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NALFA: State AGs Should Be Allowed to Hire Contingency Fee Lawyers

December 21, 2012 | Posted in : Contingency Fees / POF, Legislation / Politics, NALFA News

A recent Thomson Reuters Legal story, “Should State AGs be Allowed to Use Contingency Fee Lawyers?” reported on the relationship between state AGs and outside counsel in public interest litigation.  The article cites “tort reform” sources (i.e. U.S. Chamber of Commerce) who think this is a huge problem and are challenging the use of contingency fee lawyers in court.  In fact, the tort reform lobby is even considering federal legislation to regulate states’ ability to hire contingency fee lawyers.

In a report, “Contingency Fee Plaintiffs’ Counsel and the Public Good? (pdf),” published by Husch Blackwell, reports that 10 states have passed legislation addressing AGs’ use of contingency fee lawyers – and six of them (Texas, Wyoming, Arkansas, Kansas, North Dakota and Alabama) have imposed limits on the use of contingency fee counsel.  And judges in the half-dozen cases in which defendants challenged state governments’ use of outside counsel have overwhelmingly rejected arguments that defendants’ due process rights violated by such arrangements.

But the tort reform lobby is challenging the use of outside contingency fee lawyers in court.  In Kentucky, tort reform advocates are challenging Democratic Kentucky Attorney General Jack Conway’s authority to hire contingency fee lawyers in Commonwealth of Kentucky ex rel. Conway v. Merck & Co., Inc.  In that case, Kentucky had entered into a contract (pdf) with Garmer & Prather to investigate and litigate any Vioxx-related claims the state might have against Merck under its consumer protection act.  Merck claimed the AG violated his duty to serve the public interest by ceding control of the case to private lawyers incentivized to maximize the recovery against Merck.  As a result, Merck claimed its due process rights were compromised.  Merck is represented by John Beisner of Skadden Arps, a noted tort reform advocate.

"The private attorney general doctrine is a fundamental principle in American jurisprudence.  We need the plaintiffs' bar to take on these important public interest cases.  This is a pure partisan effort to weaken the doctrine and serve corporate interests.  Of course state AGs should be allowed to use outside contingency fee lawyers.  In fact, with state budgets stretched thin it makes economic sense to only hire outside lawyers who work on a contingency fee basis,” said Terry Jesse, Executive Director of NALFA.  “Working on a contingency fee basis saves taxpayers millions of dollars and ensures the people are protected against corporate wrongdoers,” Jesse concluded.

NALFA also reported on these issues in “House GOP Targets Contingency Fees in State AGs Contracts” and "Mississippi Bill Limits Fees for Outside Lawyers and AG's Powers"