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Kentucky AG Sued Over Contingency-Fee Arrangement With Private Outside Counsel

Prescription drug maker Merck Sharp & Dohme Corp. filed an action against Kentucky Attorney General Jack Conway challenging the legality and fairness of the arrangement in which a state attorney general hires private attorneys on a contingency fee basis to handle suits on behalf of the state.

Merck's attorneys argue,

Such suits can only be prosecuted by the Kentucky Attorney General and only when penalties would be in the public interest. Nonetheless, Conway has effectively transferred his enforcement authority to private outside counsel. And unlike the Kentucky AG, whose compensation is fixed and independent of success or failure in litigation, the arrangement with the private outside counsel in this case gives them a significant stake in the outcome: the more penalties they pursue, the bigger their potential take.

Conway filed a motion to dismiss responding,

Merck has offered no case law that supports the notion that litigation by outside counsel, directed by a state attorney general, violates a civil defendant's constitutional rights. In fact, such a finding would upend centuries of precedent permitting such arrangements between states and outside counsel.

Unfortunately, as John O'Brien of LegalNewsline.com points out, other companies have unsuccessfully made similar arguments across a wide range of jurisdictions.

In some states however, there has been significant progress made in instituting reform legislatively as Jim Copland of PointofLaw and head of Manhattan Institute's Center for Legal Policy cites in Trial Lawyers Inc.: Attorneys General, a report focused on this very topic.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.