Florida's Legislature Makes Sausage With Contingent Fee Reform

Recently the Wall Street Journal ran an editorial describing how Florida is dealing with the problematic alliances between state Attorneys General and contingent fee lawyers. As many readers of this blog know, this problem, which resulted in outrageous windfalls to private attorneys in the tobacco litigation, is still being used to pursue speculative litigation on behalf of public authorities in many contexts, most notably in the lead paint litigation. Tellingly, although the landmark Rhode Island public nuisance decision rejected the underlying cause of action against the lead paint manufacturers, it plainly - and unnecessarily - suggested that these alliances between public lawyers and private counsel may be acceptable if the public authorities maintain adequate "control" over the proceedings. The ruling must have encouraged the same private lawyers in the big Santa Clara case in California, where the California Supreme Court is presently considering the ethical permissibility of such alliances.

There are compelling arguments against permitting these agreements, especially under California law, where the California Supreme Court has rejected their use for decades in public nuisance cases. The arguments have been marshaled by the parties' briefing, by major law review articles, and in several prior entries on Lisa Perrochet's blog on this site. Various amicus curiae, including the National Association of Manufacturers, The American Chemistry Council, The Coalition for Public Nuisance Fairness, and the Property and Casualty Insurance Association of America, have also weighed in and further filings are anticipated before the case is argued on the merits.

Florida's approach however, compromises the ethical debate by explicitly allowing these alliances - as well as substantial opportunities for windfalls - and "capping" total contingent fees at $50 million. The attempt is surely admirable, at least in spirit, but it fails to solve the underlying problem. "Transparency" in relationships where fees can reach into the tens of millions of dollars is no guarantee against abuse - it simply legitimizes alliances which, according to reliable United States Supreme Court authority, are inherently illegitimate and untrustworthy. There is still no way to police the degree of "control" actually exercised by the public authority without impermissibly piercing the attorney-client relationship between contingent fee counsel and the state. As a result, defendants, who are the real interested parties affected by potential abuses, are still left "in the dark." Defendants - and the public - are still required to "trust" without verification.

Although the bill is being "supported by Florida Attorney General Bill McCollum," according to prominent Point of Law.com blogger, Walter Olsen, it "faces ferocious opposition in Tallahassee ... from a lobby that frequently gets its way there." "Still, some politicians will surely say that some reform is better than no reform. For that reason, if for no other, legislative initiatives will surely persist. Although compromise is a hallmark of the political process, one must wonder whether surrendering critical ethical principles to legislative "sausage-making" sacrifices too much. Certainly, the wrong legislative answer to this dangerous controversy is worse than the right judicial one.