January 10, 2008
In recent years, much attention has been paid to the phenomenon of state attorneys general taking on the role of plaintiffs' lawyers. In lawsuits against the tobacco companies, Microsoft, gun manufacturers, and other seemingly wealthy (and usually unpopular) industries, many of the states' top lawyers have sought to fill public coffers by winning multi-million dollar settlements or judgments for their states. These lawsuits are generally very expensive to litigate and therefore consume a large portion of the personnel and financial resources of the attorney general. Some attorneys general, facing fiscal and political limits on their ability to bring these suits, have come upon a creative solution; rather than seeking increased appropriations to hire new lawyers, they are hiring plaintiffs' firms under contingency fee contracts to litigate the suits for them.
A leader in this new approach to law enforcement is Oklahoma's attorney general, Drew Edmondson. In 2005, after three years of negotiations, Edmondson filed a lawsuit against a dozen poultry companies alleging that waste from thousands of their poultry houses (located mostly in Arkansas) were illegally increasing the amount of phosphorus in Oklahoma drinking water. Rather than seeking more money for the legislature to bring this suit, Edmondson has hired three plaintiffs' firms, under contingency fee contracts that will allocate to the firms up to fifty percent of any judgment or settlement procured, to litigate the cases for the state.
Edmondson's approach, which has also been employed in several other states, including Louisiana, Maryland, Mississippi, West Virginia and Rhode Island, has been strongly criticized by many, both within and outside of Oklahoma. Critics argue that employing financially self-interested trial lawyers on behalf of the state will result in the power of government being wielded by lawyers more interested in benefiting themselves than in doing justice. The practice, it is contended, also creates serious separation of powers problems as the attorney general's ability to hire trial lawyers for comparatively little money up front enables him to bring the lawsuit even if the state legislature objects to the action. Generally, a state legislature will not (and, under the state's constitution, arguably cannot) pass a law restricting the attorney general's power to bring the suit; the legislature's primary check on the attorney general is its control over the office's appropriations. The contingency fee contract provides the attorney general the means and personnel to bring the suit even in the face of the objections of the legislature.
Related to this potential problem is the difficulty that, assuming the suit is successful, the compensation for the plaintiffs' attorneys may far outstrip what the lawsuit would have cost the state if they had hired additional staff for the attorney general, or even if they had hired private attorneys by the hour. The percentage of the judgment or settlement (which, again, in Oklahoma, may be as high as fifty percent) that goes to the lawyers (who can be, and often are, from out of state) severely reduces the money going to the state treasury.
Finally, the hiring and possibly excessive compensation of trial lawyers by one of the state's leading elected officials may harm the legitimacy of the state's political system. Many critics point out that the plaintiffs' attorneys hired by the attorney general are often large contributors to that official. (This appears to be the case, at least in part, with Oklahoma's Edmondson.) These contributions, at the very least, give the impression that the percentage of the state's recovery turned over to the private lawyers serves as a source of "political kickbacks" to the attorney general. In words of former Alabama attorney general, and now federal judge, William Pryor, "These contracts . . . create the potential for outrageous windfalls or even outright corruption for political supporters of the officials who negotiated the contracts."
The attorneys general, for their part, defend the practice as the only way to finance these lawsuits without asking the state's taxpayers either to risk losing a large amount of state resources in an unsuccessful suit or to reduce expenditures on other state priorities in order to provide additional funding to the attorney general. Edmondson, for example, in an interview with The New York Times this August, argued that "We simply lack the resources in the attorney general's office to handle this." In response to the argument that Oklahoma could simply tax or borrow to finance the suit, Edmondson stated that "We're not going to ask the taxpayers of the state of Oklahoma to pay the lawyers. Our adversaries would like us to ask the legislature to choose between this litigation and increased funding for education, for mental health or for corrections."
The critics of this practice, aside from public chastising of their respective state's attorney general, have tried several ways to impose limits on the attorneys general. A few, with mixed results, have asked courts to ban, usually on separation of powers grounds, the contingency fee contracts. Some have sought legislative limits on the power of the attorney general to bring these suits or to enter these contracts. The newest approach, advocated by, among others, the Institute for Legal Reform, is the advocacy of an ethics code for attorneys general. These codes may contain provisions governing the awarding of these contracts in order to minimize any conflicts of interest or at least to ensure full disclosure of the contracts. Some proposals call for the banning of contingency fee contracts entirely. In any event, neither the use of practice nor the criticism of it will subside any time soon.
Andrew C. Spiropoulos is a Professor of Law and Director of the Center for the Study of State Constitutional Law and Government at the Oklahoma City University School of Law.