We led the charge on this issue.
Every once in a while, even a blind squirrel finds an acorn.
On April 4, a California trial court prohibited municipal governments from using private lawyers hired on a contingent fee basis. See County of Santa Clara v. Atlantic Richfield Co., No. 1-00-CV-788657 (Cal. Super. Ct. Apr. 4, 2007). Here’s a link to the decision.
Your ever-vigilant, and sometimes lucky, hosts at the Drug and Device Law Blog were the first to post on that case, on April 6. Here’s what we had to say then.
Less than six weeks later, on Wednesday, May 16, President Bush signed an Executive Order forbidding the federal government from hiring private lawyers on a contingent fee basis. Here’s a link to that order.
Then, the deluge.
The U.S. Chamber of Commerce was delighted with President Bush; the plaintiffs’ bar not (although some not as outraged as others). The Wall Street Journal covered the story in its print edition. Peter Lattman did a post at the Wall Street Journal Law Blog, which drew the usual collection of outraged comments. (Our readers, we’re proud to note, are much more civilized. That, or just quieter by nature, but it plays out the same way.)
Walter Olson’s op-ed piece about the perils of permitting governments to hire private lawyers on a contingent fee basis appeared in yesterday’s Wall Street Journal. Olson’s colleagues at the Manhattan Institute promptly posted on their blogs at PointOfLaw and Overlawyered. The Volokh Conspiracy got in on the act. And David Kopel, who posted at Volokh, had previously written an Issue Backgrounder for the Independence Institute on the same subject. The Mass Tort Litigation Blog covered the issue briefly.
The legal press wouldn’t be left out. The National Law Journal reports about efforts in many states to add transparency to the process by which state attorneys general hire contingent fee counsel.
Trial Ad Notes doesn’t take a position on this issue, but it offered, among other things, a bibliography, which we reproduce here to save you a click:
Meredith A. Capps, “‘Gouging the government’: why a federal contingency fee lobbying prohibition is consistent with First Amendment freedoms,” 58 Vanderbilt. L. Rev. 1885-1923 (2005);
Kris W. Kobach, “Contingency fees may be hazardous to your health: a constitutional analysis of Congressional interference with tobacco litigation contracts,” 49 S. Car. L. Rev. 215-245 (1998);
Charles Silver and Lester Brickman, “Contingency fees: should plaintiffs lawyers in the tobacco settlement receive billions of dollars?,” ABA J., Sept. 1997, at 74;
David Edward Dahlquist, “Inherent conflict: a case against the use of contingency fees by special assistants in quasi-governmental prosecutorial roles,” 50 DePaul L. Rev. 743-98 (2000).
This issue of course matters to our drug and device clients, and not simply as a matter of abstract policy. State attorneys general are hiring private contingent fee counsel in, among other things, Medicaid “cost recovery” suits, which pose a terrible threat to the pharmaceutical industry.
We don’t have much to add to our previous post on this issue, but we’d like to highlight a few points as to which we don’t see much disagreement in the blogosphere.
First, even those who favor governments hiring contingent fee lawyers (and we do not count ourselves in that crowd) can’t seriously object to adding more transparency to that process. If the government is going to enter contracts that have the ability to make select private citizens richer than Croesus, that process should be open and public.
Second, no one seems to object to competitive bidding for these lucrative contracts. If the government is going to hire private lawyers, surely it should strive for a reasonably low price. (We didn’t write the “lowest price” there, because we believe that the cheapest lawyer is not necessarily the lawyer most likely to win your case.)
Third, when governments hire private contingent fee lawyers, those lawyers have a personal interest in maximizing the recovery of money damages, from which the fee will be paid. Maximizing damages, instead of seeking, say, broader injunctive relief, will not necessarily represent the preferred public policy. We know that the client — the government — is ultimately making the decision to settle, but even the most sophisticated client relies heavily on counsel — the boots on the ground — for advice. When that counsel has a personal interest in maximizing monetary recovery, sound government policy can be placed at risk.
Fourth, permitting the executive branch — attorneys general — to extract private money for government use infringes on the legislative branch’s historic control of the government’s taxing authority. We understand that this already occurs, to a limited extent, when the government imposes civil fines and the like. Call us fools, if you like, but we just think people act differently when billions of dollars are placed on the table.
So far as we can tell, that’s where the discussion stands today. But we have a creeping suspicion that we haven’t yet heard the end of this. We’ll watch with interest.
Contingent Fees and Government Lawyers
We led the charge on this issue.