Each year, cities spend millions fighting and settling lawsuits involving alleged police misconduct, injuries on public property and a range of other legal challenges.
To approximate the fiscal impact that these cases have, we requested financial data from the 25 largest U.S. cities, 20 of which responded. Cases typically originate as claims, then turn into lawsuits if not resolved. Payments made to plaintiffs, legal costs associated with cases and liability insurance premiums were obtained to provide for a comprehensive picture of costs in each locality.
Payouts: Payments made resulting from lawsuit settlements, judgments or claims settled prior to litigation. Figures do not reflect costs related to worker’s compensation claims and employment matters unless noted.
Litigation: Expenses reflect total compensation for internal staff, outside counsel and any other costs associated with lawsuits unless otherwise noted.
Insurance: Costs paid for liability or excess liability insurance. Most larger cities are either primarily or entirely self-insured.
Reported costs for cities vary significantly. Larger, more densely-populated cities incur greater lawsuit expenses. Types of public services provided also influence costs as some are much more prone to legal challenges than others. Jurisdictions operating public hospitals, for instance, are subject to costly medical malpractice lawsuits. Different state laws dictating what a government can be held liable for and limits on damages awarded further drive cities' costs up or down.
New York's legal bills far exceed that of all other cities. While lawsuit costs account for less than 1 percent of total spending in most cities, they often represent much-needed money that could be used to fund other areas of the budget.
Select a city to view its data for the three most recent fiscal years:
Expenses often fluctuate widely from year to year as major cases are settled, so we’ve calculated each city’s average costs over the past three fiscal years. All responding cities paid out a combined annual average of nearly $1.2 billion in judgments and settlements. The median annual total cost -- including payouts, legal and insurance costs -- was $12 million for the 20 cities reviewed. The following table summarizes median costs using cities’ three-year averages:
|Total for all cities||N/A||$1,156,508,402||$127,541,734||$24,293,544|
|Median annual expense||$12,026,044||$5,499,571||$3,523,329||$302,307|
|Number of cities||20||20||17||19|
|Jurisdiction||Fiscal Years||Average Annual Total||Average Payouts||Average Litigation||Average Insurance|
Austin: Payouts, litigation and insurance costs shown don’t include expenses for the city’s aviation department, which has settled only a few small claims in recent years. (Source: City Law Department)
Charlotte: Litigation costs include costs for outside counsel plus an estimated annual $332,000 for in-house attorneys, paralegals and litigation support. Insurance premiums cover excess liability, a police helicopter, excess liability for buses, auto liability for van pools, GL-rail and streetcar, the city’s network security and the airport. (Source: Office of the City Attorney)
Chicago: Payout totals reflect all types of settlements and judgment expenses. (Source: Annual Financial Analysis report) The city did not respond to a Freedom of Information Act request for litigation and insurance costs.
Columbus: Reported payout costs for 2016 do not reflect the last two months of the fiscal year ending on December 31, but the litigation section chief reports that he anticipates few, if any, additional cases to be settled those months. Litigation costs include expenses for in-house staff and an estimated $30,000 per year for outside counsel, travel and other costs. The city’s liability insurance premiums for aviation insurance and natural gas do not correspond with the city’s fiscal year as they run from Aug. 1 to July 31. (Source: Columbus City Attorney Litigation Section)
Dallas: Litigation costs were estimated by adding annual salaries of internal staff ($2,571,360 per year) with reported annual expenses for expert witnesses and outside counsel. The City Attorney’s Office reported FY 2014 and FY 2015 totals combined for the two years. (Sources: Office of Risk Management, City Attorney's Office)
El Paso: Payouts include totals for the city’s Public Service Board: $19,252 for 2013; $100,062 for 2014; $75,765 for 2015. The city noted that staff attorneys are responsible for other matters in addition to litigation. (Source: Office of the City Attorney)
Fort Worth: (Source: Risk Management Division)
Houston: Payouts do not include breach of contract and worker’s compensation claims. (Source: City of Houston Legal Department)
Indianapolis: Litigation totals were estimated by adding 2016 salary and benefit costs for city personnel ($920,902) with outside counsel costs provided for each year. The city reports that personnel costs are fairly consistent from year to year. (Source: Office of Corporation Counsel)
Jacksonville: Total litigation costs included all attorneys’ fees, both in-house and external. (Source: City Risk Management Division)
Los Angeles: Payout totals do not reflect back wages paid by departments, tax refunds, payments made directly by proprietary departments or special funds and those relating to retrofitting costs for ADA matters. Worker’s compensation expenses are also excluded, as they are for other cities. Payouts increased during the most recent fiscal year due to four major cases being resolved: An officer-involved shooting ($15 million), a fatal traffic accident ($15 million) and two wrongful imprisonment cases totaling $24.3 million. Litigation expenses shown do not include benefit costs for city staff. (Source: Office of the City Administrative Officer)
Nashville: Payments for claims cover all types of matters including negligence claims, civil rights violations, employment issues and contracts. The Department of Law estimates that salaries for employees dedicated to litigation matters total approximately $1.4 million annually. This estimate was added to other provided data to compute listed totals for each fiscal year. (Source: Department of Law)
New York: The city was unable to provide estimates for litigation costs. The city comptroller’s office handles claims, while the law department is responsible for lawsuits filed against the city. (Source: Office of the Mayor)
Philadelphia: The city reported that it was unable to provide litigation costs associated with lawsuits because of how law department and finance records were kept. Liability insurance policies, effective from September 1 through August 31, don’t correspond with fiscal years. (Source: City Law Department)
Phoenix: The city’s litigation costs do not include any expenses for internal staff. (Source: City Risk Management Division)
San Diego: Payout totals refer to what the city was ultimately responsible for regardless of insurance coverage. Totals shown reflect some costs that were later reimbursed by insurance. The city’s risk management department was unable to calculate exact amounts reimbursed. Litigation costs reported do not include costs for in-house counsel. (Source: Risk Management Department)
San Francisco: The city estimated its liability insurance coverage premiums by assuming 20 percent of total broker fees were related to liability premiums and consulting services. Most of the city is self-insured with the exceptions of the airport, Port of San Francisco and SFMTA. All figures shown for fiscal year 2016 are pre-audited actuals and are subject to change. (Source: City Controller's Office)
San Jose: Listed payout totals include amounts for the city-run sewer and airport. The city incurred a $4.9 million excessive police force verdict in fiscal year 2014. Litigation costs also include expenses for worker’s compensations attorneys and associated staff. The litigation figure for fiscal year 2016 is a forecasted amount. (Source: City Attorney's Office)
Seattle: Payouts for lawsuits, but not claims, include worker’s compensation cases. (Source: City Attorney's Office, Risk Management Division)
Washington, DC: Fiscal year 2016 amounts do not include expenses incurred during September, the last month of the District’s fiscal year. Total payouts increased sharply in fiscal 2016 as a result of four large settlements involving wrongful conviction cases. The fiscal 2016 settlement total also includes a class-action lawsuit for unpaid cost-of-living adjustments for employees entitled to disability compensation benefits. Litigation costs reflect total personnel and support costs for the Office of the Attorney General’s civil litigation division, commercial division, public interest division and Office of the Solicitor General. The public interest division and the Officer of the Solicitor General engage in both defensive and affirmative litigation. The Civil litigation division also defends lawsuits brought by former government employees. (Sources: Office of Risk Management, Office of the Attorney General)
Municipalities spend more than a billion dollars a year on settlements and claims from citizens. Some are trying hard to rein in those costs.