Greg Abbott (R)
AUSTIN, Texas (Legal Newsline)--Attorneys general of several states have been getting negative press lately for hiring campaign donors as outside counsel in public pension fund shareholder litigation. Texas, however, has remained above the fray.
An article in the Feb. 3 Wall Street Journal focused on a county pension fund in Massachusetts and the Ohio Attorney General's Office as instances where those in charge of hiring private lawyers to represent pension funds chose firms that contributed to their political campaign.
"There has been no litigation here, per se, though we have investigated certain funds," said Thomas Kelley of the office of Texas Attorney General Greg Abbott.
George Scott Christian, president of the Texas Civil Justice League, had praise for the Abbott's office.
Founded in 1986, the Texas Civil Justice League is a statewide coalition of businesses and trade associations working for liability and legal reform.
"His office has operated with transparency," Christian said. "He has been nothing if not open."
Christian said a lot changed in Texas after the state's tobacco settlement in 1998.
Then-Attorney General Dan Morales hired a team of five attorneys to represent Texas in a suit against tobacco companies. Walter Umphrey, Wayne Reaud, John Eddie Williams, John O'Quinn and Harold Nix originally had a deal to receive 15 percent of settlement proceeds. The lawyers had contributed about $150,000 to Morales' campaign.
The attorneys brokered a $15 billion settlement for Texas, and eventually gave up their bid for 15 percent and accepted around $2.5 billion in attorneys' fees.
The Houston Chronicle calculated that if the five lawyers worked 40 hours a week for 18 months, their hourly rate came to about $105,000 an hour.
In 1991, Texas enacted legislation that put limits on how the attorney general can hire outside counsel.
"Now there is an approval process with the budget board," Christian said. "The AG has to work with legislative leadership."
There is also a cap on fees.
"Greg Abbott runs a good law firm (in the AG's office), his team has plenty of expertise," Christian said. "I think they would only seek outside help if it was a very specialized case."
Abbott is up for re-election in November, and will face Democratic challenger Barbara Ann Radnofsky.
The WSJ report said New York firm Labaton Sucharow has been hired to pursue 10 shareholder lawsuits since 2006 by the Norfolk County, Mass., pension board. Joseph Connolly, the head of the board, has received 68 maximum contributions of $500 from attorneys at the firm and their relatives.
"Plaintiffs' lawyers donate because they think it buys them access to people who make decisions over how pension funds select counsel," said Fred Isquith, a partner at Wolf Haldenstein Adler Freeman & Herz LLP, a plaintiffs' firm in New York, in the report.
The report also quoted former Ohio Attorney General Marc Dann, who said, "I have no doubt I received donations with the expectation of work."
After he resigned during a sex scandal, current Attorney General Richard Cordray took over. Five of the firms picked to represent Ohio pension funds have contributed $300,000 to the state Democratic party, the report says. Cordray received almost $2 million from the party.