NEW ORLEANS – Louisiana’s Attorney General is facing questions over his use of outside law firms to help his office pursue a case against BP involving the 2010 Gulf of Mexico oil spill.
To date, Buddy Caldwell’s office has spent almost $24 million on the state's case against BP and the subsidiaries named in the suit–$15.4 million of that has been in payments to outside attorneys and firms hired by Caldwell.
In contrast, in-house attorneys working on similar litigation for Alabama Attorney General have only cost that state around $200,000.
According to The Associated Press, $10 million of the amount paid to the outside firms was part of a grant BP provided after the spill and the remaining dollars were earmarked from a state set-aside fund that includes fees, taxes, penalties and other money paid by the oil industry to cope with spills such as this.
State Rep. Greg Miller, R-Norco, supports the use of outside plaintiff's attorneys, saying part of keeping the government “lean and mean” is allowing the Attorney General’s office to hire experts on an as-needed basis.
So far none of the money spent on outside counsel has come from tax dollars, however the Caldwell plans on asking the legislature for approval to pull more revenue from the spill fund and, in the event that the spill fund is used up, from state taxes.
Eight of the 11 firms contracted by Caldwell donated money to his campaign committee.
According to the the Times-Picayune, U.S. District Judge Carl J. Barbier, took issue with the number of lawyers contracted by the state, saying that instead of cooperating or working collaboratively “the State of Louisiana, through its retained private counsel, has instead often obstructed and frustrated the progress of the litigation.”
Melissa Landry, executive director of the Louisiana Lawsuit Abuse Watch criticized the fees paid to outside counsel. She said that the attorney general should be able to hire outside attorneys to pursue legitimate claims on behalf of the state when he lacks the capacity to handle them in-house, but that those hired "must be selected on expertise and experience, not political connections."
“The cozy relationship between Attorney General Caldwell and the private firms he’s contracted with to represent the state is very troubling,” she said. “The lawyers in these firms have contributed more than $100,000 to Caldwell’s campaign, and at least two of them held leadership roles in his bid for re-election.
“What’s the basis for selecting these attorneys? And was the process fair and transparent? The public has a right to know.”
The lead counsel on the case, Allan Kanner of Kanner & Whiteley, is not among those who donated to Caldwell. He did, however donate $5,000 to Governor Bobby Jindal–$2,000 in March of 2010 and an additional $3,000 in August, a few months after his firm’s contract with the state began. His law firm also donated $5,000 in January 2009.
Kanner & Whiteley is a well known environmental law firm and was recommended for the contract by Caldwell, but ultimately contracts of this nature must be approved by the state's Division of Administration, which is overseen by the Governor.
In addition to the attorneys at Kanner & Whiteley, Caldwell contracted the firms of his former campaign chief, Allen Usry of Usry, Weeks and Matthews, and his former campaign treasurer, Wade Shows of Shows, Cali, Berthelot & Walsh. Each of the men donated $5,000 to Caldwell’s campaign as did the New Orleans based firm Spears & Spears. Ike Spears, one of the attorneys working on the case, is quoted by the AP as being “fairly certain” that his campaign contributions did not have an impact on the work he is doing for the state. Another attorney on the case is Henry Dart of Covington. His law firm, Henry Dart Attorneys at Law, donated a total of $10,000 to Caldwell and Dart himself donated an additional $5,000.
It is not the first time Caldwell has stirred controversy with his use of outside counsel. Last year pharmaceutical giant GlaxoSmithKline sued Caldwell, alleging that his use of outside attorneys compensated on a contingency basis in a suit against the company was unconstitutional.
The lead attorney in the state’s case was Kanner, and Ursy and Shows were among the co-counsel.
GSK claims that because the attorneys are compensated based on the damages recovered, Caldwell needed the approval of the state legislature to hire them.
Caldwell recently filed a second suit against GSK concerning the promotion and marketing of certain drugs and is expected to use contingency-fee based attorneys in that suit as well.
Caldwell originally sought to hire attorneys on a contingency-fee basis in the oil spill case, but was unable to persuade lawmakers. The lawyers are currently paid on an hourly basis.
Because of the complex nature of the case, as well as the number of claims, the judge blocked damage claims from the state until liability for the spill is determined.
In March, BP settled with most of the more than 350 individuals and businesses that filed suit for economic loss, property damage and injuries, paying an estimated $7.8 billion. In November, the company agreed to pay $4.5 billion to resolve federal charges and civil claims by the Securities and Exchange Commission, although it may still face as much as $17.6 billion in fines for violations of the Clean Water Act. These settlements did not cover pending suits from the Gulf Coast states.
The original date for a liability trial, in March 2012, was postponed due to a fairness hearing regarding BP’s settlement with private parties. The trial was then supposed to take place Jan. 14, but was delayed due to the Super Bowl and Mardi Gras. The trial is now scheduled to begin Feb. 25.
The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana, New Orleans.
Editor’s note: This story has been updated. A previous version included a statement from Louisiana Lawsuit Abuse Watch Executive Director Melissa Landry on an unrelated topic. The Louisiana Record regrets the reporting error.