With New Hampshire becoming the most recent state to hire outside law firms to assist with its litigation against manufacturers of polyfluoroalkyl substances (PFAS), now is the time to re-evaluate how the state makes the important decision to select lawyers from the private sector.
It has become commonplace for state attorneys general to hire outside counsel to assist in large-scale complex litigation, and they generally do so on a contingency fee basis, which pays outside counsel a specified percentage of any court award or settlement. Enacting Transparency in Private Attorney Contracting (TiPAC) reform legislation would help ensure that any such litigation serves the interests of the state and not those of the contingency fee lawyers. The economic interests of the counsel can conflict with the public interest and without the proper guidelines in place, the hiring process can lead to corruption.
A closer examination of the landmark tobacco litigation in Texas during the 1990s proves that corruption can be a real problem when enormous sums of money are on the line. Then-Texas Attorney General Dan Morales spent four years in federal prison because he forged documents to get a personal friend a share of the enormous legal fees generated in the state’s case, even though he had done no work in the matter.
More recently, Oklahoma Attorney General Mike Hunter hired lawyers for his state’s opioid litigation whose business partners and spouses maxed out contributions to his campaign. One of the firms hired did not even tout litigation as a specialty on its website, yet that firm walked away with $5.6 million in fees from the state’s settlement with Purdue Pharma.
In Nevada, Attorney General Aaron Ford took it a step further by pushing through a last-minute amendment during his time as Senate majority leader that lifted Nevada’s limit on contingency fees awarded to outside firms that contracted with the state. This year, as state AG, he then hired his old law firm to represent the state in its opioid litigation.
Opportunistic trial lawyers see endless financial opportunity with this new wave of PFAS litigation. 3M settled a PFAS claim with Minnesota for $850 million in 2018. Of that settlement, the state paid $125 million in contingency fees to the out-of-state private attorneys, or $47,000 per day for seven years. Our recent report details this litigation and the significant role the plaintiffs’ bar plays in driving this litigation across the country.
New Hampshire can avoid providing a “windfall” to plaintiffs’ lawyers by following the lead of other states in implementing a sliding scale for fees. By guaranteeing that as the amount of compensation grows, the percentages awarded to outside counsel diminishes, New Hampshire will prevent the situation in which trial lawyers walk away with over-sized sums in comparison to the state’s actual recovery.
Currently, 23 other states have implemented a form of TiPAC legislation, codifying best practices to provide transparency in all situations in which the state pursues a contract with outside firms. TiPAC legislation generally includes a measure requiring that firms be identified through a public call for proposals on the case, rather than through an interview and selection process hosted solely through the attorney general’s office. New Hampshire currently does not require a public request for proposals, and members of the attorney general’s office have confirmed in the past that it is not standard procedure. It should be.
While New Hampshire’s current attorney general has guidelines in place for the office under his tenure, these guidelines should be strengthened and codified in a TiPAC statute to prevent future attorneys general from acting unscrupulously.