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Police Misconduct Is Increasingly a Financial Issue

Lawsuits are costing governments millions, and, in some cases, forcing them to shut down departments.

(Wikipedia/Tony Webster)
For governments, getting sued unfortunately comes with the territory. But in recent years, the amount that cities are shelling out for police misconduct lawsuits has become not just a criminal justice issue but a financial one as well.

For big cities, the costs are alarming -- equivalent to huge line items in agency budgets.

In just the first eight weeks of this year, for instance, Chicago paid out $20 million in police misconduct lawsuits, according to a local news investigation. That's outpacing its average of $47 million a year over the last six years. New York City pays by far the most. In 2017, it doled out a record $302 million for police misconduct lawsuits, according to the city controller's office.

For small cities, however, the financial impact can be even bigger. Most small governments have liability insurance to help them cover the costs of lawsuits. But legal costs for police misconduct can still place huge strains on budgets and, in some cases, can lead to law enforcement agencies being disbanded.

Recently in Lakewood, Wash., a jury returned a $15 million verdict for the death of Leonard Thomas, who was unarmed when a police sniper shot him. While Lakewood's insurance is expected to cover a portion of that payout, the city still has to spend $6.5 million on punitive damages -- an amount equivalent to 18 percent of the city's annual spending.

When misconduct lawsuits start mounting, insurance companies can withdraw coverage. Without insurance, a single claim against a local police department has the potential to bankrupt a small municipality. As a result, cities in California, Illinois, Louisiana, Ohio, Pennsylvania and Tennessee have in recent years opted to disband their police departments after losing coverage.

Police misconduct lawsuits are an overlooked area of taxpayer spending and management, says David Eichenthal, executive director of the PFM Group's Center for Safety & Justice Finance. "The ability to limit your future liability by taking preventive steps upfront isn't just good policing policy, but important financial policy," he says.

Ron Serpas, New Orleans' former police chief and a consultant with PFM, agrees. He says training and active monitoring of new hires can make a big difference. "You see numerous times that poor decision in hiring or succession planning results in multimillion-dollar lawsuits in cities."

In Sorrento, La., for example, a newly hired cop in 2013 slammed into another car on a highway after going on a high-speed chase to catch a separate driver who was speeding. The driver who was hit sued. It was later revealed that the officer was already one of the town's most zealous issuers of speeding tickets, hundreds of which were later thrown out in court.

That incident, combined with other lawsuits against the police department serving the small town of 1,500 people, prompted the city's insurer to drop its coverage. The town disbanded its police department shortly thereafter.

Some small towns have been able to make a turnaround before losing insurance. Last year, University of Chicago law professor John Rappaport detailed examples of such efforts ranging from new training and supervision of SWAT teams in Wisconsin after botched raids, to firing a police chief in Tennessee.

Still, says Eichenthal, governments shouldn't wait until the threat of bankruptcy or losing insurance forces them to start looking at what causes misconduct. "I used to have a boss who'd say it's cheaper to build a guardrail at the top of a cliff than station an ambulance at the bottom," he says. "It's really about building those guardrails in the right places."

Liz Farmer, a former Governing staff writer covering fiscal policy, helps lead the Pew Charitable Trusts’ state fiscal health project’s Fiscal 50 online resource.
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