BP battle at center of contingency fee debate

Aricka Flowers Jun. 8, 2010, 1:45pm



The ongoing BP oil leak has sparked debate around the state's ability to defend itself in litigation with corporations.

Because of that, a bill sponsored by State Sen. Joel Chaisson II (D-Destrehan) is quickly becoming one of the most contentious in Louisiana's current legislative session.

If passed, the bill would allow the state to hire attorneys on a contingency basis.

In a senate judicial committee hearing last month, supporters of the bill say contingency contracts will give Louisiana Attorney General James D. "Buddy" Caldwell the ability to hire adequate assistance in major legal battles like the one the state seems to be inevitably destined to have with BP. But leaders in the state's business community say the attorney general already has the ability to hire assistant counsel, if they get a nod from the proper authorities.

"We feel that the attorney general has the power to get contingency fees authorized by the Louisiana legislature," said Don Briggs, president of the Louisiana Oil and Gas Association. "And if they are granted, there would be oversight to those specific suits involving contingency fees."

Another concern with contingency contracts involves the fees that private attorneys can recoup under such agreements. Under SB 731, private attorneys would receive at least 25 percent of funds rewarded on a lawsuit they work on under a contingency contract.

But the bill's challengers point to the lawsuit the state settled with Eli Lilly & Co. in April as an example of why that percentage is too great.

In that case, Eli Lilly agreed to pay $24 million in a suit former Attorney General Charles Foti filed against the drug company. Private attorneys hired by former AG Foti reaped $4 million, while the rest went to the state -- $17 million going to Louisiana's general fund.

"If you look at the recent Eli Lilly case, when you take the $4 million against the total amount recovered, that is less than what Senate Bill 731 calls for because it starts out at 25 percent," said Ginger Sawyer, president of the Louisiana Association of Business and Industry. "If the attorney general is able to get the resources to hire the attorneys, why should the state give away 25 percent of anything? Our bottom line is we are going to oppose it all the way through. We have a very united business community on it. There are some 31 trade associations that are in our coalition against this."

Supporters of the bill say the legislation would put Louisiana in line with other states in the region that allow contingency contracts, like Alabama, Mississippi and Texas. But Sawyer says there is a key difference between Louisiana and those states; and it makes a contingency law less necessary.

"Other Gulf Coast states have common law and we have civil law," Sawyer pointed out.

"Under civil law, our constitution says you can't do something unless you are permitted to do it. Under common law, you can do it until you are prohibited from doing so. Those other states have not been able to move forward with their tort reform in order to reign in the attorney general either."

Leaders in the business community say the possibility of contingency contracts between law firms and the state will make a negative impact on an already fragile commerce environment.

"To randomly be able to hire attorneys on contingency fee contracts creates a bounty hunting atmosphere," said Briggs. "Louisiana is already noted to be one of the most litigious states in the country; thus, making it more difficult for businesses to have any kind of consistency to work with here in Louisiana. It has had a serious impact in our industry and with the people wanting to do business within the state of Louisiana. It certainly does not bring business to the state; it drives it away."

Sen. Chaisson and supporters of the bill say it has protections against cronyism and excessive litigation via restrictions that include required interviewing of at least three attorneys or law firms for each contract and final approval for agreements via public hearings.

The bill is up for vote later this session.

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