Contingency fees challenge upheld in poultry lawsuit
Posted on Saturday, June 16, 2007
TULSA — An attorney for Tyson Foods Inc. failed to convince a judge Friday that Oklahoma Attorney General Drew Edmondson can’t legally use money obtained in a federal environmental lawsuit to pay private lawyers.
U. S. District Court Judge Greg Frizzell did give Tyson attorney Jay Jorgensen permission to raise the issue of how private lawyers are paid in Oklahoma’s lawsuit against poultry companies by submitting a question to the federal court.
That question then could be sent for review to the Oklahoma Supreme Court.
Jorgensen said if Edmondson wins, Oklahoma is obligated by its state law to immediately turn over all money to the state treasury before paying private lawyers. Edmondson said if he wins, he’ll pay his lawyers their contingency fee, then turn over the rest to the state treasury.
The questions about contingency fees raised Friday in the Oklahoma case against eight poultry companies with operations in Arkansas, who are accused of polluting the Illinois River watershed with poultry litter, is a small part of a bigger national issue.
Private groups such as the U. S. Chamber of Commerce are becoming increasingly concerned about contingency fee contracts that state attorneys general make with private lawyers. Lawyers who work for a contingency fee receive no pay when states lose cases, but they receive percentages of any lawsuit winnings or settlements states make.
The private lawyer’s incentive is money, and that may not be in the public’s best interest, Jorgensen argued.
“There’s nothing wrong with [paying private lawyers ] with flat fees or by the hour,” Jorgensen told Frizzell.
Tyson attorneys on Friday based their argument on New Mexico v. General Electric, a case filed in 1999. In that case, a 10 th U. S. Circuit Court of Appeals judge last year upheld a decision that prohibited New Mexico from paying private lawyers with any money it would have recovered in a Comprehensive Environmental Response, Compensation and Liability Act lawsuit.
That federal act, passed by Congress in 1980 and more commonly known as Superfund, requires that money obtained through the act must be used to improve or repair natural resources.
Edmondson uses the same federal act as a basis for his lawsuit against the poultry companies. His contract with three private law firms will pay them 33 percent to 50 percent of any money paid by the poultry companies if Oklahoma wins the lawsuit.
Edmondson said those lawyers bring expertise that the Oklahoma attorney general’s office doesn’t have. Oklahoma law allows the hiring of private lawyers, but it doesn’t specify how they are to be paid.
In the New Mexico case, Attorney General Patricia Madrid, who now works for a Washington law firm, hired private lawyers and agreed to a contingency-fee arrangement to help with lawsuits against companies that were blamed for environmental damage to South Valley, an area in southern Albuquerque.
“The natural resources damage provision says recoveries are to be used solely to restore, replace or acquire equivalent resources,” said Tami Lyn Azorsky, an attorney with the McKenna, Long and Aldridge law firm in Washington that represented ACF Industries in the New Mexico case.
“It was our position that [the Superfund act ] pre-empted any state attempt to use some of the money recovered to pay outside attorneys,” Azorsky said in a telephone interview Tuesday. “What’s not permissible is to take some of the natural resource money and pay attorneys with it.”
The poultry companies’ position against contingency fees has been supported by the U. S. Chamber of Commerce and the American Tort Reform Association. Both groups filed friendof-the-court briefs earlier this month in the Oklahoma case, speaking against contingency fee arrangements.
The U. S. Chamber Institute for Legal Reform, an arm of the U. S. Chamber of Commerce, praised President Bush’s decision last month to sign an executive order that barred paying contingency fees to private lawyers and expert witnesses who do work for the federal government.
Lisa A. Rickard, the legal reform institute president, commended Bush’s move and said private lawyers should be paid by the hour.
“There is an inherent conflict,” Rickard said in a telephone interview Thursday. “Private attorneys paid with contingency fees have a financial incentive to jack up damages as high as they can. The objective of the state may be to change a behavior or something the company does.”
“If they need expertise outside of what they have inside the office, then [attorneys general ] just can contract and pay them by the hour.”
Arkansas Attorney General Dustin McDaniel said in a telephone interview Wednesday that private lawyers’ expertise is sometimes needed.
Arkansas was among the 46 states that used private lawyers paid on contingency to assist with the multibillion-dollar, multistate tobacco settlement. Motley Rice, the Mount Pleasant, S. C., law firm hired by Edmondson to help Oklahoma in its lawsuit against the poultry companies, helped Arkansas and the other states obtain a $ 246 billion settlement with tobacco companies in 1998.
“There are cases where states need to have qualified legal counsel that has a specific area of expertise or the resources to handle big cases,” McDaniel said.
McDaniel spoke favorably of a state requirement that forces the Arkansas attorney general to select a private lawyer for assistance, but then gain the approval of the governor and state legislators of the hiring.
“We have what we think is one of the best laws with regarding to hiring outside counsel,” McDaniel said.
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