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Paying for a Case?

Did a Houston law firm effectively purchase a potentially lucrative no-bid contingency fee contract with political contributions to Pennsylvania Governor Ed Rendell? Based on the facts in this WSJ editorial, it sure looks that way. I'd be curious to see the other side of this story, if there is one.

UPDATE: The Philadelphia Inquirer reports on the story here.

Dave N (mail):
Reminds me of how states lined up to join the tobacco litigation several years ago. Some private lawyers became billionaires in that one.
4.8.2009 9:31pm
Rendall should have taken Penn. Con-law:
Big Pharma is using a state constitution to block a governor from selling out the tax payers (on the front end with over paying for legal services, and on the back end with over paying for meds). I guess those guys making life-saving medicine aren't so bad after all.
4.8.2009 9:49pm
Ralph Stanley:
Nothing new. Politician, by granting political favor to donor, has donor shake down private enterprise to fund Politician's power base. Donor gets big payday. Politician gets a fraction of the proceeds. Sort of a twist on Jesse Jackson's M.O. If the Politician eliminates the middleman, he loses his cover and, well, you have Blagojevich.
4.8.2009 10:08pm
My Middle Name Is Ralph:
One thing we can be sure of--Johnson &Johnson is not trying to DQ the law firm out of its concern for the Pennsylvania taxpayer. The fact that J&J is trying to DQ the firm tells me that the firm is more than merely competent in handling the litigation.
4.8.2009 10:27pm
Bill Poser (mail) (www):
Why does the defendant firm have standing? The arrangement may be corrupt, but I don't see that it is unfair to the defendant.
4.8.2009 10:30pm
Joe McDermott (mail):
Once again the WSJ editorial page is doing what it can to make it safer for big corporations to screw the consumer without the pesky burden of answering for their conduct in court.
4.8.2009 10:37pm
llamasex (mail) (www):
Based on the facts in this WSJ editorial.

FACTS are in EDITORIALS spin and BS is. Articles in newspapers are where the facts are.
4.8.2009 11:08pm
NTB24601:
The editorial's suggestion that the state should use "open bidding" to retain outside counsel strikes me as fairly ridiculous. Would you want to be represented only by the cheapest lawyer available?
4.8.2009 11:12pm
Soronel Haetir (mail):
I can see an argument for the defendant to have standing if they are based in the state. Such an arrangment would make the state interests adverse to some of it citizens. Because outside counsel's sole objective would be making the settlement as cash heavy as possible without taking other considerations into account.

I've seen numerous arguments against a state being able to hire contingency based counsel along those lines. I beleive some states ban the practice outright.

You could search Beck and Herrmann's Drug and Device Law for some of them.
4.8.2009 11:14pm
My Middle Name Is Ralph:
I'm sure the big corporsations for which the WSJ shills would love this idea.
4.8.2009 11:21pm
SeattleSolicitor:
While llama wasn't particularly eloquent about it, he/she has a point: the editorial page probably isn't a great place to assume that the facts have been fairly presented. The valence of the last sentence in the penultimate paragraph (governor claims nothing to hide, "but" details were confirmed through a FOIA request) alone makes me doubt the editor's fair presentation, since there is no tension between the two clauses of that sentence. A public records request is a very common way for information to be delivered from the government these days, at least in my state; the fact that the defendant used that method to obtain information does not in any way create an inference that someone was hiding something. I also think there are many reasons for special counsel contracts to be selected by some method other than public bidding in certain cases, and this editorial does nothing to explain what the circumstances of this case were.

That said, there is always a concern with elected offices that the officeholder could exchange favors for money. It sounds like there is some criticism that the governor rather than the attorney general made the ultimate decision on this contract--but the AG is also an elected office in Pennsylvania. Perhaps the best solution is to have a process-oriented approach identified well in advance, where someone other than the officeholder or political appointees (e.g., the attorneys actually handling the case for the state) makes the decision. There is no indication from WSJ that anything other than that happened here. The governor claims to have "had nothing to do with the selection" and WSJ says nothing that would contradict that. WSJ criticizes that the governor rather than the AG made the selection, but tells us nothing about how often "requests of delegation" are made or granted, or the considerations the AG makes in granting such a request.

