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Category: Legislation / Politics

Kentucky Legislation Would Limit Attorney Fees to Outside Counsel

March 27, 2018

A recent AP story by Bruce Schreiner, “Bill Advances to Limit Fees to Outside Attorneys,” reports that over objections from Kentucky’s Democratic attorney general, GOP lawmakers took another step Thursday toward limiting how much outside attorneys can earn when hired by the state.

Supporters said the bill aims to maximize the amount from a settlement or judgment that benefits those hurt by a transgressor's actions. Attorney General Andy Beshear's office said the limits could hamper recruiting outside attorneys whose expertise can help win large awards for the state. In those cases, the contingency fees would be a good tradeoff, a top Beshear aide said.

"If we're going big, 75 percent, 80 percent of big is way better than 100 percent of nothing," said Deputy Attorney General J. Michael Brown. "And we need the ability to win these cases."

The measure was advanced by Republicans on the Senate Judiciary Committee. Its chairman, Sen. Whitney Westerfield, lost to Beshear in a close election in 2015. Westerfield, who plans to run again for attorney general next year, said he's comfortable with the measure.

The bill would set limits on contingency fees paid to outside lawyers. Those attorneys don't get paid unless they win the lawsuit. They sign a contract with the Attorney General's office that guarantees them a certain percentage from a settlement or judgment.

The proposal would apply to future contracts. If it becomes law, those fees would be capped at 20 percent of a settlement or judgment up to $10 million. Fee percentages would shrink for amounts above $10 million.

Those cases can yield potentially lucrative judgments, but often pit the state against corporations with vast resources and high-powered legal teams. So attorneys general sometimes hire outside lawyers to help with big cases, as Beshear has done in suing pharmaceutical distributors he accuses of inundating Kentucky with dangerously addictive opioid painkillers.

Beshear's office says the bill would restrict its ability to recruit outside lawyers, pointing to its legal fight with opioid distributors. Nemes dismissed the criticism as "pure demagoguery," noting Beshear's office has received bids from outside lawyers that complied with the bill's terms.

The bill, which already passed the House, would require the attorney general, the governor's office or any another constitutional office to show that hiring outside counsel is needed.

But the focus has been on the attorney general's office, and has been a politically charged issue as Beshear has feuded with Gov. Matt Bevin over the Republican's use of executive authority.

Rep. Jason Nemes said his bill aims to make sure hiring outside counsel is necessary, that the contracts are transparent and injured Kentuckians are the biggest beneficiaries of awards.

"That's what we're trying to do with this bill, get as much money as possible to go to injured citizens," the Louisville Republican said.

In complex cases, Brown said, some wrongdoers aren't exposed until attorneys dig deep into a case. He said fee limits could deter outside lawyers from pursuing all potential defendants.

The Senate panel amended the bill to give the legislature or state Finance Cabinet oversight of contingency fee agreements. Beshear said in a statement that the amendment was "another power grab" and could "hamstring" his efforts to pursuit lawsuits against drug companies.

If the bill passes the Senate with the change, it would go back to the GOP-led House.

The bill also would require all records — including expenses — associated with the hiring of outside lawyers be made public.

The legislation is House Bill 198.

Delaware Governor Seeks Fee Reduction in State Court Party Balance Case

January 12, 2018

A recent Delaware Law Weekly story by Tom McParland, “Carney Asks for Fee Reduction in Case Striking State Court Party Balance Mandate” reports that attorneys for Governor John Carney are asking a federal judge in Wilmington to slash a request for attorney fees in the case of a New Castle County lawyer who successfully challenged a provision of the Delaware Constitution requiring political balance on the state’s courts.

Carney, who has appealed the decision said that a ruling on James R. Adams’ fee request should be tabled until the U.S. Court of Appeals for the Third Circuit can weigh in.  But the governor also argued that any award the court grants should be reduced by 40 percent because Adams had only achieved partial success.

Adams, who is represented by Finger & Slanina partner David L. Finger, last month requested $22,900 to cover the cost of litigating the case through summary judgment.  U.S. Chief Magistrate Judge Mary Pat Thynge of the District of Delaware on Dec. 6, 2017, ruled in favor of Adams, a graduate of Widener University Delaware Law School, who argued the 120-year-old requirement violated the First Amendment of the U.S. Constitution by restricting government employment based on party affiliation.

Carney, who is responsible for nominating judges, did not dispute that Adams had prevailed in the case.  However, Carney challenged Adams’ assertion that he had secured a “complete victory,” saying that Thynge’s ruling did not specifically address constitutional provisions preventing one political party from being represented by more than a “bare majority” of the judges on Delaware’s courts.

