Is it an AG-tort bar cabal
or a taxpayer's godsend?
By Chip Drago
Mobile Bay Times
A recent Wall Street Journal editorial lambasting Mississippi Attorney General James Hood's use of private contingency fee lawyers in lucrative civil litigation exposed a campaign finance flaw rather than an unethical legal practice, according to a number of Alabama lawyers.
"The tort bar-AG cabal deserves to be exposed nationwide," the WSJ editorial concludes.
Did the WSJ paint with too broad a brush? Is there a more nuanced take, one wherein a state's citizenry, fairly and without political taint, can avail themselves of the best legal talent against malefactors that harm and may otherwise continue to harm them?
"In principle, there is nothing inherently wrong in employing outside counsel with special expertise to help the state prosecute legitimate claims which it might otherwise be unable to pursue. As always, the devil lies in the details.
Would the state of Alabama have been able to successfully pursue its oil royalty claims (there were a lot more defendants than just XOM) or lawsuits against drug companies for overcharging Medicaid without such assistance? I doubt it. The difficulty comes in the apparent quid pro quo described in Mississippi and the even worse, if true, abuse of the state's criminal prosecutorial powers to leverage civil claims.
I think that the outright prohibition of employment of special counsel would be a mistake and result in the State's loss of a useful weapon in vindicating claims in behalf of its citizens. On the other hand, the terms of all such contracts should be completely transparent and easily accessible to the public. Equally important, the relationships between the lawyers employed and the elected officials involved in awarding the contracts should be strictly scrutinized."
-- Ian Gaston,
president, Mobile Bar Association
"While I agree that the article raises some interesting questions and issues about this practice, I think there are some important points that are glossed over and forgotten in this article that should be considered. Some of these same questions and points were raised related to the Exxon case here in Alabama. As with most situations, the answer is not always as simple and easy as we would like.
In a perfect world, State Attorney General Offices would have the manpower and resources to pursue cases on behalf of their citizens without having to 'outsource' the legal work. But the fact of the matter is that complex lawsuits and litigation require thousands of man hours and sometimes millions of dollars in expenses to pursue. Looking at the Exxon case …which is still not resolved, what if the attorney general had used 'staff attorneys' paid by the taxpayers and used the $3 million-plus of litigation expenses from the State general fund? It is clear by the two verdicts and the latest opinion from our Supreme Court that in the very least Exxon withheld $216 million in gas lease revenues from the State (two juries and the trial judge were also convinced that this 'withholding' was intentional and fraudulent.) This legal work was done, and continues to be done, without cost to the taxpayers.
If you ask the average person, 'Would you be like to pay higher taxes so your attorney general can pursue corporate wrongdoers who may have underpaid the State or are you OK with that legal work being outsourced to lawyers who will handle it on a contingency fee?' You and I know what the answer will be … and so does the WSJ.
Even if you wanted to spend tax dollars on this type of legal work you still have to consider what you’ll get in return. With all respect to the assistant attorneys general across the country, you don’t go head to head with the world’s largest corporation with lawyers who have no experience in that type of litigation. It would be like asking me to argue the Constitutional vagaries of a capital murder statute in front of the United States Supreme Court with Alan Dershowitz, Roscoe Pound and three other experts in con law, on the other side. (Or trying to defend the constitutionality of banning sex toys…an area of law that Attorney General (Troy) King appears to be good at!)
I also find the WSJ position on 'outsourcing' to political contributors a little hokey. Where is their concern about law firms getting legal work via political contributions for State and local bond issues and various multi-million dollar projects and contracts. It’s OK for the fancy high end silk stocking law firms of Wall Street to get millions of dollars in fees related to the how much money is received for a bond issue, but God forbid a 'plaintiff’s law firm' … or 'trial lawyers' get a political assignment. Come on., gimme a break. I’m not saying these type of contracts and the assignment of legal work shouldn’t be subject to review and scrutiny … I think they should. But the WSJ should include in their 'rant' about political assignment of legal work, the billions of dollars in other legal work that is routinely assigned by politicians. Of course that work goes to law firms other than trial lawyers so we’ll just overlook that. Because it’s OK for friends of the WSJ to get wealthy off of political contacts. Just not 'trial lawyers' because they’re NOKD. (Not our kind, darling.)"
-- Mark Wolfe,
"Here's my view: The practice of law, like everything else I suppose, has gotten so complex and specialized. As a practical matter, the staffs of most Attorneys General simply cannot handle much of the legal work which falls to them. They have no choice but to contract it out to lawyers who specialize in the particular subject matter. That covers everything from sales transactions (Balch Bingham represents the State on the TK transaction) to litigation.
I have handled several cases for the Attorney General. They were litigated defense matters where either the AG or the department lawyers involved felt like they needed help. They negotiated fees with me (at lower rates than customary) and politics had nothing to
do with it. I suspect that much of their outside contract work is
handled like mine.
The cases described in the WSJ article are but one example of
this issue. It happens that this article focuses on the big,
contingency fee contracts. I am sure politics figures into it some, but
I feel that in Alabama the State has hired very good lawyers. If the
lawyers are hired based purely on politics, the State will lose the
cases and it won't take long for the elected official to be criticized.
Nobody doubts that Cunningham (Bounds) did a good job for the State on the Exxon case or that (Jere) Beasley is doing so on the wholesale drugs case.
Would the taxpayers have been better served to have bid out that work to some inexperienced young lawyer at $90 per hour? I don't think so. The lawyers made a lot of money but worked hard and obtained a great result for the taxpayers. The fee arrangements were generally comparable to what a private client would have paid, and in the Exxon case, was probably below market.
