Posts Tagged ‘contingent fee’

“Texas Officials Were ‘In Over Their Heads’ When They Struck Deals With Opioid Lawyers”

“You don’t auction professional services,” said Terry O’Rourke, assistant county attorney for Harris County (Houston), Texas, in charge of the opioid litigation, regarding the hefty 35% fee plus expenses the county has contractually agreed to pay to its contingency-fee outside counsel. Meanwhile, Dallas County for its representation in the same litigation “sets the contingent fee at the lesser of 12.5% or a “base fee,” calculated as four times hourly rates ranging from $900 an hour for partners to $200 for paralegals.” Some of the lawyers hired by Harris County have been active political donors: “It’s not uncommon for elected officials to hire their political allies for contingency fee work.”

Harris County’s contract with three outside law firms also requires the county to pay a fee based on its total recovery before expenses, while many municipal clients have negotiated more favorable deals in which the contingency fee is a percentage of the recovery after expenses….

The fact that some counties agreed to pay all of the expenses associated with their cases while others will pay fees net of expenses also shows a lack of sophistication and the potential for gamesmanship, [Cardozo emeritus professor and legal ethicist Lester] Brickman said. Lawyers in asbestos cases and securities litigation have been accused of double-billing and allocating the same expenses to multiple cases, and it can be difficult for individual clients to uncover wrongdoing unless they obtain records showing the overall distribution of expenses and recoveries – something lawyers rarely provide….

“Few of the cities and counties have required that the expenses claimed by the lawyers be detailed, including providing receipts and other supporting documents,” Brickman said. “There’s a possibility that some lawyers will emulate `The Producers’ and charge aggregate expenses that are in excess of actual expenses,” as has happened with asbestos litigation.

[Daniel Fisher, Legal Newsline/Forbes]

I join Dr. Saurabh Jha to discuss law, medicine, and American tort history

A noteworthy podcast: I join Dr. Saurabh Jha [@RogueRad on Twitter] for an lengthy discussion of how American tort and medical malpractice law has changed over the past century, similarities and differences with Britain, how ethics in the legal field stacks up against ethical trends in medicine and the pharmaceutical business, contingency fees, the successes and shortcomings of legislated tort reform, trends in the courts, incentives for medical testing, and much more. It’s all part of Dr. Jha’s podcast series, associated with the Journal of the American College of Radiology. You can listen here.

Crime and punishment roundup

  • Prosecutors too often dodge mens rea (knowing wrongfulness) as precondition for crime. SCOTUS can help by better defining “willfully” [Ilya Shapiro and Reilly Stephens on Cato certiorari brief in Ellison v. U.S.]
  • False abuse accusations, a dozen years later: “The Girl Who Told The Truth” [Michael Hall, Texas Monthly]
  • Retired federal judge Kevin Sharp: mandatory minimum sentences forced me to do injustice [Cato Policy Report]
  • Kansas is unique in extent to which it adds large classes of drug offenders to sex offender list, new bill would change course [Maurice Chammah, Marshall Project]
  • Like a contingency fee: “Tennessee state forensic scientists have a financial incentive to secure DUI convictions, says a Tennessee appeals court, as the $250 fee imposed on guilty motorists pays their salaries (and some of their positions were nearly cut in a recent budget crunch). Which violates due process.” [John K. Ross, “Short Circuit”, on Tennessee v. Decosimo]
  • Amicus brief from Cato Institute and other groups in Ross Ulbricht/Silk Road case argues that Internet deserves robust Fourth Amendment protection [Ilya Shapiro and Aaron Barnes]

Ninth Circuit finds public sector contingency fees constitutional

The use of contingency fees by governmental plaintiffs incentivizes sharp practice and overzealous litigation in lawyers charged with representing the general public; it also invites corruption and end runs around democratic legislatures intended at making law through litigation. All these evils manifested themselves in the tobacco and gun rounds of mass litigation, and there are some cases offering precedent for the proposition that their use can violate defendants’ rights to due process. Nonetheless, the Ninth Circuit has lately upheld a California district attorney’s hiring of outside law firms on a contingency basis against such a challenge [Amanda Bronstad, The Recorder] And the Supreme Court last month refused to review a challenge to the New Hampshire attorney general’s use of contingency-fee counsel in an opioids suit against Endo Pharmaceuticals [Peter Hayes and Steven M. Sellers, Bloomberg, in a piece surveying current use of public contingency fees more broadly]

Liability roundup

  • Another dubious lawsuit blaming terrorism on social media from law firm with phone number for a name [Tim Cushing]
  • Courts reverse two big talc/baby powder jury verdicts against Johnson & Johnson [Tina Bellon and Nate Raymond, Reuters ($417 million, California); Insurance Journal ($72 million, Missouri)]
  • “US-Based Tech Companies Subject to Worldwide Jurisdiction as Judicial Comity Takes a Back Seat” [Moin Yahya, WLF on Supreme Court of Canada’s decision in Google v. Equustek Solutions]
  • Richard Epstein wrote the Encyclopedia of Libertarianism’s entry on liability, tort and contract;
  • Asbestos: “Judges and juries should learn about a plaintiff’s entire exposure history so they can apportion liability appropriately.” [Phil Goldberg, Forbes]
  • Study of contingent fee litigation in New York City: few cases resolved on dispositive motions, lawyers nearly always take the maximum one-third permitted by law [Eric Helland et al., forthcoming Vanderbilt Law Review/SSRN]

