Judge Picks Auditor To Assess Homeless Services in LA

A federal judge has selected an auditor to conduct what could be the most comprehensive picture of Los Angeles’ response to homelessness in years.

The decision was made on Monday, according to court transcripts.

U.S. District Judge David O. Carter tasked Alvarez & Marsal with the audit. The probe is the result of an ongoing, years-long lawsuit filed by a downtown business group, the L.A. Alliance for Human Rights, against the city and county over its lack of progress on addressing homelessness.

The firm was picked after two other potential auditors, CliftLarsonAllen (CLA) and Horne LLP, gave presentations in a downtown courtroom last Thursday.

Scott Marcus, an attorney for the city, said in Friday’s hearing that he was given additional information that made Horne LLP “less desirable to the court” and that he didn’t think CLA “was capable of performing the audit” they had in mind, according to court transcripts.

What do we know about the firm?

Alvarez & Marsal is a consulting firm with about 9,000 employees and dozens of offices around the world, including in L.A.’s Westchester neighborhood.

David McCurley, a Texas-based managing director who leads the firm’s state and local government practice, said in Thursday’s hearing that Alvarez & Marsal will bring their expertise in government efficiency, health and human services, and forensic accounting to the audit.

“We know that the effective populations that we're going to be dealing with, many of them struggle with either behavioral health, physical health, disabilities, a variety of other challenges that make them a more challenging population to deal with, and we want to make sure that we're bringing all of that stuff to bear as we tackle it,” McCurley said.

The price range the firm provided was between $2.8 million and $4.2 million to complete the audit in 20 weeks, said Scott McKee, a managing director and accountant who works with the firm’s disputes and investigations team.

During the Thursday hearing, Carter called on the firm to seek out the perspective of people living on the streets.

“I want to make certain that you are willing to visit with the community,” he said. “In other words, you're going to be talking to politicians, statisticians, etcetera, and I want you to absolutely promise me that you're willing to take to the streets.”

Carter reiterated those directives during Monday’s hearing, saying he’s asked Alvarez & Marsal to visit the unhoused communities “almost immediately,” according to court transcripts.

Who is paying?

The L.A. City Council agreed to pay between $1.5 and $2.2 million for the audit on Friday, which is hundreds of thousands of dollars less than the minimum price Alvarez & Marsal had originally proposed.

Alvarez & Marsal have committed to staying within the council’s budget, even if it means they’re doing some pro bono work.

“This is very, very important work,” said Diane Rafferty, a managing director with the firm’s public sector group, according to court transcripts. “We’re not cutting ourselves off at 40 hours a week. If it takes us more time, if it takes us to meet you on Saturday and Sunday in these areas, we’re going to do that.”

The firm will be going through the contracting process over the next week, but Carter made it clear the city can’t limit the court-ordered audit and “there’s no cap” on the cost.