TCS Daily

A Bad Mix: Government Suits And Contingency-Fee Lawyers

By James K. Glassman - January 29, 2001 12:00 AM

"We should never hire lawyers for the government on a contingency-fee basis," says a lead philosophical opponent, Alabama Attorney General Bill Pryor. He tells TechCentralStation host James Glassman he disagreed with Alabama Gov. Don Siegelman doing so in a recent case against Exxon Mobil. He also says attorneys general, working with trial lawyers in tobacco litigation and other suits against industries, perform an "end run around the political process." He argues that "These kinds of government lawsuits against entire industries to achieve taxation and regulation that have failed in the political process subvert our democratic republic."

Jim Glassman: You've said that the use of contingent-fee contracts allows government lawyers to avoid the appropriations process and just sort of create the illusion that lawsuits don`t cost taxpayers anything, while creating the potential for outrageous legal windfalls. But in your own state of Alabama, the governor hired contingency-fee lawyers to go after ExxonMobil, and they won a $3.4 billion punitive damage award. What are you thoughts on that?

Bill Pryor: It`s pretty well known in Alabama that the governor and I have had a respectful, but clear, disagreement about hiring lawyers on a contingency-fee basis. Under Alabama law, for the state to institute a lawsuit and hire attorneys, it requires my approval. But how we pay those attorneys, what kind of contract we negotiate for attorney fees under Alabama law, is totally within the discretion of the governor. Early in our joint administrations, I made it very clear to the governor that I think that we should never hire lawyers for the government on a contingency-fee basis. Frankly contingency fees were considered unethical for a long time, and that view gave way, understandably, to the need for poor persons to have access to the legal system when they have valid claims and they would not otherwise be able to obtain that access. But that has absolutely nothing to do with governments, which have the power to tax and condemn and, therefore, have more than adequate resources to hire attorneys. I don`t think there is an appropriate role for the use of contingency fees for government attorneys. But if we do so, we ought to at least have pretty strict regulation of that process.

Glassman: What about the government simply hiring an attorney but not on a contingency fee basis, that way that the Justice Department did with David Boies in the Microsoft case?

Pryor: One of the things that I`ve strived to do as attorney general of my state is to handle more and more of the legal work for the state in house. I believe the taxpayers very often get the best results from the use of their tax dollars when we do that work in house. But there are going to be instances where you have to hire a private lawyer to represent the state well and to give the state the best legal representation possible. I think that has to be an extraordinary circumstance. Obviously if it`s the federal government, and you`ve got resources as large as the Department of Justice, which has tens of billions of dollars in its budget every year, then I cannot imagine what kind of case would require the use of an outside lawyer. If on the other hand, you have a smaller governmental agency I think that it`s more likely that you might need to hire occasionally an outside law firm.

Glassman: You are involved in a conference that`s coming up this March in Birmingham, Taxation and Regulation Through Litigation. Could you tell us a little bit about that?

Pryor: One of the first things that happened after I became the attorney general of Alabama was that I was thrust into the controversy surrounding the tobacco litigation, where many state attorneys general joined together to sue the tobacco industry. I thought that was a very dangerous precedent and one that was contrary to any traditional understanding of law, and unfortunately a lot of my fears have come to pass. Now we have many cities, big cities, filing lawsuits against the firearms industry, wanting to claim that the firearms industry is somehow responsible for the cost of crime within their cities. And we`ve had at least one state attorney sue the paint industry. These kinds of government lawsuits against entire industries to achieve taxation and regulation that have failed in the political process subvert our democratic republic. They`re contrary to the rule of law and they need to be stopped. And that`s what this conference will be about. It will be about addressing that subject, exploring the problems, and discussing possible solutions.

Glassman: When you talk about taxation and regulation through litigation, is part of the reason that we see litigation playing such a large role in public policy the failure of elected officials, legislatures and the executive to tackle some of these tough problems themselves?

Pryor: The proponents of this kind of litigation as an end run around the political process often say that they pursue litigation because the political process has failed and the elected officials have abdicated their responsibility. I think, though, that in a democratic republic, sometimes when the elected representatives choose not to act, that that in and of itself is also a democratic solution - a decision by government. Just because the government decides not to act does not mean that that`s not the right answer. Unfortunately, the proponents of government expansion and government activism see any failure of the government to address any problem as a failure of leadership when, quite frankly, in many cases, it`s an act of leadership.

