Contingency Fees and Lobbying and Contracting with Attorneys General

There is a lot of disagreement over whether contingency fee
arrangements between client and lobbyist should be permitted. Many cities,
counties, and states prohibit arrangements where lobbyists are paid
only if they succeed. The principal reason is that this arrangement encourages ethical misconduct. It
encourages lobbyists to do everything they can to win, which may be good in a private adversary suit, but is not appropriate in a public context, where winning
involves changes in public policy or obtaining public contracts, grants, or
permits.<br>
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Historically, courts have seen contingency fee arrangements
relating to government action as leading to corruption and harmful to the
public's trust in its government. But lawyers have argued that it
works well for them, and allows more people to hire lobbyists
(although there is no evidence that this actually occurs).<br>
<br>
<a href="http://www.nytimes.com/2014/12/19/us/politics/lawyers-create-big-payday…; target="”_blank”">An
investigative piece in the New York <i>Times</i></a> last week shows what
can happen when lawyers being paid via contingency fee arrangements
lobby state attorneys general. What the lawyers are lobbying for is to
have AGs bring suits that will help their clients, and them, win
their cases. These lawyers are acting as procurement lobbyists, for themselves and their clients.<br>
<br>

AGs argue that they need the resources of law firms to bring such
suits (which contend that consumers have been harmed by big companies). But
there is much more involved in these transactions. Many of the plaintiffs' lawyers who bring these suits are former AGs who have personal and political relationships with current AGs.<br>
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There are usually large campaign contributions involved, as well.
"Over all, plaintiffs’ firms have donated at least $9.8 million
directly to state attorneys general and political groups related to
attorneys general over the last decade."<br>
<br>
When plaintiffs' firms don't have a former AG in-house, they turn to former AGs who act as brokers, pitching cases (i.e. lobbying) for these law firms. When many millions of dollars in legal fees
are involved, there's a lot to go around.<br>
<br>
It would appear that everyone's a winner. State governments make
lots of money when these cases are won and spend less money on cases that are lost, the lawyers do well, and
incumbent attorneys general get big war chests to help them stay in office.<br>
<br>
But then why is there disagreement over the value of these
arrangements, even among AGs. For example, Colorado's AG is quoted
as saying, “Farming out the police powers of the state to a private
firm with a profit incentive is a very, very bad thing.” And a
former Massachusetts AG is quoted as saying that this practice
"seriously threatens the perception of integrity and professionalism
of the office, as it raises the question of whether attorneys are
taking up these cases because they are important public matters, or
they are being driven more by potential for private financial gain.”<br>
<br>
Some of the companies that have been sued by AGs under these
arrangements have made counterclaims that "the attorneys general
improperly turned over state law enforcement powers to private
parties, citing their financial incentive to push ahead with cases
against them, even if the facts did not support the claims." Contracting out work is one thing; contracting out the responsibility over cases is another.<br>
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Also problematic is the fact that these AG-law firm
arrangements are no-bid arrangements. This means that the state pays
millions of dollars to a law firms that has not bid for the job and
that has made large campaign contributions to the office that has
entered into a contract with it. This looks to the all the world
like bribery.<br>
<br>
Or pay to play. That's how one federal judge described the situation
last year, arguing that cases filed by AGs should not become “a
vehicle for keeping elected officials in office by allowing them to
extract campaign contributions from lawyers selected to serve as
class counsel.”<br>
<br>
Some states are trying to limit these arrangements. In the last two
years, at least 14 states have adopted new rules that generally
require AGs to make a specific “finding of need for outside
counsel.” Some of them now require competitive bidding and a limit
on legal fees. They have treated these issues as procurement issues,
not as government ethics, lobbying, or campaign finance issues.<br>
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<b>Government Ethics Solutions</b><br>
From a government ethics perspective, three additional things could
be done. One, state lobbying codes need to include the lobbying of
attorneys general (just as local lobbying codes cannot exclude city or county attorneys). They are too often excluded by definitions of
"lobbying" that are limited to the lobbying of legislators or of
only a limited list of executive positions or offices. The lobbying
of government attorneys should be disclosed just like any other
lobbying. We can't hope that newspapers will do
in-depth investigations to find out what has been going on.<br>
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Two, contingency fee arrangements with lobbyists should be
prohibited to prevent the appearance of bribery and pay to play that
has occurred in these cases. However valuable such arrangements may be
for consumers and accident victims, they are inappropriate to
lobbying. A lawyer who enters into such an arrangement should not
lobby, directly or indirectly.<br>
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Three, lawyers seeking to work as AG contractors should be
prohibited from making campaign contributions. And anyone who has
made campaign contributions should not be permitted to get a
contract.<br>
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There is certainly a value in AGs farming out work in legal cases. And there can be a value in having AGs join
private suits to protect consumers. But if an AG wants to do the former, he should follow
ordinary procurement processes. And if an AG wants to do the latter,
she should establish a formal process for handling requests to join
private suits.<br>
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And with respect to either, even if it is perfectly legal, an AG
should make it clear that campaign contributions are prohibited
before, during, and for at least a couple of years after entering
into an arrangement with an attorney or law firm. What no AG should ever say is
what one AG's office told the <i>Times</i>:<blockquote>

“Whether or not an individual makes a campaign contribution during
an election cycle has no bearing on any decisions made by the office
of attorney general or its career attorneys who adhere to the
highest standards of professionalism.”</blockquote>

The highest standards of professionalism require that an AG consider
the appearance of impropriety and do what is necessary to prevent
it. What this AG has done appears highly improper.<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
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