The U.S. Supreme Court on Monday declined to review a case that could have reined in the excessive use of contingency-fee lawyers by governments. Without comment, the court declined to grant certiorari in Atlantic Richfield et al. v. Santa Clara County.

Some cash-strapped counties and cities will no doubt interpret the court’s decision as granting them carte blanche to contract with private attorneys to carry out government lawsuits. However, these contingency fee arrangements remain an example of bad public policy that puts the law firms’ interests ahead of the public interest.

The National Association of Manufacturers joined other industry groups in filing a friend of the court brief urging review of the case. Our NAM Manufacturing Law Center entry summarized the issues, which include a due process argument:

We argued that contingency fee agreements distort the decision-making of both private attorneys and the government attorneys who retain and oversee them. The agreements create improper financial incentives for both parties to the contract, fostering opportunistic attitudes that distort the government’s duty to exercise independent and unbiased judgment. And as a practical matter, there is no way for the public to verify that a government supervisor is in fact neutral and controlling the acts of the contingent-fee lawyer. Government’s use of contingency fee lawyers has provoked public outrage, and has so far affected many industries, including tobacco, firearms, lead paint, poultry and pharmaceuticals.

The underlying case was yet another example of governments trying to shift liability and costs for lead paint abatement to the companies that manufactured a legal product decades earlier. But paint manufacturers did not create a public nuisance. As Philip Curtis, counsel for Atlantic Richfield, put it: “The proven solution is enforcing the law against landlords who neglect their property, rather than engaging in wasteful litigation against companies that made a lawful product more than 50 years ago.”

Obviously, these kinds of lawsuits also add to California’s reputation as a bad place to manufacture.

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