Crain's New York Councilman fights de Blasio over lawsuit payouts by Erik Engquist

Crain's New York
Crain's New York
Councilman fights de Blasio over lawsuit payouts
Erik Engquist

410Photo: Courtesy of Ben Kallos/Associated PressCouncilman Ben Kallos (left) and Mayor Bill de Blasio (right)

As Crain’s investigated an assertion by City Councilman Ben Kallos last week that Law Department reforms would save the city $430 million over the next four years, one thing became clear: There’s not a lot of love lost between Kallos and the de Blasio administration.

Kallos has been pestering and pressing the Law Department for two years about reducing the amount of money it pays out to people who sue the city, or threaten to.

When budget documents revealed the predicted savings, he claimed victory, issuing a press release attributing the $430 million to his advocacy and the administration’s grudging cooperation. He cited a decision to expand a Bronx pilot program in which one city lawyer handles a case from beginning to end, a policy known as “vertical case handling.”

It seemed questionable, to say the least, that vertical case handling could save so much money (the city pays roughly $700 million a year in judgments and claims). Asked to clarify, city officials told Crain’s that it expects to save $136 million from fiscal 2017 to 2020 by expanding vertical case handling. That information was not shared with the councilman before he issued his release—perhaps because he has been grilling top de Blasio officials including Corporation Counsel Zachary Carter and budget director Dean Fuleihan at council hearings.

“This is another case of the administration not wanting to share credit with anybody,” said Kallos, who, like Mayor Bill de Blasio, is a Democrat. “I have to rely on the Law Department … and unfortunately there is less transparency there than there should be.”

Beyond the icy relations between the Manhattan councilman and the mayor’s office is the bigger question of whether the predicted reduction in lawsuit costs will materialize.

“We derived the [estimated] savings from our real-life experience in the Bronx, where we have a pilot program that is producing actual savings,” said the mayor’s press secretary, Karen Hinton. “When we forecast savings in our budget, we used a conservative estimate based on those real-life savings. The savings come from two factors: Fewer cases being brought to trial and lower settlement amounts in those cases that do go to trial.”

Beyond vertical case handling, the administration’s savings will come from contesting more cases rather than settling them for generous amounts. The city’s 2016 budget allocated $709 million for judgments and claims, and the mayor’s budget office had forecast an increase to $854 million before the savings plan was factored in.

Said Kallos, “It’s been two years of me saying, ‘If we’re spending money, can we have a return on investment?’ This is the third budget, and they finally made a change.”

Hinton said vertical case handling will save on judgments and claims by reducing settlement amounts as well as the number of cases brought. The savings in the next four fiscal years are penciled in at $14 million, $30 million, $46 million and $46 million again.

The remaining savings are from new estimates based on more recent data. "We are still predicting growth in costs, but at a slower rate," said Hinton. That should lower the budgeted amounts over the next four years by $56 million, $60 million, $64 million and $84 million, the budget office calculated.


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