“Because plaintiff did not achieve success in challenging the constitutional provisions relating to the Family Court and the Court of Common Pleas, or in challenging the bare majority provisions for the Delaware Supreme Court, the Superior Court or the Court of Chancery, defendant requests a 40 percent reduction in any award the court may choose to grant, as such a reduction would reflect plaintiff’s partial success in challenging Delaware’s constitutional provisions governing the composition of its courts” Carney’s Young Conaway Stargatt & Taylor attorneys wrote in an 8-page brief.

Finger, meanwhile, said in an interview that reduction of attorney fees was not warranted in any case where a plaintiff has won “substantial” relief from the court.  “We won a very substantial issue,” he said. “Moreover, the issue [of party balance] will apply to Family Court and the Court of Common Pleas because the bare majority requirement still requires making political party a determining factor [in nominating judges],” Finger said.

Adams, a registered independent, said he’s been prevented in the past from applying for judgeships because of the constitutional mandate that judicial seats be split between Republicans and Democrats.

Proponents of the provision—codified in Article IV, Section 3 of the state constitution—have said it safeguards a fair, independent and impartial judiciary that attracts talent to serve in its ranks.  But Adams and others have argued the mandate improperly boxes out independents and creates the impression the state’s judiciary is tinged with political bias.

Governor Cuomo Signs Attorney Fee FOIL Bill

December 13, 2017

A recent Times Union story by Brendan J. Lyons, “Cuomo Signs Bill Strengthening FOIL Law,” reports that Gov. Andrew Cuomo signed a bill that will require judges to award attorneys' fees to litigants who "substantially prevail" in Freedom of Information Law (FOIL) cases.

The governor acknowledged the legislation is important but said it falls far short of comprehensively reforming the state's antiquated Freedom of Information Law, including not requiring greater transparency from the Legislature that sent the bill to his desk.

"The bill before me continues to perpetuate a fractured and inequitable system of transparency by only applying to the executive (branch), and intentionally excluding other branches of government," Cuomo said in a memo filed in support of the measure.  "Notably, current law already provides courts with discretion to award attorney's fees in such situations, but they are not required to do so."

Still, advocates for more transparency in government have hailed the legislation as necessary to prevent agencies at all levels of New York government from deliberately withholding public records or delaying responses unnecessarily.

Cuomo vetoed similar legislation two years ago that stated courts must award attorney's fees when an agency denies access to FOIL requests in "material violation" of the law.  The governor said the earlier bill did not define the term "material violation," which could have created confusion for judges who could reach different conclusions on what the term means.

The bill requires that courts "shall" assess reasonable legal costs in FOIL cases in which a person "substantially prevailed" and the court finds there was no reasonable basis for denying access to a record.  Courts have sparsely awarded attorney's fees in FOIL cases.  But not always.

New Jersey Legislation Would Mandate Fee Retainers

August 23, 2017

A recent New Jersey Law Journal story by Michael Booth, “Bill, Spurred by Wray Representation, Would Mandate Retainers,” reports that one of Gov. Chris Christie's most persistent critics in the state Legislature is sponsoring a bill that effectively would have barred Christie's apparent hiring of high-profile lawyer Christopher Wray—now the FBI director—without a written retainer fee agreement.

Assembly Deputy Speaker John Wisniewski, D-Middlesex, has introduced A-5179, which would require retainer fee agreements between any state agency and private counsel to be memorialized in writing within 30 days of the attorney's retention.  The bill, which has not yet been assigned to a committee, would prohibit a firm from being paid with public funds if the 30-day requirement is not met.

Wray, according to reports, was Christie's personal attorney for 11 months during the Bridgegate investigation, and while Christie was gearing up to run for the Republican nomination for president—before Wray and the administration signed a retainer agreement.

Wray, then of the Washington, D.C., office of King & Spalding, began representing Christie in September 2014 but did not sign a retainer agreement until August of the following year.  Ultimately, Wray and other lawyers at the firm, which charged a blended rate of $340 an hour, racked up about $2 million in fees and costs, reports said.

New York public radio station WNYC first reported the arrangement between Wray and Christie on July 24.  A day later, Wisniewski voiced his concern about the lack of a retainer agreement, which he pointed out would have been a document available to the press and public.

"This is highly unusual and raises questions about whether Gov. Christie was trying to hide this cost and legal representation from the public," Wisniewski said in a statement at the time.  "Mr. Wray and his colleagues ended up costing taxpayers $2 million, yet the governor did not even take basic steps to provide public transparency and uphold ethics standards.

