TALLAHASSEE, Fla. (Legal Newsline) - Private law firms will have the amount they can recover while representing the state of Florida in securities lawsuits capped thanks to a unanimous vote Tuesday by the State Board of Administration.
Gov. Charlie Crist, Attorney General Bill McCollum and Chief Financial Officer Alex Sink all voted for McCollum's proposal, which is based on his own personal practices as attorney general. The cap system provides a certain amount of attorneys fees for each tier of an award or settlement and allows a maximum of $50 million.
McCollum is also hoping legislation that will make the practice permanent in the state's Attorney General's Office. The same bill stalled in early 2009.
"We're hopeful because some seats have changed in the Senate," said Joe Jacquot, McCollum's chief of staff.
"The dynamic is in our favor. Hopefully we can get it through. For people to see a unanimous vote by the cabinet can only be positive for the bill."
McCollum and Sink are likely to face each other later this year in the general election for governor. Sink asked for and received what McCollum called "a friendly amendment" that makes fees a factor in which of the five law firms approved to represent the SBA in securities lawsuits.
Jacquot said it was important to pass the measure because it will maximize the amount of recovery for taxpayers instead of trial lawyers.
Jacquot pointed to the tobacco litigation of the 1990s in which attorneys representing states made fortunes, and that the amount of settlement funds paid to the state may be now being diverted into the general appropriations process.
That amount is lower because of what the trial lawyers earned, Jacquot said. Any future securities lawsuits coming on behalf of pension funds could have high-dollar awards or settlements, too, he added.
"Florida -- having gone through this experience, having seen the amount law firms can get --can see that that money could've and should've gone to the people of Florida," Jacquot said.
He also noted the story of Scott Rothstein, a lawyer accused of running a $1.2 billion Ponzi scheme by selling investments in non-existant legal claim settlements.
Sink's chief of staff recommended Rothstein's firm be on the list of those who could represent the State in securities suits after Rothstein held a fundraiser for Sink.
The measure also provides more readily available public information about contingency fee contracts, such as timesheets and firms' bids.
"The cap is not going to stop pay to play, but it's certainly an incentive," Jacquot said. "The transparency with the firms on a Web site, the open bidding, that's going to be key."
The five law firms that can represent the State in securities litigation are: Pomerantz Haudek Grossman; Bernstein Litowitz Berger; Berman DeValerio; Barrack Rodos & Bacine; and Kaplan Fox & Kilsheimer.
The litigation hit a snag last year when an amendment to the bill became an issue.
It allowed outside attorneys to make more than the cap system allowed if the attorney general thought they deserved more and a majority of the four Florida Cabinet members (governor, attorney general, chief financial officer and agriculture commissioner) agreed.
On the last day of the session for non-budget items, the House asked the Senate to recede the amendment. House Speaker Larry Cretul had the power to call for a vote on the amendment but did not.
The original bill was amended by the Senate. Sen. Dennis Jones, a Republican, pushed the amendment.
From Legal Newsline: Reach John O'Brien by e-mail at email@example.com.
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