The use of contingency agreements between government entities and private counsel has always been controversial.
In the 1980s, the matter came before the California Supreme Court in a public nuisance case. The CA SC ruled against contingency. Then the issue emerged again in the Santa Clara lead paint public nuisance lawsuit. The defendants pushed against the use of contingency. The lower court agreed. The appeals court did not, okaying it as long as the government entity maintains full control. Here is that appeals court opinion - pay close attention to the concurring one Download H031540. No way can that control being maintained, decried the defendants. They requested and got a review by the CA SC.
Since then, the contingency debate has turned red hot. In Pennsylvania there's a motion for that state's SC to review the alleged link between awarding contingency contracts, without competitive bidding, to major campaign contributors. In Florida is a bill to make transparent every aspect of that process in the office of the attorney general. Here is the opinion of Lisa Rickard, president of the Institute for Legal Reform, on that Sunshine legislation. As may of you know, the Rhode Island SC okayed the use of contingency Download Statev.LeadIndustriesAssoc.,Inc.
That's where things stand now. Given the influence of the CA SC rulings, the decision could impact everything from the power of the state attorneys general to the number of class-action suits filed. Amicus briefs have been submitted to the CA SC. One has been filed by the National Paint & Coatings Association. As you might recall NPCA had submitted a seminal amicus brief to the RI SC in the lead paint public nuisance litigation review Download RIamicusbrief. As I saw it, the NPCA brief provided the RI High Court with a narrow passageway through the nine years of legal proceedings in the litigation. The Court overturned the verdict against the defendants.
The author of both the CA SC amicus brief and that RI one is Thomas J. Graves, Vice President and General Counsel at NPCA. Both briefs were prepared by appellate attorney Eric Lasker of Spriggs & Hollingsworth, Wahington DC.
In this amicus brief filed by NPCA, Graves asks the CA SC to reverse the appellate decision which would permit state and local entities to enter into contingency fee agreements with private attorneys. Here is a copy of the NAPA brief Download AmicusBrief.
In this particular situation, Graves goes on to point out, the agreements involve pursuing public nuisance suits based on the premise that the government lawyers can remain neutral and supervise these "subordinate" private attorneys. That would, it's contended by contingency supporters, prevent any pecuniary interests tainting the impartial pursuit of justice.
NPCA, notes Graves, concurs with the defendants that the CA SC case precedent deems these types of arrangements as anathema to ensuring the government lawyer's neutrality, which is essential to the system of justice and the confidence of society in that system.
By allowing private attorneys, continues the brief, to take this case on behalf of municipalities against old lead paint and pigment manufacturers, NPCA emphasizes, the Court of Appeal failed to recognize the distorting impacts of contingency fee arrangements. Those include not only the effect on the decision-making of the private attorneys retained but also on the decision-making of the government attorneys who retained them. At stake is the proper balancing of government authority.
Perhaps Graves's strongest point is that in practical reality, the government has an artificial incentive to pursue monetary damages award (in the billions) rather than to seek purely equitable or injunctive relief (or electing to suspend the litigation in favor of other government public interest action.) The other options may not be all that attractive because they don't provide the financial payout the government now needs to retain its outside legal team.
Thus, summarizes Graves, the enticement of a "no-cost" arrangement actually comes at the price of tipping the scales in the balancing of interests in the abatement of public nuisances of the sort the CA SC has already pronounced "cannot be tolerated."
At the National Paint and Coatings Association, Thomas J. Graves, General Counsel, can be reached at TGraves@paint.org, 202-462-8743.