Wolverhampton Council was locked in a legal battle with Willmott Dixon, who took over the contract for the major scheme in 2019 after original contractor Shaylor Group collapsed.
The Labour-run authority challenged the firm over its demands for so-called "compensation events" relating to extra costs incurred due to delays, and saw an adjudicator rule in its favour.
It meant chiefs avoided a bill of more than £3 million but it was made clear the result, which is temporarily binding, could be disputed and challenged by Willmott Dixon in the High Court.
Now it has emerged the authority has so far spent £347,688.94 on external legal support from Trowers and Hamlins – and are seeking to expand the budget to up to £500,000 which could be used to defend the position further.
A report, set to be approved by members of the cabinet (resources) panel on Wednesday, said the legal advice allows the authority to "robustly ensure that contracts are adhered to in order to achieve best value and defend its position in any disagreements between the contractor and the council by enforcing the terms of the construction contract".
It added: "It is likely that further support is required including the possibility of a High Court challenge to the adjudicator’s decision and this will require specialist construction legal support
"In order to robustly defend its position and to hold our professional advisors to account the council will need specialist external legal support. The council does not have the requisite specialist knowledge internally to deal with this matter.
"Where possible and appropriate, internal legal colleagues are advising to ensure the council remains legally compliant whilst defending the council’s position and secures best value."
The document said the increase was down to the "nature and the tight contractual requirements" relating to the dispute. The council had earmarked £380,000 to fund legal costs, and is now seeking approval for a further £120,000 to support the costs – taking the budget to £500,000.
Councillor Simon Bennett, deputy leader of the Conservatives in the city, said the expense showed how much the relationship between the authority and the firm had deteriorated – and described the situation as a "shambles".
But Councillor Craig Collingswood, chair of the council’s Audit and Risk Committee, said: “This is a clear example of the council protecting taxpayers money, saving potentially millions of pounds, by fighting legal claims for additional payments.
"In winning the first challenge, the council has again showed its commitment to providing value for money and looking after the public purse.
"Just two months ago independent auditors Grant Thornton praised the council for its handling of the Civic Halls refurbishment work since 2018, finding no risk of ‘significant weakness’ in its management of the project.
"Grant Thornton’s annual audit report gave the council’s finances a clean bill of health, backing the way it managed public funds.”
After an eight-year revamp, the venue is finally set to open in June and is now called The Halls Wolverhampton.