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State Government Usage of Contingency-Fee Counsel

October 25, 2011 9:08 AM

John Beisner

The Manhattan Institute's new Report about state government usage of contingency- fee counsel offers an insightful history of the questionable financial relationships between certain state attorneys general and members of the plaintiffs' bar. The Report is important reading because the subject has been seriously under-reported by the media, particularly by local and state news services that are missing the obvious headlines.

Two aspects of this topic warrant further emphasis:

First, I applaud the MI Report's observations about the non-universality of the phenomenon. Some state attorneys general have expressed adamant opposition to the use of contingency-fee counsel. Other AGs, without significant public comment, have simply concluded not to take that path. Importantly, there is no evidence that law-enforcement imperatives are better served in states that regularly use contingency-fee counsel. To the contrary, some of the nation's most successful state attorneys general have eschewed the outside-counsel option. This is not surprising. Contingency-fee counsel rarely handle the cases about which an AG campaigned for election; almost invariably, the topics an AG publicly identifies as a state's most important enforcement priorities are entrusted to the AG's own staff. In contrast, the lawsuits turned over to contingency-fee counsel are generally conceived by plaintiffs' counsel with profit (not policy) motives and then "pitched" to the AG. In other words, contingency-fee counsel normally are not needed to achieve a state's basic law-enforcement objectives. Instead, the contingency-fee counsel option is nothing more than a "perk" indulged in by some attorneys general.

Second, special attention should be given to the increasing use of contingency-fee counsel in "penalties only" cases. Some AGs are authorizing outside counsel to bring lawsuits seeking only quasi-criminal penalties, promising to put a substantial portion of those penalties in counsel's own pockets if they succeed. These cases are the most extreme example of AGs ceding prosecutorial discretion to private counsel with a vested financial interest in the outcome. Litigation of this sort raises serious due-process concerns because private counsel with a pecuniary motive are making policy decisions about quasi-criminal lawsuits. Defendants are entitled to have prosecutorial judgments regarding quasi-criminal charges made by financially disinterested officials -not profit-motivated private lawyers.




Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.