STATE AUDITING DELGADILLO'S OFFICE.

Byline: Rick Orlov and Beth Barrett Staff Writers

State auditors have started reviewing the rapid increase in use of outside lawyers by City Attorney Rocky Delgadillo, officials said Wednesday.

City Controller Laura Chick sought to conduct the audit after questioning why the use of outside lawyers grew from $14 million to nearly $30 million between 1999 and 2003, but Delgadillo rebuffed that effort, citing the City Charter. The issue was taken up by state Sen. Richard Alarcon, D-Van Nuys, in his mayoral campaign and he won approval for the state to fund the review.

``We have our people going through records now,'' said State Auditor Elaine Howle, who expects the team of three auditors to work at least through the summer. ``After they do their preliminary work, they will come back here and we will determine where to go next.''

Delgadillo, who is exploring a run for California attorney general, said through a spokeswoman that the office is ``cooperating fully.''

``We are sure that the auditors will find that we are using outside counsel correctly and saving the city money,'' said Chief Financial Officer Jennifer Krieger.

Delgadillo has said outside lawyers had cut the city's annual liability payouts by 50 percent, saving about $50 million a year.

Chick said she was ``disappointed'' her auditors weren't able to do the work, and accused Delgadillo of reneging on letting her proceed.

``I wanted to do the audit,'' Chick said. ``There were questions I thought were important: how does the city attorney determine when outside counsel is necessary; how (does he) determine which law firms to hire; how does the city attorney monitor these contracts? It's been a mystery area for a very long time.''

Delgadillo's chief deputy, Terree Bowers, said the city attorney was willing to cooperate with Chick but that the proposed scope of her audit went beyond what the charter allowed.

``We have nothing to hide,'' Bowers said.

Alarcon said he wanted to ensure that the city has a comprehensive policy on hiring outside lawyers.

``I want the auditors to provide us with assurances that proper procedures are being followed and that when we do hire outside attorneys, it is at a reasonable cost.''

Howle said the auditors will review the process for selecting outside counsel as well as review the justification for such requests. Also, they will review how the work of the attorneys is monitored - including the billing records - and the steps followed to make sure there is no conflict of interest by the law firms hired.

Generally, the City Attorney's Office hires private firms if there is a conflict of interest, for specialized cases or for particularly complex cases.

Rick Orlov, [phone]

rick.orlov(at)dailynews.com