My lengthy profile of New York Attorney General Eric Schneiderman in the new City Journal ranges over many topics, including mortgage and Wall Street settlements; Uber, Lyft, AirBnB and the sharing economy; unions’ efforts to light legal fires under fast-food operators; the unreconstructed Left politics of Manhattan’s Upper East Side; and much more, including Schneiderman’s dubious campaign against herbal supplement retailers. One section that I hope is of interest beyond New York is a sidebar on the politics of state attorney general offices. An excerpt:
…State attorneys general really took off as players on the national scene in the 1970s and 1980s, a period in which the number of staff attorneys in AG offices quadrupled, according to figures in Paul Nolette’s new book, Federalism on Trial. Once the National Association of Attorneys General, or NAAG, began to take a more active role in helping beef up and coordinate formerly scattered efforts, multistate AG litigation, in which many state offices band together to file suit, began to grow, from fewer than five cases a year three decades ago to 40 to 50 cases a year more recently.
Is this a spontaneous upsurge reflecting the decentralized genius of our system? Not quite: as Nolette explains, Congress was, in fact, busy over this period funneling federal grants to state AG offices to build up their strike-force capacity against business defendants, while revamping laws to give them more enforcement power. The executive branch helped, too: “[F]ederal agencies have aggressively promoted [state AG] litigation working groups,” Nolette writes….
The tobacco episode — and the idea it encouraged that AGs should step in to reform national industries through litigation and master settlement when the U.S. Congress declined to do so — changed everything. One of its consequences was to send hundreds of millions, even billions of dollars in settlement money sloshing through the formerly sleepy AG offices:
…It’s common for AGs’ offices to keep at least enough money from settlements to cover their own investigation; state laws vary widely, however, on whether they have to turn over surplus money to a general fund. When they don’t do so, the AG office can quickly become a power center, handing out (in effect) appropriations that bypass the state legislature’s scrutiny. In states like Arkansas, Massachusetts, and West Virginia, AG offices have channeled settlement funds to health nonprofits, police and fire charities, and agencies of their own choosing within state, county, and local government. Other favored beneficiaries include legal-aid programs, bar associations, and law schools—the legal profession being, of course, a key political constituency of any AG’s office. With control over big money flows, smart AGs can populate a political landscape with grateful allies. …
Last week I linked a sidebar on the legal system’s failure to protect businesses (small banks, in this case) from the exercise of arbitrary authority by officials like Schneiderman. While my piece is critical of his enforcement actions, it also makes clear that most of what he’s up to simply applies the set of far-reaching powers assembled by earlier state attorneys general before him, from Eliot Spitzer and Andrew Cuomo in New York to figures in other states like Jerry Brown, Richard Blumenthal, Jim Hood, and even Bill Clinton. Whole thing here.