It is a sad state of affairs when our state Attorney General pays an outside attorney almost 1 million dollars to litigate a case and then refuses to tell the public anything about the case.
A particularly alarming development is AGs' increasing use of private law firms to sue companies under no-bid contracts where the firms get percentages of the settlements or awards. These arrangements were born out of tobacco litigation in the 1990s and have spread to all sorts of actions, leading to several scandals over the connections between AGs and the firms they hire.
A key reform states can enact is the Transparency in Private Attorney Contract (TiPAC) Act. More than a third of the states, often with broad bipartisan support, have enacted TiPAC or similar bills. These laws do not outright ban contracts with private law firms, but they subject the contracts to commonsense regulations. For example, they mandate public bidding, require the posting of contracts on websites, limit attorney's fees, demand that firms keep appropriate records, and mandate complete control of the litigation by the government.
When private attorneys have direct financial stakes in law enforcement, the pursuit of businesses is often no longer about pursuing justice or using prosecutorial judgment, but maximizing contingency-fee profits. Indeed, it is now common for private lawyers to pitch litigation to attorneys general, rather than wait for there to be an actual problem that states need to resolve.
Nursing-home lawsuits are prototypical examples of such prepackaged litigation and problems they can cause. One firm reportedly contributed more than $70,000 to 16 state AGs in campaigns across the country and, among other projects, specifically pitched nursing-home litigation. According to reports, this firm received $7 million for work in Mississippi alone and stands to amass some $21 million in "law enforcement" actions around the country.
Other examples of questionable behavior under contingency-fee contracts are extensive. For instance, in Texas, a former AG was sentenced to four years in federal prison for attempting to funnel millions of dollars' worth of legal fees to a longtime friend. In Michigan, attorneys were awarded $450 million in fees through a contingency-fee contract, equaling an hourly rate of $22,500. Attorneys in New York saw big payouts through contingency-fee contracts when they received roughly $13,000 per hour in a settlement for the state. Pennsylvania reportedly has four active contingency-fee contracts with firms that donated to AG campaigns.