Contingency-Fee Bill Compromise Dies Due To Senate Intransigence, LABI Not Distraught

While the Louisiana Association of Business and Industry (LABI) and the general business community have long opposed allowing the attorney general to enter into contingent fee contracts that can be used as fishing expeditions and harassment tools against business and industry, LABI entered into an agreement with the Jindal administration that LABI would not oppose SB 731 if it remained as passed by the House Civil Law Committee on June 15.

LABI worked with Executive Counsel Stephen Waguespack after he had crafted the language that was unanimously approved by the House committee and which went to the House floor for debate and approval on June 18. LABI did not oppose the bill on the House floor, because it contained the provisions which had been agreed to with the administration, so long as the significant restrictions placed on the bill remained intact.

Key provisions of that agreement were to give a very limited approach to using a hybrid form of a contingency fee in this instance only. LABI agreed to the proposal which put a $50 million cap on contingency fee awards, restricted contracts to the Deepwater Horizon spill only, excluded natural resource and other damages that are already adequately addressed by state and federal law, and allowed sufficient legislative oversight over the hiring of attorneys in suits involving this particular disaster. The House passed this version, 71-23.

Unfortunately, Sen. Joel Chaisson did not agree with the limited application of his bill, and he urged the Senate to reject what the House had approved. On the afternoon of the last day of the session, June 21, Sen. Chaisson sent the House conferees a draft conference committee report that was similar to the version which had been rejected by the House committee. It had none of the limiting provisions to which LABI had agreed.

LABI suggested to the House author that the House conferees draft its own suggested report which would be a restatement of the House-passed bill. In response, Sen. Chaisson sent the House conferees a second draft report that would have expanded the cap on attorney fee awards from $50 to $100 million, but it would have allowed attorney fees to be paid on damages that are already provided for in state and federal law.

It was particularly important that these damages which the Jindal administration excluded from its version of the bill not be included in the total on which an attorney fee would be based. The House-passed bill said that the contract with attorneys wouldn’t apply to claims for damages awarded pursuant to the federal Oil Pollution Act or the Louisiana Oil Spill Prevention and Response Act. Allowing attorney fees to be paid on these damages would have improperly and unconstitutionally diverted millions of dollars from restoration of the public’s natural resources to paying attorneys’ fees instead. By law, potentially responsible parties are already liable to the government for all response costs in order to make the state whole for damages to the state’s interest. Importantly, these damages will be recovered through an administrative process through the state and do not need attorney involvement for recovery.

LABI had also argued that the attorney general has received sufficient financial resources from the Jindal administration to begin the process of defending the state. On May 19, the Joint Budget Committee allocated $4.1 million to the attorney general for costs of the early stages of the investigation and litigation. Contracts were signed with outside attorneys, effective April 23 and May 13, and the negotiated fees were on an hourly basis. The attorney general asked for and received $25 million in the 2010-11 Appropriations Bill, which was specifically authorized for Deepwater Horizon litigation. The provisions of HB 1065 raise an additional $9 million in the annual amount in the Attorney General’s Legal Support Fund. Additional resources can be appropriated to the attorney general in future years if these resources are deemed insufficient.

While the Senate chose to endorse this more expansive bill, the members of the House were more in line with the bill they had passed, which was consistent with LABI’s agreement with the Jindal administration. Time ran out at 6:00 p.m. on June 21, and the House never had an opportunity to once again reject the Chaisson plan which was significantly different from the one they had passed on June 18.



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