Confirmed: climate denial heresy hunt based on contingency fee deal

Papers obtained by The Hill confirm that the prominent plaintiff’s law firm of Cohen Milstein is in for a 27 percent slice (plus costs) of loot from at least one branch of the ongoing probe over erroneous opinion on climate change, a campaign advanced by a subpoena dragnet from state attorneys general seeking papers and correspondence from dozens of free-market and right-of-center advocacy and scholarship groups. [The Hill]

Although the blithe denials of a couple of sources who spoke to The Hill might suggest otherwise, contingency-fee representation of states and other public bodies in damages claims was deemed ethically improper over most of American history. It’s a story I tell in The Rule of Lawyers, where I talk about Dickie Scruggs’ pioneering venture in the early 1990s in representing the state of Mississippi in claims for removal of asbestos from government property:

The United States [as of this point] had long justified its departure from other countries’ [bans on contingent fees] on the grounds that otherwise [given our lack of “loser-pays”] some poorer clients might be unable to obtain a lawyer at all. But no one was seriously claiming that no lawyer could be found to handle the asbestos case for the state of Mississippi on an hourly fee basis.

Until quite recently the notion of letting lawyers represent government on a contingency-fee basis would have been seen as pernicious, absurd, or both. But as Scruggs was no doubt aware, times were changing fast. Many of America’s legal authorities had begin to regard contingency fees — and the encouragement they gave to speculative litigation — not as a lesser evil that should be limited to the cases where it was necessary, but as something wholesome and beneficial in itself. The first experiments had already been noted by the end of the 1980s, with the state of Massachusetts hiring private lawyers on contingency for asbestos rip-out cases. If contingency fees for public lawyering could pass the ethical smell test in the state that was home to Harvard Law School, why shouldn’t they do so in Mississippi, too?

Since the Great Tobacco Robbery steered billions of dollars in fees to the pockets of politically influential law firms, the practice has been the subject of continued lively controversy, with legislative proposals in many states aiming to curtail or eliminate the opaque or even undisclosed deals by which private law firms get themselves cut themselves in on a share of public moneys by attorneys general dependent on their political support. Earlier on the contingency-fee angle in the climate subpoena affair here and here.

Prosecution roundup

  • Deferred prosecution agreements are a powerful new tool of the administrative state, with a tendency toward lawlessness [James Copland and Rafael Mangual, Manhattan Institute] Expected judicial deference to corporate prosecution deals: sign of a broken system [Scott Greenfield citing my April piece]
  • Secrecy more common in criminal prosecutions: sealing of cases and documents, “gag orders… ex parte presentations, in camera submissions” [Tim Cushing, TechDirt]
  • “In my heart, and in my approach to law, I saw rights as a challenge, as something to be overcome.” Confessions of an ex-prosecutor [Ken White (of Popehat), Reason] “Enforcement Gone Amok: The Many Faces of Over-Enforcement in the United States” [John Beisner et al, U.S. Chamber]
  • Hunt County, Texas resident Kent Grady challenges county’s hiring of contingency-fee lawyers to go after him on environmental fines that via statutory per-day multiplication could turn a wrongly placed woodpile into a liability of $2 billion [WSJ editorial via Chamber Institute for Legal Reform]
  • “Don’t Ask Us to Turn In Our Own Executives, Business Lobby Warns” [Bloomberg on Yates memo]
  • “Scientists Looking To Fix The Many Problems With Forensic Evidence” [Tim Cushing, TechDirt]

Unclaimed property: headed eventually for the Supreme Court?

I’ve got a new post at Cato at Liberty noting that Justices Samuel Alito and Clarence Thomas, in a concurrence this spring, appear to be inviting a constitutional challenge to states’ administration of escheat (unclaimed property) law on due process grounds. [More on Taylor et al. v. Yee from Daniel Fisher at Forbes] While the immediate questions posed would likely be whether states are doing too little to notify owners and using too short a period of idleness (three years is becoming common), the fact patterns might conceivably implicate some of the other problems noted by businesses on the receiving end of these laws, which we discussed back in 2013 (more): creative redefinitions of unclaimed property and outside “auditors” incentivized by contingency fees to overreach in assessments.

The Associated Press took a look at the issue last fall; more background at Maria Koklanaris, Tax Analysts and Odds and Means.

Reflecting widespread business discontent, the U.S. Chamber has addressed the issue in a series of papers and its publications have covered problems in states like Illinois, as well as in California as well as profiling the firms that specialize in these collections, which in some cases have filed qui tam (bounty-hunting) suits for a share of the proceeds.

On Delaware in particular see the Wall Street Journal (more), Forbes, and Delaware State News. And the Wilmington News-Journal has published an extensive investigation of the escheat contractors’ ties to the Delaware political class.

Contingency fees + IRS = sound policy?

Yet again — we covered this issue last year — lawmakers on Capitol Hill are considering sending private debt collectors on contingency fee after those who owe money to the Internal Revenue Service. Here’s an issue where I can agree with Washington Post columnist Catherine Rampell: contingency fees and tax collection don’t make for a good mix. Will we ever learn our lesson on law enforcement for profit?