LANDRY: Caldwell’s Contingency Fees Are At Issue, Again

Louisiana Attorney General Buddy Caldwell is making headlines again.  This time he’s asking a Baton Rouge judge to dismiss a lawsuit alleging that he illegally approved a resolution allowing a New Orleans-based flood protection board to contract with private plaintiffs’ lawyers to sue nearly 100 energy companies over coastal wetlands loss.

At the center of the debate is the use of contingency fee contracts to hire lawyers to act on behalf of the state or its political subdivisions such as school boards or levee boards.

As we’ve discussed here many times, Caldwell seems to have a strong preference for paying outside attorneys contingency fees—a large lump sum based on a percentage of the settlement or award—rather than paying regular fees based on reasonable hourly rates.

In a motion filed before 19th JDC Judge Janice Clark, Caldwell defended his approval of the flood authority’s unconscionable, no-bid contingency fee arrangement with outside lawyers.

In numerous public statements before and since the motion was filed, the AG has painstakingly tried to communicate his position, claiming that his office does not approve contingency fee contracts.  He simply “reviews” them to ensure they meet certain criteria.  To me, this seems to be a distinction without a difference.  Nevertheless, one piece of criteria that he considers in his review is that the fee must be “reasonable under the circumstances.”  I suppose reasonable is a relative term.  The lawyers in this case, led by the notorious firm Jones Swanson, stand to make untold millions, possibly billions of dollars, should the case ever actually prevail in court.  And as if that weren’t bad enough, the contract also includes a “poison pill” provision requiring the levee authority to pay all expenses and legal fees if the suit is dropped before a court decision or settlement is reached. Lawyers recently estimated they’ve already racked up more than 8,000 “billable hours” working on the case.  With hourly fees ranging between $200 to $850 an hour, the tab is already over a half million dollars.

In spite of these facts and the considerable potential costs to Louisiana taxpayers, Caldwell is defending his position that the contract was “reasonable.” But he didn’t stop there.  In the recent motion, he also asked Judge Clark to weigh in on the use of contingency fee contracts to hire lawyers in his own office.  It is well documented that the attorney general is contracting out much of the state’s legal business to a small group of politically connected trial lawyers, many of whom are his campaign contributors. He often uses contingency fee arrangements to engage these outside attorneys, claiming that he’s found a way to “work around” state law, a state Supreme Court decision and a specific provision of the state Ethics Code that prevents him from doing so.  Caldwell’s theory contends that by allowing lawyers to negotiate their own fees and having them awarded by the court, the contingency fees don’t come out of state funds.

Caldwell’s position is clearly contradicted by the state’s own Office of Contractual Review, which specifically noted on the approval of one of these contracts that it was in fact a contingency fee arrangement.  See the contract here.

Nevertheless, Caldwell is seeking to legitimize his “work around” through the courts.  Let’s hope Judge Clark looks closely at the facts and issues a ruling that is consistent with judicial precedent.  Louisiana voters expect and deserve nothing less.

One final issue that’s worth noting about Caldwell’s latest legal maneuver: the motion was filed and delivered by the firm Shows, Cali & Walsh on behalf of the attorney general’s office.  E. Wade Shows is a major contributor to Caldwell and served as a top campaign official in his last bid for re-election.  At last count, Shows and his firm had more than a dozen different contracts with attorney general’s office, including at least six contingency fee contracts that we have identified (here was a report on one).  In other words, they have a significant financial interest in the outcome of this ruling.

Is this really the proper motive in a case that seeks to change public policy in a way that will impact businesses, employers, workers and taxpayers at every level?

In a controversial case over the use of outside lawyers, wouldn’t it be more prudent for the Attorney General to draw on the resources of his own office, which employs hundreds of attorneys?

Of course it would be, but it seems prudence is not a priority for this administration. The fact that Shows is heavily involved in this legal dispute is no coincidence.  It demonstrates Caldwell’s heavy reliance, some might say overdependence, on his political buddies to conduct state business.

This pattern has been repeated many times, with the same politically-connected attorneys popping up in many different areas of litigation on behalf of the AG’s office.  Let’s hope Judge Clark closely reviews what is going on and makes a ruling that is fair, consistent and engenders public trust in our civil justice system.

Melissa Landry is executive director of Louisiana Lawsuit Abuse Watch, a non-partisan, non-profit, citizen watchdog group focused on a broad range of civil justice issues in Louisiana.

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