Florida Court Empowers Fee Agreements in Claims Bill Fee Disputes

June 30, 2017

A recent Daily Business Review story by Noreen Marcus, “Court Empowers Lawyers in Claims Bill Fee Disputesdiscusses Florida’s legislation on a victim’s claims bill and fee agreements.  The story reads:

Which comes first, the promise of a sizable contingency fee or the Florida Legislature's passage of a claims bill?  The answer is the fee agreement between, typically, one or more prominent personal injury law firms and a victim suing someone who enjoys the protection of sovereign immunity and damage caps.  The example from this past session is $3.75 million in private relief to Victor Barahona, the victim of hideous child abuse that his twin sister, Nubia, did not survive.

But would a claims bill ever get past go without the guarantee of a significant fee and costs to cover lobbyists and everything else it takes to succeed in the Legislature?  As a practical matter, probably not.  This reality irritates people who want to maximize payouts to victims as opposed to their lawyers.  That's the dilemma when claims bills turn into legislatively recognized damage awards and the money must be split between victims and attorneys.

To this point, Fourth District Court of Appeal Chief Judge Cory Ciklin penned a June 21 opinion in Grossman Roth v. Mellen that must seem to him like good karma.  In 2015, the influential jurist wrote a dissent that the Florida Supreme Court later adopted — the very precedent that dictated his ruling.

In the precedent-setting case of Searcy Denney Scarola Barnhart & Shipley v. State, a claims bill awarded $15 million to the victim in a medical malpractice case and capped all fees and costs at $100,000.  A Fourth District panel majority approved the formula; Ciklin's dissent called it "draconian."

Ultimately, the Supreme Court agreed with Ciklin that the Legislature cannot constitutionally impair fee contracts through a private relief act.  Access to courts might otherwise be chilled, the court reasoned in an unsigned opinion.

The claims bill could be saved by severing the fees and costs provision, the justices concluded.  Searcy Denney and other firms would get their contracted $2.5 million for fees and costs.  The guardianship trust for Aaron Edwards, a child who suffered a catastrophic brain injury due to hospital negligence, would get $12.5 million.

The decision drew two dissents from Justices Charles Canady and Ricky Polston, the latter joined by Chief Justice Jorge Labarga.  "Although this is a favorable result for the plaintiff and his attorneys, it is not what the law requires," Polston wrote.  "The Legislature was very clear that it was awarding only $100,000 for anyone other than Aaron Edwards."  But he noted the result was to take $2.5 million from the guardianship of Aaron Edwards for attorney fees, "a result that was explicitly rejected by the Legislature with its enactment of the claims bill."

Florida TaxWatch, a nonprofit government watchdog that keeps track of how taxpayer dollars are spent, sees a need to reform the claims bill system.  "The current process is a little too arbitrary," said Kurt Wenner, head of research for TaxWatch.  "It's more a factor of lobbying than the justification for the claim, so it's political, and lobbying plays too big of a role."

Not that TaxWatch would oppose passage of a claims bill in an obviously worthy case like Victor Barahona's. "Our whole thing is, make sure that people have access and are allowed to file just claims and get their compensation in a timely manner, but don't pay unnecessary costs where taxpayers have to foot the bill," Wenner said.

TaxWatch produced a 2013 briefing paper for a legislative committee reviewing claims bill procedures.  The committee accepted the group's suggestions, held hearings and drafted legislation that went nowhere.  TaxWatch's ideas are all about trying to avoid the court system and the Legislature in the kinds of tort cases that tend to result in claims bills.  It's hard to imagine PI lawyers and lobbyists would support this kind of change.

For instance, Wenner talked about raising the sovereign immunity cap from the current $200,000 to a figure that would be tougher to resist and therefore encourage settlements.  His research turned up four states with caps of $1 million per person.  Florida's current political climate suggests a $1 million cap would be a hard sell.

As for attorney fees and lobbying costs, Wenner praised the Legislature for combining the two into one number in claims acts.  He said TaxWatch recommended adding that concept to the law.  It didn't happen and, in fact, Ciklin was talking about a $100,000 total for fees and costs when he used the word "draconian" in his Searcy Denney dissent.

The recently decided Grossman Roth case is similar to the Searcy Denney case.  The Grossman Roth matter began in 2008 when Kristi Mellen and her husband Michael Mellen went to a public hospital because he showed symptoms of a heart attack.  In the waiting room he suffered a massive heart attack and died.

His widow sued the North Broward Hospital District for medical malpractice.  She signed a contingency fee contract with Grossman Roth that promised the firm what amounted to 25 percent of her total recovery.  After huddling with Mellen's lawyers, the hospital district agreed to a $3 million settlement and to support a claims bill.

The claims bill passed and apportioned $290,000 of the award to attorney fees and $2.8 million to Mellen.  The trial court approved the split — but this was before the Supreme Court handed down its Searcy Denney decision, Ciklin noted.  Grossman Roth will get its $750,000 fee.