Glassman: To get back to something you said before about the Microsoft case, where 19 state attorneys general joined in efforts to break up the company and reportedly appeared to stand in the way of a settlement in that case: Are there cases where such combined action is appropriate by attorneys general?

Pryor: I believe that in an autonomous society as complicated as ours, where we have the responsibility of combating very complicated criminal conspiracies, there`s certainly a role for law enforcement agencies and legal officers to collaborate and bring their forces together. You mentioned the Microsoft litigation. I`ve never been part of that litigation, and I think that has been, at best, dubious litigation. But, of course, the heart of the problem in Microsoft is a longstanding one, and that is Section 2 of the Sherman Act, which has been a tool for abuse by government officials for more than a century. It allows government officials to claim that a single company that is out competing very successfully is a predatory monopoly. And it`s a very difficult thing to defend if you`re the accused monopolist. I think the real problem lies in what kind of legal theories are being pursued. I do think that there are structural issues that are really problematic with the hiring of contingency-fee lawyers that create problems that are analogous to the problems we`ve seen with the independent counsel law that almost created a separate, independent branch of government. The issue is not collaboration in the pursuit of what are very good legal theories. The issue is where bad legal theories are brought into play and then you combine forces to pursue a longstanding abuse of law.

Glassman: There`s another issue involved in this fourth branch of government that has come up in your state - giving the contract in the particular Exxon case to a law firm that donated heavily to Gov. Don Siegelman's campaign. In some eyes, including mine, that created at a minimum an appearance of impropriety. Shouldn`t public officials at least have to go through some kind of legal board or bid process before they hire outside lawyers?

Pryor: As I mentioned a moment ago, I don`t think there`s any place for contingency-fee lawyers for government lawyers at all. But I mentioned also briefly that if we`re going to keep contingency-fee arrangements for some government attorneys, then we ought to have competitive bidding. We ought to have requirements that their contracts be subjected to public scrutiny and to legislative committee review. We ought to have a process that ensures that government officials are adhering to the highest ethical standards. When I campaigned for attorney general, I limited the campaign contributions that lawyers could make to my campaign voluntarily. Under Alabama lawyer, an individual lawyer can contribute an unlimited amount to an attorney general candidate`s campaign. But I limited it to a $1,000 per election cycle. I think it would be good for us to have laws on the books to accomplish that kind of result.

Glassman: Can you give us some insight about how costly it is to go to court versus negotiating with a business to resolve problems? I ask this question because we see more and more attorneys general calling press conferences and making a big show of taking a company to court. That may be beneficial in a political sense, but isn`t it costly?

Pryor: Litigation is not only costly, it`s rarely the right answer to resolving a problem. And I say that as someone who has been a litigator for almost my entire professional career. Litigation has a place in the resolution of problems, but it really ought to be a last resort because it is not only extremely expensive but extremely time consuming. And very often, once you get far into it, you wonder what it was that brought you to such an unsatisfactory conclusion.

Glassman: Along the same lines, attorneys general in many states have made pronouncements about the criminality of individuals and businesses at press conferences before they have even presented any evidence in court. Former U.S. Attorney General Griffin Bell said that judges should do a better job of keeping cases from being tried on the courthouse steps. Do you think that prosecutors or attorneys general need to be reined in so that defendants aren`t tried in the press? Is there a line that we can draw between informing the public and grandstanding?

Pryor: I think there is a clear line between informing the public and grandstanding. I think it`s much better respected in the area of criminal prosecutions where prosecutors are subject to pretty strict rules about publicity. They frankly do a pretty good job of just making an indictment public at the appropriate time, but noting that an indictment is merely an accusation and the defendant is presumed innocent.

Glassman: What about civil litigation?

Pryor: Unfortunately that good work is not as true or prevalent in the area of civil litigation. In the tobacco litigation, when one of the state attorneys general had all counts of a lawsuit against the tobacco industry thrown out, that attorney general held a press conference and, in front of television cameras, took the judge`s many-paged ruling and threw it into a trash can. Fortunately the state bar association in that state sanctioned the attorney general, and that`s something that bar associations have a responsibility to undertake to make sure that the rules are followed. And courts have a role to play in that as well.

Glassman: Who was that?

Pryor: Actually, the former attorney general of Indiana.


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