AGs look to outside counsel amid states' budget woes

Chris Rizo Aug. 6, 2009, 3:10pm

Doug Gansler (D-Md.)

Jon Bruning (R-Neb.)

(Legal Newsline)-State legal officials, struggling against budget cutbacks, may be forced to increasingly look to outside lawyers to litigate cases on behalf of the public, said Maryland Attorney General Doug Gansler.

Gansler, co-chair of the Democratic Attorneys General Association, said while his office has not relied on so-called contingency counsel to litigate consumer and securities issues since he was elected in 2006, his and other offices might be forced to do so amid state budget woes.

"We actually may be forced to do this because of the economy," Gansler told Legal Newsline. "The more that our budget is cut, the more lawyers we don't have to do our day-to-day statutory responsibilities."

Gansler, who described himself as a "pro-business, moderate, centrist Democrat," said there is nothing morally or ethically wrong with contingency cases.

"You are bringing money back to the state from someone who has wronged the state," he said. "Now, you are also making some lawyers wealthy at the same time, but that is the nature of our legal system."

Critics, including legal reformers, say attorneys general have used their authority to hire outside lawyers as a way to pay back their political contributors.

Often cited is West Virginia Attorney General Darrell McGraw, a Democrat who used contract counsel to sue Purdue Pharma over the company's deceptive marketing of its painkiller OxyContin.

In 2004, the case settled for $10 million, a third of which went to the private attorneys who litigated the case on behalf of the state's Medicaid program.

Theodore Frank, president of the Center for Class Action Fairness, said it's worrisome if an attorney general's outside counsel is doing law enforcement on a contingency fee.

"Then their incentives on a contingency fee are to maximize the amount of money paid out rather than doing what's best for the state," Frank said.

Jon Bruning of Nebraska, president of the National Association of Attorneys General, said the key to using outside counsel is transparency. Like Gansler, he said there is nothing inherently wrong with AGs hiring private lawyers to help do the state's legal work.

"Contingency fees in and of themselves are not wrong," he said. "I think at the point at which there is a perception that pay-for-play is involved is the point when they seem like a negative tool."

He noted that there are times when hiring lawyers on contingency is appropriate, particularly if an "immense" amount of research and effort is needed to decide whether bringing an action is warranted, as in complex securities cases.

"State attorneys general have to be very, very judicious about their use of contingency counsel," Bruning said. "If it can be done internally, it should be done internally."

In Nebraska, which does not have budget problems, the attorney general said he uses some contingency counsel, but with safeguards, including billing guidelines and a competitive selection process.

"It can really erode public confidence if in a contingency case if the lawyers end up making an obscene hourly fee," Bruning told Legal Newsline. "We've turned down many, many offers for contingency counsel. We've been approached three dozen times about a dozen different issues."

From Legal Newsline: Reach staff reporter Chris Rizo at

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