State Attorneys General

For the past twenty years, state attorneys general have played an increasingly prominent role in enforcing laws and regulations affecting the business community.  While often appropriate, state AG enforcement can also lead to inconsistent, duplicative and politically motivated enforcement of key laws and regulations. In addition, many state AGs hire outside plaintiffs’ lawyers for these cases, raising questions about conflicts of interest and political favoritism. Read More...

Modern state AG litigation began with the lawsuits filed against tobacco companies in the 1990s. These generated billions in state revenue, favorable publicity for state AGs and huge profits for certain plaintiffs’ firms hired by state AGs to conduct the litigation. 

The success of the tobacco litigation has led many AGs to target additional business sectors, particularly in the pharmaceutical and financial services areas. While some cases may be legally appropriate, other state AG actions appear more about enhancing a state AG’s political standing. In addition, businesses face the danger of inconsistent and duplicative enforcement by each of the fifty state AGs as well as numerous federal regulators. This is particularly true in the financial services context, where the Dodd-Frank law grants state AGs the power to enforce regulations issued by the new Consumer Financial Protection Bureau.

Also problematic is the use of outside contingency fee counsel by many state AGs. This involves state AGs awarding secret, no-bid contingency fee contracts to outside plaintiffs’ lawyers to represent their states in litigation.  As plaintiffs’ lawyers are awarded large contingency fees from successful lawsuits, money may be funneled back into campaign contributions to the AGs.  These alliances raise significant concerns about conflict of interest, favoritism, the use of a public entity for personal gain, and fairness in prosecutions. 

Twenty-one states—Alabama, Arizona, Arkansas, Colorado, Florida, Indiana, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Nevada, North Carolina, North Dakota, Ohio, Texas, Utah, Virginia, West Virginia and Wisconsin—have passed "sunshine" legislation to create an open process of hiring outside contingency fee counsel. These measures vary, but more recent laws require state attorneys general to disclose their contingency fee contracts, ensure that they maintain control of the litigation and impose reasonable limitations on fee awards to private attorneys. Other attorneys general have adopted office policies that implement many of these reforms. Companies are also fighting back against AGs hiring outside counsel in court. 

 

 

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  1. Frequent Filers: Repeat Plaintiffs in Shareholder Litigation

    September 03, 2013 | Research

    In recent years, shareholder litigation against public corporations has grown into a substantial financial enterprise controlled by relatively few shareholders and the law firms that represent them. With increasing frequency, these shareholders are state or municipal pension funds. Their lawyers are private law firms that are hired by the state (or another government unit) to pursue the case on a contingency fee basis, meaning the firm is paid a percentage of the judgment or settlement if its client, the state, is successful.... Read More

  2. Privatizing Public Enforcement: The Legal, Ethical and Due-Process Implications of Contingency-Fee Arrangements in the Public Sector

    September 03, 2013 | Research

    A growing area of concern in civil litigation is the proliferation of arrangements under which state attorneys general ('AGs') hire outside counsel on a contingency fee basis to represent the state in civil litigation. ... Read More

  3. U.S. Chamber Applauds West Virginia’s Outside Counsel Sunshine Policy

    March 21, 2013 | Press Release

    Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform, made the following statement today about West Virginia Attorney General Patrick Morrisey's new proposed procedures and guidelines for hiring outside counsel.... Read More

  4. The Current State of Affairs: A Conversation with State Attorneys General

    October 24, 2012 | Video | Watch

  5. 101 Ways To Improve State Legal Systems

    September 13, 2012 | Research

    "101 Ways to Improve State Legal Systems in 2013 & Beyond" provides policymakers with a compilation of some of the many avenues available to foster a sound legal system that promotes states' economies. The reforms are organized into five areas. The first section highlights five reforms that have gained momentum and should be of particular interest to state legislators. The report then considers fair and effective measures that would improve the litigation process, improve product liability law, promote rational liability rules, and rein in excessive damage awards. While this report presents proposals for legal reform options in a conceptual manner, it directs readers to recently enacted laws that show how legislators can move the proposals described in this guide from theory into practice.... Read More

  6. Beyond Due Process - A Litigation Primer: Challenging Attorney General and Other Government Contingency Fee Arrangements

    January 31, 2009 | Research

    Defendants in government contingency fee lawsuits should consider a variety of non-due process "bright line" challenges to contingency fee arrangements. These include challenges based on the government's control or lack of control of the case and whether it was brought and is being litigated in the public interest; as well as challenges based on state separation of powers provisions, government contracting laws, and laws pertaining to government employment of outside counsel. This paper highlights these challenges as well as the limitations of certain of these challenges in qui tam suits, which have been brought by private plaintiffs' attorneys to circumvent the legal and policy issues associated with more traditional government contingency fee arrangements.... Read More