Testimony of Bill McCollum Before the House Judiciary Subcommittee Hearing on "Contingent Fees and Conflicts of Interest in State AG Enforcement of Federal Law"

On February 2, 2012, the Honorable Bill McCollum testified on behalf of the U.S. Chamber of Commerce and the U.S. Chamber Institute for Legal Reform before the U.S. House of Representatives Judiciary Subcommittee on the Constitution hearing on "Contingent Fees and Conflicts of Interest in State AG Enforcement of Federal Law."

INTRODUCTION

Chairman Franks, Ranking Member Nadler and Members of the Subcommittee, on behalf of the United States Chamber of Commerce and the U.S. Chamber Institute for Legal Reform, thank you for allowing me the privilege to appear this afternoon to testify on what I believe are some very important issues facing our legal system. The views expressed in this testimony are my own.

The U.S. Chamber Institute for Legal Reform (ILR) is an affiliate of the U.S. Chamber of Commerce dedicated to making our nation’s legal system simpler, fairer and faster for everyone. Founded by the Chamber in 1998 to address the country’s litigation explosion, ILR is the only national legal reform advocate to approach reform comprehensively, by working to improve not only the law, but also the legal climate. The U.S. Chamber of Commerce is the world’s largest business federation, representing the interests of more than three million businesses and organizations of every size, sector and region.

In recent years several federal laws have given enforcement authority to state attorneys general. The most recent are enforcement provisions pertaining to the Consumer Financial Protection Bureau in the Dodd-Frank law. As a former Attorney General of Florida and a former member of Congress, I believe I have the experience and perspective to speak authoritatively on the subject of state attorneys general enforcing federal law and their use of contingency fee plaintiff counsel. I am concerned that the expansion of state authority to enforce federal law has the potential to create much greater and unnecessary burdens for businesses and the public. This is especially the case if state attorneys general contract with private attorneys on a contingency fee basis to bring enforcement actions under this authority.

I am also very concerned that, when state attorneys general elect to retain contingent fee plaintiff counsel to pursue litigation on behalf of the state, there is a substantial risk of, and opportunity for, “pay-to-play” schemes and other types of abuse in which political contributions from plaintiff firms are traded for contingent fee contracts. At the very least, use of such counsel without proper safeguards can give the appearance of impropriety and undermine public confidence in our legal system. State attorneys general should only enter into private attorney contingency fee contracts when their own office does not have the expertise or ability to handle a matter and the AG cannot locate an appropriate outside counsel to handle the matter on an hourly fee/non-contingency basis. Then only with complete transparency, a competitive bid process and caps on attorney fees, should contingency fee counsel be retained.

There are three very important issues that I believe the Subcommittee should consider: (1) how to create a balanced legal system – one that protects the public without creating incentives for unnecessary litigation that imposes enormous and unnecessary costs on businesses which must be, and are, passed on to consumers; (2) the risks and burdens for business and the public from the continuing expansion of the legislative authority for state attorneys general (“State AGs”) to enforce federal laws concurrently with federal law enforcers; and (3) the need for increased transparency, fee caps, and other safeguards on those occasions where State AGs deem it necessary to utilize private sector contingent fee attorneys to pursue litigation on behalf of a state. Hopefully, such occasions will be rare.

In addition to their underlying state enforcement powers, State AGs are increasingly receiving the authority to enforce federal laws which can be duplicative and unnecessary. All of you understand the importance to business of being able to know the rules of the road, the standards under which businesses are required to operate. Unfortunately, a state attorney general, empowered by federal law, but who operates completely independent of any federal checks and balances, can add significant uncertainty and costs to a business community that needs predictability and reliability. This problem is exacerbated when an AG retains private plaintiff’s counsel to enforce federal law on a contingency fee basis.

I wrote and promoted the Transparency in Private Attorney Contracts (TiPAC) legislation, which was enacted in Florida. I strongly support this law that requires Florida’s Attorney General to conduct open bidding for contingency fee contracts and provides for caps on potential attorneys’ fees. I believe that our nation would be well-served if such a standard was adopted nationally through the action of all state legislatures and through federal law requiring state attorneys general to follow TiPAC guidelines whenever they choose to use contingency fee outside counsel to enforce federal laws.