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The Need for Transparency in the AG-Trial Bar Relationship

October 28, 2011 8:15 AM

Lisa A. Rickard

State Attorneys General (AGs) often receive financial and other political support from fellow attorneys. Generally, that makes sense - AG candidates often are well-known among the legal community, and lawyers as a group tend to be highly engaged in politics. Public confidence in government can be undermined, however, when private lawyers are hired to pursue claims on behalf of the state by AGs to whom they have made substantial campaign contributions. Such arrangements look particularly bad when work is awarded on a no-bid basis or involves a contingency fee arrangement in which the private attorney stands to recover a share of a multi-million award pursued on behalf of the state and its citizens.

An Increasingly Common Practice or Exception to the Norm?

AGs increasingly have turned to outside counsel to supplement their limited staff and resources, and this trend has made more prominent those instances in which lawyers who contributed to an AG's campaign later have been hired to pursue claims on behalf of the state. For example, in a recent five-year span, one AG's office retained 27 law firms to represent the state in 20 separate lawsuits after partners at those firms contributed more than $500,000 to the AG's reelection campaigns. Another AG received $50,000 in campaign contributions from a particular law firm, and within two years had extended the law firm's contract to represent the state in litigation against a pharmaceutical company without soliciting any bids. Yet another AG hired outside counsel who had contributed to his campaigns on a contingency fee basis for a 2001 lawsuit against a pharmaceutical company, resulting in more than one-third of a $10 million settlement going to the private attorneys.

It may be the case that these examples are exceptions, and it further may be the case that hiring private lawyers in these instances was, in fact, the AG's best means of pursuing the interests of his or her respective state and constituents. But AGs play a unique role and have a unique responsibility in our legal and political system - they must balance effective law enforcement and the interest of their respective states with preserving public confidence in the integrity of their offices. Accordingly, the potential that public trust might be undermined when an AG hires a donor to serve as plaintiff's counsel for the state requires that safeguards be put in place to preserve fairness and faith in the rule of law.

The Need for More Standards and Disclosure

To ensure that AGs exercise their power in a manner that is consistent and fair, the standards and policies that guide AGs' conduct should be clearly articulated and transparent. In 2007, the U.S. Chamber Institute for Legal Reform (ILR) identified a set of "best practices" for AGs in the form of a proposed Code of Conduct, the goal of which is to enhance transparency, consistency, predictability, and fairness in the activities of an AG's office. The guide covers the gamut of issues facing AGs, from public statements concerning pending investigations or litigation, to conflicts of interest, to multi-state activities. Key among the issues addressed in ILR's best practices is AGs hiring private counsel they hire to pursue claims on their states' behalf. As pointed out by the Wall Street Journal:

"State prosecutors are supposed to be motivated by a sense of public responsibility for the interests of justice. Law firms have other motivations, and no-bid contingency fee deals encourage lawyers with a financial stake in a case to try meritless claims or ask for exorbitant awards. That serves neither taxpayers nor justice..." Wall Street Journal, "The State Lawsuit Racket," April 8, 2009.

Notably, a bipartisan group of four AGs released an important report in December 2010 to serve as guidance for newly-elected AGs. The report, Practical Considerations For Approaching Key Issues in the Office of Attorney General - A Publication for New Attorneys General, incorporated many of the concepts advanced in ILR's Code of Conduct, including best practices for hiring private counsel to pursue claims on behalf of the state.

In some states, legislators have taken it upon themselves to implement by statute measures to promote transparency when the AG hires private attorneys to pursue claims on the state's behalf, particularly on a contingency fee basis. A prime example of such legislation is the Florida Transparency in Private Attorney Contracting Act, which passed with the support of then-AG Bill McCollum in 2010. This law, as well as several others passed in 2011, requires that arrangements between an AG and private counsel retained by the state must be in the public interest, be transparent and open to competitive bidding, and include reasonable limitations on fees - either flat fee or contingency-based - that private counsel may recover.

It is critical for AGs to recognize the importance of and lend their support to such guidelines and state legislation. As an increasing number of attorneys solicit AGs and other government officials to allow them to bring cases on behalf of the state, laws and procedures must be in place to make sure that these arrangements are fair and do not compromise public trust in government. Even AGs who do not use outside counsel can still appreciate the value in establishing good governance for their successors.




Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.