LEGAL NEWSLINE

CHICAGO (Legal Newsline) – The City of Chicago has hired a private law firm to file a lawsuit against five pharmaceutical manufacturers, but it will not disclose the hourly fees the firm submitted or if the contract was ever put out to bid.

The lawsuit accuses the defendants of misrepresenting the benefits of opioids and concealing their health risks. It was filed less than two weeks after Santa Clara and Orange counties in California filed a similar lawsuit against the same manufacturers through the same private attorneys.

Chicago alleges in its June 2 complaint that Purdue Pharma, Cephalon, Janssen Pharmaceuticals, Endo Health Solutions and Actavis knew that opioids like OxyContin and Percocet were too addictive and harmful for chronic pain patients, but spent millions of dollars to convince doctors that the drugs would improve their patients’ function and quality of life.

Chicago hired Cohen Milstein Sellers & Toll — a plaintiffs’ class action law firm with 80 attorneys and offices in Washington, D.C., New York, Philadelphia, Chicago, Denver and Palm Beach Gardens, Fla. — to serve as special assistant corporation counsel on a contingency-fee basis in the case. The filing of the lawsuit was publicized by a press release issued by Mayor Rahm Emanuel.

According to a retainer agreement provided by the City, Cohen Milstein will be paid: “22% of net recovery if the matter is resolved pre-complaint, 26% of the net recovery if the matter is resolved after a motion to dismiss but before summary judgment and 30% of the net recovery if the matter is resolved after summary judgment.”

The City provided another document, a one-page email that lists the hourly rates of four attorneys and two paralegals at Cohen Milstein. However, according to the City, those rates were redacted under state law as “proprietary” trade secrets and commercial or financial information.

“Trade secrets and commercial or financial information obtained from a person or business where the trade secrets or commercial or financial information are furnished under a claim that they are proprietary, privileged or confidential, and that disclosure of the trade secrets or commercial or financial information would cause competitive harm to the person or business, and only insofar as the claim directly applies to the record requested,” a response to the FOIA request says.

Legal Newsline asked John Holden, director of public affairs in the City of Chicago Department of Law, why the city requested the hourly rates of its contingent-fee counsel and then refused to provide those rates to the public. Legal Newsline also asked how Cohen Milsten was chosen as the special assistant corporation counsel and whether there was a bidding process in this case.

Holden responded via email, issuing this statement: “The city chooses law firms that will provide the greatest service and value to taxpayers. We believe Cohen Milstein is uniquely qualified to assist the City of Chicago in combatting the opioid industry’s misleading marketing practices and its downplaying of the risk of addiction for these drugs.”

A Sept. 19 modification to the contract said Cohen Milstein’s attorneys fees, if the City terminated the agreement without good cause, would not exceed the City’s guidelines of $295 per hour.

Matt Topic, an attorney at Loevy & Loevy in Chicago who focuses on intellectual property licensing and litigation and governmental transparency/freedom of information matters, explained that the statute that permits the redaction of trade secrets and commercial and financial information only applies if certain conditions are established.

He points out that when a law firm submits its hourly rates to a government entity, it needs to specifically state at that time that the rates cannot be disclosed because they are considered proprietary information. He adds that the law firm would also need to show that disclosure could cause competitive harm.

“If they didn’t do that, the exemption just wouldn’t apply,” Topic said.

Legal Newsline’s original FOIA request sought:

-A list of any other private firms who bid on the contract but were rejected and a copy of their bid;

-Any solicitation for bids published by the City of Chicago; and

-The date and location of any meetings between attorneys at Cohen Milstein and any Chicago officials regarding the contract, as well as the identities of those present.

Chicago’s contract with Cohen Milstein may cost the City a higher percentage of net recovery than Santa Clara County’s contract with the same firm.

According to the retention agreement between Santa Clara County and the firm, Cohen Milstein stands to recover 20 percent of the net recovery, as opposed to the 22, 26 or 30 percent the firm would make in three different outcomes in the Chicago case.

Shook, Hardy & Bacon attorney Cary Silverman - whose work focuses on product liability, tort and consumer law and civil justice reform – said the agreement between Chicago and Cohen Milstein is a product of a larger trend.

“It appears that contingency-fee lawyers who have developed a lucrative alliance with state attorneys general are increasingly eying relatively untapped new clients – major city and county governments,” he said.

“These arrangements pose the same types of conflict of interest, due process, and taxpayer value concerns as we have seen arise over and over again when private lawyers who stand to personally benefit financially from imposing the highest monetary award possible enforce state law.”