, and costly, development can become a bold step for the City Council and an opportunity to display strong leadership. And strong leadership means to guide, inspire, and influence others toward shared objectives and success for the city.
We are eagerly waiting to see what the Budget and Finance Committee recommends, and how the full City Council reacts.
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(Nick Patsaouras has served on key public boards, including the LA Department of Water and Power, Metro, and the Board of Zoning Appeals. He is the author of the book "The Making of Modern Los Angeles.")