So why is this a news story? Some of the more cynical comments above seem to think that WSJ is advocating for its big-business constituency. My more naive (ok, but still quite cynical) hypothesis would be that scandal moves copies.
4.9.2009 12:04am
Timber (mail):
This is much like the Dickie Scruggs - Attorney General Hood arrangement down in Mississippi. Also, it's interesting that so many have no problem with politicians on the take so long as a "corporsations" take it in the chin somehow. Situational justice I guess.
4.9.2009 12:49am
Kazinski:
I can make a fair case that there has been more than one pharmaceutical firm that has saved my life, and other loved ones lives. Can't think of Governor that's done shit for me, other than lightening my pockets, of course.
4.9.2009 4:07am
BGates:
I can make a fair case that there has been more than one pharmaceutical firm that has saved my life, and other loved ones lives.

Sure, but I bet they charged you money for it.

They probably even made a profit. Can you imagine - actually profiting off of (the investment of decades of research and risking hundreds of millions of dollars in order to alleviate) human suffering?
4.9.2009 5:52am
Joe Y (mail):
Re NTB24601: And there's nothing wrong with the government forcing down prices and salaries--except for lawyers of course!
4.9.2009 6:53am
Oren:
Why the hell is this being farmed out to a civil litigation firm anyway? I was of the impression that States had salaried lawyers that could handle this sort of thing.

Even worse, why is it handled by contingency? This sort of case cries out for injunctive, not monetary, relief. If the claim is accurate, enjoin them from the practice in the future, make them pay the State's legal fees, maybe a slap on the wrist fine and move on. What the hell purpose is a large award going to server here?

Grrr....
4.9.2009 8:16am
TerrencePhilip:
Oren, I'm not familiar with Pennsylvania but if it's like other state AG offices I've encountered, they don't produce the best legal work, nor do they have experience in cases like this one. Also, I assume the AG's stable of lawyers are all occupied with currently assigned tasks. A 15% fee to get a firm like this in a big case, is a good deal for the client.

The editorial's recounting of the campaign contributions, designed to sound sinister, does not impress me. All the contributions are legal; this goes on every day. I don't recall such hyperventilation from the WSJ when industry groups contribute to the campaigns of state pols and judges- or buy ads to promote Republican federal judicial nominees- and later have business before the pols and courts.

The only good point they may have, is that this is a contingency fee contract that- according to the editorial- was required to be legislatively approved and was not. In that case, I assume the remedy would be to disqualify the law firm and force the AG to either hire them on an hourly basis (which would be devastating to his budget), handle the case in-house, or ask the legislature to approve the contingent-fee contract.
4.9.2009 9:23am
t-boy (mail):
I would think that the defendant has standing to protect its due process rights in this case.


In court papers, the drug firm argues that the contingency fee contract is invalid because it wasn't approved by the legislature, as the state constitution requires, and because it "violates Janssen's rights to due process under the United States and Pennsylvania Constitutions, which guarantee that attorneys representing the Commonwealth, acting in its capacity as sovereign, not have direct financial interest in the outcome."


The rest of the complaint is most likely posturing to illicit voter outrage to make this go away.

Personnally I would like to see some type of barrier to this type of litigation. An FDA hearing to determine whether the defendant had actually violated FDA guidance before litigation could commence might be a starting point.
4.9.2009 9:32am
NTB24601:
Re Joey Y: I'm all for the government forcing down prices through competitive bidding when the government is doing things like procuring pens. How exactly is that going to work for retaining outside counsel, though? I can't begin to fathom how the state is supposed to fashion an RFP that would limit borders to only the best law firms. It seems like a silly idea to me.