So, I have no objection to the practice, so long as the State
hires capable lawyers and negotiates fair fees. It is simply not
practical to bid out work for professional services, particularly in
this context where specialized skills are needed."
-- Allan R. Chason,
"My goodness -- there's a money trail to a politician from those who would benefit from that politician's actions? Who would have thunk it?
The main problem with the WSJ article is that it implicitly cites the situation in Mississippi as the norm, when it is undoubtedly one of the more extreme cases. If memory serves, the two firms that represented the State in the Exxon case split a 14 percent contingency fee. Regardless of what the Supreme Court did, the citizens of Alabama got top notch legal work and a whole lot of bang for their buck. Gov. (Bob) Riley agrees, as would any lawyer who tries complex cases.
In reality, the practice of hiring outside counsel for this type of work is, as a practical matter, mandatory. At least in Alabama (and, I am sure, most other states), the AG's office is just not funded/staffed/equipped to do battle with corporate America. The firms that are getting results are very equipped to do so.
There are certainly ways to deal with the very real issues raised in the WSJ article. Develop bi-partisan protocols or committees, limit campaign donations from firms doing the work (would the WSJ endorse this idea?), or any number of other fixes. Pure competitive bidding is not the way because only qualified firms or consortiums should be handling these cases. Can you imagine, from any angle, Troy King leading the fight against corporate greed?"
-- Pete Mackey,
"The Exxon case is a perfect example of the state needing to hire a firm whose practice has the attorneys and the money and the long term
perseverance to handle complex litigation against huge corporations such as Exxon who have not fulfilled their obligations to our state. Frankly, there are very few law firms which meet this standard in Alabama.
When the Journal talks about putting out this type of case for a bid, I am not sure what that means. There are no details regarding the nature of the bid specs. In other words, could a defense workmen's compensation firm bid on representing the state in this type of case? This firm would not have the mindset much less the other capabilities to handle the case. I presume that such a firm could be the low bidder. Is that the type firm our state wants to represent our interests against Exxon? Of course not. We can easily see that the bid idea is just an oversimplified, perhaps demagogic, solution to the perceived problem that the Journal seems to imply is based on favoritism between law firms and the Governor.
Next, when a firm makes a lot of money, at times millions of dollars, from their work representing a client and the client asks the firm to help him out in a matter that the client is personally interested in, does anyone expect the firm not to help that person? Why should we expect it to be any different when the Governor hires a law firm who does a good job and makes a huge fee and then the Governor asks for the firm's help. Some might say that if the firm did not help the Governor, the firm was rotten, selfish and without any loyalty to a person that had helped the firm.
On the other hand, obviously like anything involving the nexus between
government and money, these matters can be abused, even to the point of criminality. However, if that happens, let the system work. Frankly, I have not heard of such in Alabama involving law firms in my over 30 years of practice. So, it does not appear that we have the need under these circumstances to address such a matter.
So, if the Journal feels that we need to do something in our state as it suggests for Mississippi, I would simply ask, where's the problem?"
-- Lee Hale,
former assistant attorney general now in private practice in Mobile
"I agree with Wolfe. How in the world can Troy King keep the citizens of Alabama safe from all those dangerous sex toys if he wastes his time
handling multi-billion dollar plaintiff's cases in house?"
-- Steve Moore,
Moore & Wolfe
"... I know their editorial position and agree with their point that the power of the state should not be franchised out to contingency fee plaintiff lawyers. Many of the suits attempt to accomplish what the legislature could and some would say should have enacted as law. Examples: tobacco litigation is nothing more than a tax on smokers through litigation. Latest Pharm thing is in the same category. Congress and the legislature knew what was going on with Medicaid drug reimbursement rates but never changed the laws to correct it.
... and then there's the money angle. It's all bad. If the state has a
legitimate beef with private industry let the State prosecute it. Often,
as I said, this amounts to legislating by litigation though, and is not
even appropriate for judicial legislating."
-- Matt McDonald,
"It seems to me but for those huge campaign contributions there wouldn't be a story here. If you find a way to regulate the campaign contributions, you don't have a problem. An attorney general is not going to have the kind of lawyers on staff that they can get in the private market for a complex civil case. The only way to get brilliant lawyers like them to represent a state is to give them an incentive to do so, given the risk they have to take. So I think it is a good thing for an attorney general to do, provided that there's some way to regulate campaign contributions so it doesn't look bad (as in Mississippi where the credibility of assignment is cast into doubt).
Campaign finance (not the use of private attorneys to a state's benefit) is the heart of the problem. The campaign contributions, at least the ones I saw in Mississippi's case, were so big to make the situation look bad. The heart of the matter is how to get the best lawyers to represent the state and the practice of using the best lawyers available on a contingency basis is a sound practice. However, in Mississippi, the campaign contributions cast a pall over the process which should be eliminated.
You wouldn't have the editorial if not for the huge campaign contributions because there's no juice there without the campaign contributions. In Mississippi, they may need to look at some regulation in that area. It doesn't mean you have to kill the policy of hiring the best outside lawyers you can get to represent the state in a complex civil matter. These cases take thousands of hours of manpower and work and expense, overhead that is a big risk for the contingency fee lawyer to undertake.You are not going to get the best lawyers available unless you're willing to take the contingency fee lawyer route without limitations."
-- Don Foster,
former U.S. Attorney, now in private practice with Jackson, Foster & Graham, LLC
