U.S. Policy on Attorneys Fees Sparks Debate at State Level

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Source: WSJ

President Bush yesterday signed an executive order barring the federal government from using lawyers on a contingency-fee basis, an arrangement where lawyers don't get paid until a matter is resolved and then claim a portion of any winnings.

Such arrangements rarely occur on the federal level, but the action quickly sparked debate about the practice on a state level, where it is more commonly used by state attorneys general and has become part of a wider debate on the civil legal system.

The order states that lawyers hired by the federal government should be "compensated in amounts that are reasonable, not contingent upon the outcome of litigation or other proceedings."

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The practice came under the national spotlight after states settled lawsuits with the tobacco industry in the 1990s. Significant portions of the settlements went to outside plaintiffs' attorneys hired by states. That created some conflicts of interest. For instance, former Texas Attorney General Dan Morales, who served the state when President Bush was governor, went to prison in a case related to the state's multibillion-dollar settlement with the tobacco industry. He admitted to falsifying a contract so a longtime friend and lawyer could profit from the settlement, according to the Associated Press.

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But Rhode Island's attorney general, Patrick Lynch, said such a restriction on states would put them at a disadvantage when suing big corporations on behalf of citizens. Jon Haber, CEO of the American Association for Justice, a group of trial attorneys, said in a statement: "This executive order . . . removes from the federal government a powerful tool successfully used by state attorneys general to prosecute wrongdoers and hold them accountable in our courts."

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