Contingency Fee Attorneys, Scrutiny, Politics and Accountability

An editorial in today’s Wall Street Journal, “Pay to Sue on the Docket,” approvingly reports the Pennsylvania Supreme Court’s decision to hear a legal challenge to Gov. Ed Rendell’s decision to hire contingency lawyers to sue a pharmaceutical company on behalf of the state.

Government use of contingency attorneys — mostly by ambitious or crusading state attorneys general — raises a basic conflict of interest: Are the private lawyers handling the case in the interests of a state’s citizens or are they putting their pecuniary interests first? The possibility of a big payday down the road could discourage consideration of a reasonable settlement or keep a lost cause alive contrary to the best interests of the state. (The Rhode Island attorney generals’ [Sheldon Whitehouse, Patrick Lynch] reliance on contingency attorneys to mount a legally suspect “public nuisance” suit against paint manufacturers comes to mind. The state Supreme Court rejected the arguments.)

Then there’s the political self-interest of the official who does the hiring. As the Journal notes:

The lawsuit—which we first wrote about in April—concerns Bailey Perrin & Bailey, a Houston law firm tapped by the Rendell administration to prosecute Janssen Phamarceuticals over the marketing of its antipsychotic drug Risperdal. When states lack the resources or expertise to bring certain suits, it’s not uncommon for them to seek help from private lawyers. But in this case, it appears as if pay-to-sue politics was involved in the choice of Bailey Perrin.

While F. Kenneth Bailey, the law firm’s founding partner, was negotiating a potentially lucrative no-bid contingency fee contract with the Governor’s office, he was also making political donations totaling more than $90,000 to Mr. Rendell’s 2006 re-election campaign.

The state Supreme Court has indicated it will consider “whether Bailey Perrin Bailey, LLP, should be disqualified because the due process guarantees of the United States and Pennsylvania Constitutions prohibit the Commonwealth from with a direct contingent financial interest in the outcome of the litigation.”

Good question.

The Drug and Device Law Blog, aka Beck and Herrmann, has a copy of Janssen’s plea for extraordinary relief here. The U.S. Chamber has submitted a friend of the court brief on the issue of contingency fee attorneys.

The issue is also prominent in Oklahoma Attorney General Drew Edmondson’s lawsuit against chicken producers in neighboring states, complicated by the legal status of Indian Country.
The Tulsa World reports, “Attorney: Lawsuit still on, even without pay“:

A private attorney representing Oklahoma in its suit against the poultry industry says he and his firm will proceed despite a ruling last week that could impinge on their ability to get paid.

“It does not change our duty to our client, which is the state of Oklahoma,” said David Riggs of Riggs, Abney, Neal, Orbison and Lewis. “You can’t just walk away. Our commitment is the same.”

Edmonson hired Riggs’ firm in 2004 to conduct the state’s lawsuit against commercial poultry operations in Oklahoma, Missouri and Arkansas for polluting northeast Oklahoma’ watershed.
Other firms he put on the case were Miller and Keffer of Dallas and Motley Rice of Hartford, Conn.; Motley Rice was the law firm Whitehouse hired in Rhode Island to sue the paint manufacturers.

Critics of the lawsuit and Edmondson suggest nearly $35,000 contributed by Riggs, Abney lawyers to Edmondson’s gubernatorial campaign through March 31 is a payback of sorts for bringing the firm into the case. Riggs, though, said he has been friends with Edmondson since both served in the legislature 30 years ago

So even if Riggs, Abney doesn’t get paid for the current lawsuit, there’s still political investing going on.

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