On Monday, the California Supreme Court endorsed the corruption of local government hiring contingent-fee lawyers to prosecute cases, notwithstanding its earlier precedent forbidding such a conflict of interest, siding with an appellate court that had reversed a trial-court disqualification of attorneys. [CJAC; Legal Newsline; Mercury News; Steele; Santa Clara v. Superior Court.] We discussed the issue thoroughly in 2008, including a column by John Sullivan. The question now is whether defendants are permitted to engage in discovery of the attorneys suing them (since the Court has created a fact-bound test for determining the required "neutrality" of the contingency-fee attorneys) or whether the "neutrality" test will be de facto toothless and satisfied with the formality of a figurehead government official at the apex of the lawsuit.
You will recall that some of the contingency-fee contracts at issue in this lawsuit explicitly violated the neutrality test, but the appellate court decided to honor self-serving parol evidence; the California Supreme Court did reverse this disingenuousness, requiring that the contingency-fee contracts be modified.
The good news is that the decision is narrowly drawn: the Court relied upon the fact that this was a lead-paint suit so there was no risk that an ongoing business practice would be enjoined, and used that fact pattern to distinguish Clancy. Which means that most other contingency-fee suits could still be challenged.
The bad news is that the Court spoke of an abusive lead-paint public-nuisance suit as if it was an entirely appropriate use of the public-nuisance doctrine, which is certain to lead to more regulation by litigation and empowerment of the attorney general's office. (Which makes one wonder why Jerry Brown is running for governor, since, except for patronage possibilities, the California attorney general is now a more powerful position.)