The City of Winnipeg's legal services department is running 20 per cent over budget as it struggles to get a handle on a backlog of files.

A new report to city council's finance committee says legal services faces an $800,000 shortfall on its $4-million budget for 2020, mainly because of the cost of outsourcing hundreds of files to external legal counsel.

Legal services had 700 outstanding files to deal with last fall and now faces 200 to 300 new requests every month, corporate finance official Tanis Yanchishyn writes in the report. The COVID-19 pandemic added to legal issues, she added.

The city has hired Winnipeg law firm Duboff Edwards Haight & Schachter to deal with the backlog, at an expected cost of $1.1 million this year alone.

"The majority of the files outsourced to external legal counsel are litigation matters," Yanchishyn writes, adding it's difficult to estimate how much these files will ultimately cost the city.

"There are many factors to consider, including but not limited to: the volume of documents necessary to review from both sides during the discovery process; whether or not there any interim motions; whether or not the use of experts is required; the willingness of each party to negotiate potential settlement to avoid a trial and more."

The city also expects to spend $458,000 this year to defend against the legal challenge of its right to levy growth fees on new developments in some areas on the edge of Winnipeg.