Re Oren &TerrencePhillip: For the most part, the Commonwealth's attorneys are quite good at what they do, but this sort of litigation is not what they do. Attorneys in the Office of the Attorney General handles generally handle narrow categories of cases: basically defense work and some criminal prosecutions. Attorneys in the Office of General Counsel (i.e., the administration's attorneys) handle transactions and defend Commonwealth agencies mostly before administrative tribunals. What the Commonwealth needs here are attorneys with extensive experience prosecuting civil litigation. The might be able to find some attorneys like that among their ranks, but it makes a lot more sense to me for the Commonwealth to simply retain a firm which regularly does that sort of work.
4.9.2009 10:31am
Aultimer:
Political contribution money buys access, and the class-action lawyer uses that access to propose a contingent fee action to the benefit of the state (and himself, unsurprisingly). As a taxpayer, I'm happy to have contingent fee lawyers working for me on stuff the AG doesn't care enough to take on (let alone to think up).

Calling this a "no-bid" contract or "pay to play" based on the facts in evidence is transparent spin.
4.9.2009 10:41am
Profane (mail) (www):
As a layman, this is the bit that I find troubling (from the PI story):

Under the contract, Bailey Perrin will receive up to 15 percent of any judgment made with the state. The contract stipulates that the state cannot accept a nonmonetary settlement unless the agreement "also provides reasonably" for Bailey's compensation.

Janssen argued in its appeal that such an arrangement was improper because Bailey had "a selfish interest" in the outcome of the case.

Asked about that assertion, Rendell said: "That's the way these class-action lawyers get paid. Welcome to the real world, Janssen."

Ardo added that such arrangements were "commonly used in other contracts."
4.9.2009 11:29am
Bob from Ohio (mail):

Articles in newspapers are where the facts are.


Sometimes.

Papers have a lot of articles labeled "analysis". Are those "fact articles" or "editorials"?

Further, many articles I read mix analysis with facts but don't label them as "analysis". Does the point of view color the facts presented?
4.9.2009 12:19pm
Bob from Ohio (mail):

"There wasn't the slightest bit of pay-to-play here," Rendell said. "I never put a dime of state money in jeopardy for Ken Bailey."


The second sentence does not support the first. A contingency contract would never involve the client paying fees out of their own pocket.

I also like how the decision was made by the governor's counsel, like that is an independent position.

Its my lawyer who decided, not me! Just because I hired him, sign his checks and can fire him means nothing!

The counsel just happened to pick a major contributor to his boss.

I wouldn't expect a rural, backwards state like Pennslyvania to have good in-state counsel. I totally see how the counsel would be compeled to pick a major out of state contributor to his boss.
4.9.2009 12:29pm
David Drake:
Aultimer:


As a taxpayer, I'm happy to have contingent fee lawyers working for me on stuff the AG doesn't care enough to take on (let alone to think up).


Cases that the AG doesn't care enough to take on should not be the concern of the State Government. We've had the issue here in Georgia. The State AG, who is a Democrat, does not want to pursue certain cases so the Republican Governor has hired outside counsel to pursue them. Even though I'm a Republican, I don't think that's proper. Even in the absence of campaign contributions from the lucky law firm.

Although the legalities depend on what the State Constitution says about the respective roles of Governor and AG, what's really going on is that the Governor is lending the name of the State of Pennsylvania to lawyers who hope to profit from naming the state in the lawsuit. The "contingent fee contract" restricts the state from settling on terms that may otherwise be advantageous to the state. If you put the campaign contributions (to a Pennsylvania candidate for governor from a Houston Texas law firm) into the mix, it stinks.
4.9.2009 12:58pm
David Drake:
Bob From Ohio--

Hey, you know how "Philadelphia lawyers" are.
4.9.2009 1:01pm
levisbaby:
I don't seem to recall any posts by Mr. Adler when billions of dollars were awarded via no-bid contracts to Bush cronies.

I guess the outrage is selective.
4.9.2009 1:08pm

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