CT Blue

Adam Liptak, of the New York Times, has a problem with State Attorneys General who hire private law firms to bring actions against corporations who pollute or otherwise harm the public interest, even though he acknowledges that the use of the private lawyers level the playing field in legal battles against corporate criminals. The problem? The firms work on a contingent basis, meaning if they win they get a substantial premium over what they would have charged for their time. On the other hand, as he barely acknowledges, if they lose, they get nothing.

The article is neutrally titled (not): A Deal for the Public: If You Win, You Lose.
Why is that? Well, according to Liptak, and the corporate defenders he quotes, it’s partly because the lawyers who handle the cases get paid for their work, unlike the presumed typical situation, where they apparently work for free:

On the phone the other day, [Oklahoma Attorney General] Mr. Edmondson said that how he paid his lawyers was a distraction from the serious issues in the suit. He controls every aspect of the litigation, he said, and personally argued important motions last month.

Mr. Edmondson added that the state could not afford to address the problem any other way. “We are over $10 million in litigation costs to date,” he said. “We simply lack the resources in the attorney general’s office to handle this.”

Asked if he had given any thought to hiring lawyers by the hour, he said, “With what?”

But Oklahoma is a government, with the power to tax and to borrow, and it does not have to turn to a private business to finance a lawsuit it says is in the public interest.

“We’re not going to ask the taxpayers of the state of Oklahoma to pay the lawyers,” Mr. Edmondson responded. “Our adversaries would like us to ask the legislature to choose between this litigation and increased funding for education, for mental health or for corrections.”

But that is not quite right. The taxpayers may pay either way.

Any recovery in the case belongs to the state’s taxpayers, but Mr. Edmondson has signed a contract to give a big chunk of it away.

This is an interesting writing style. Do the paragraphs between quotes represent questions posed to Mr. Edmondson, or editorializing by Liptak? What struck me is the last paragraph. There is, of course, another way to look at it-that Mr. Edmondson signed a contract to get the taxpayers something instead of nothing. That, as Edmondson makes clear, is the real choice. In any lawsuit the parties must pay for their attorneys, so it is the rare litigant that is made completely whole. If one wants to reduce one’s financial risk to zero, one must expect the person that assumes that risk will expect more compensation in the event of success.

Liptak raises separation of powers issues, and points out that no less a defender of that principle than George Bush sees merit in the argument against contingent fee arrangements, having outlawed, by executive order, such arrangements on the federal level. The fact that the order also serves to protect Bush’s corporate masters is, apparently, a mere by-product of Bush’s principled stand.

Funny how Bush, who has pushed privatization of government functions to absurd limits, costing the American taxpayers literally billions of dollars, sees problems with privatization when the public interest is served, and when not a dime of taxpayer money is at risk.

In the best of all possible worlds, the various states would have ample funds to bring these lawsuits using their own lawyers. But they don’t have the money, particularly because the defense lawyers typically adopt a scorched earth defense strategy, driving up the costs to make such litigation prohibitively expensive.

Liptak is obviously sympathetic to the arguments of the corporate “victims” of this practice. But if the corporations get their way, and outlaw the contingent fee agreements, we can predict the results by simply modifying the article’s title: A Deal for the Public: You Lose.