Prosecution for Profit (Part 2)

In keeping with the below post regarding "Government Sanctioned Tort Actions".

Prosecution for Profit
Wall Street Journal, July 5, 2007



When President Bush issued an executive order in May barring federal agencies from hiring private lawyers on a contingency fee basis, the press corps yawned. But Mr. Bush was getting out ahead of one of the bigger legal battles now raging across the country: prosecutorial neutrality.

America's legal system is based on the idea that government officials act on behalf of the public interest, not for personal profit. That's why we don't pay policemen per arrest, judges a percentage of damages they award, or prosecutors a bounty for each conviction. Yet public officials are increasingly violating this ethic by outsourcing legal work to tort lawyers who profit from prosecuting public claims.

The practice developed in the 1990s, when state Attorneys General promised trial lawyers a percentage (a contingency) of any settlement they could beat out of Big Tobacco, and it has since spread like bird flu. In Rhode Island and California, prosecutors have tried to give plaintiff firms a cut of judgments against lead paint makers. Oklahoma wants to reward private attorneys for suing poultry companies. Mississippi AG Jim Hood has signed contingency deals in securities cases.

The practice has become a lucrative new tort business, to the point that plaintiffs attorneys are now recommending lawsuits to state officials. In some instances, governments simply target an industry, and then let the tort lawyers decide whom to sue and on what grounds. The tort lawyers then turn around and send a portion of their profits back to the politicians in the form of campaign contributions.

The good news is that defendant companies are starting to fight back in court -- and are winning. The Superior Court of California in April ruled that the county of Santa Clara could not pay contingency fees to private attorneys -- in this case, tort lawyer giants Thornton & Naumes and Motley Rice -- who were suing lead-paint manufacturers on behalf of the government. The county had argued that since government retained "oversight" of the attorneys, there was no problem.

Judge Jack Komar pointed out the impossibility of determining how much control a government attorney must exercise to make a contingency fee deal legitimate. He cited the California Supreme Court's 1985 Clancy decision, which noted that a contingency arrangement "is antithetical to the standard of neutrality that an attorney representing the government must meet."

Unfortunately, California's high court is one of the few to have addressed such fee agreements. Some defendants have noted the 1927 Supreme Court decision in Tumey v. Ohio, which barred paying government officials a bounty for arrests and convictions during Prohibition. The Rhode Island Supreme Court last year seemed intrigued by this argument, and returned a lawsuit over contingencies to a lower court for more consideration. Still, prosecutors are busy dreaming up reasons why Tumey doesn't apply, and the contingency issue is probably destined for the Supreme Court. In the meantime, some states are moving to bar these contracts, or make them more transparent.

Government prosecutors claim they need outside lawyers because they lack the money and resources for big suits. But surely if the tort bar is as interested in "public justice" as it professes, it'll work by the hour. And if prosecutors feel underfunded, they can always request more money from the state legislatures that control the purse strings. Budgetary oversight is in fact one check on prosecutorial excess.

In the 1935 Berger case, the Supreme Court noted the obligation of a prosecutor "is not that it shall win a case, but that justice should be done." Sometimes that means foregoing a suit, or balancing litigation with other public policy goals. Such concepts aren't priorities for trial lawyers, whose main goal is to hit the financial jackpot. The U.S. justice system is frayed enough without making trial lawyers the deputized vigilantes of public prosecutors.