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July 2008 Archives

By John H. Sullivan

"Not only is a government lawyer's neutrality essential to a fair outcome for the litigants in the case in which he is involved, it is essential to the proper function of the judicial process as a whole."

These words by Justice Stanley Mosk in his 1985 People ex rel. Clancy v. Superior Court decision have been a beacon for public attorneys. They know, as he also wrote, that "without a belief by the people that the system is just and impartial, the concept of the rule of law cannot survive."

Last week, the 6th District Court of Appeal, in County of Santa Clara v. Superior Court , dismissed most of his decision as dicta. Mosk's opinion has long protected impartiality by prohibiting public prosecutors from hiring lawyers on a contingency fee basis. It is a powerful unanimous statement, joined by then Chief Justice Rose Bird and future Chief Justice Malcolm Lucas. When Mosk wrote of "the heightened ethical requirements of one who performs governmental functions," it was not as a theoretical observer. He served six years as attorney general before a remarkable 37-year career on the California Supreme Court.

The 6th District, in approving government lawyer contingency fee hiring of private lawyers in lead paint nuisance actions, distinguished Clancy from the Santa Clara case. It saw a lack of control by the city of Corona over private attorney James Clancy in a quaint contingency fee contract ($60 an hour for wins, $30 an hour for losses) to hassle adult bookstores. In Santa Clara, the justices found a different contingency fee situation where private counsel are "merely assisting" government attorneys and "lack any decision-making authority or control."

We don't know much about the Corona's control of Clancy because there's little discussion of that in the Mosk decision. But we don't know much for certain either about the various city attorneys' and county counsels' control over the private attorneys in Santa Clara - even though the Court of Appeal gives the topic lots of attention. The seven contingency fee agreements involving each city or county and its private lawyers evidently were control deficient. Most of the cities, counties and private lawyers submitted post-litigation declarations saying the government lawyers were in charge. The city of San Mateo never produced an agreement but wrote to the court that its in-house lawyers retained "complete control ... final authority," etc.

Oakland, which declared that "notwithstanding any documents suggesting the contrary," its city attorney retained complete control and is in the process of revising the contingency fee agreement "so that it reflects the reality of the relationship."

Pity a judge having to determine what's really going on, as Justice Patricia Bamattre-Manoukian in her concurring opinion proposes be done. She would have the agreements plus "the factual circumstances" and "the conduct of the plaintiff's counsel" be among the "many important factors in each case" that courts should henceforth analyze when approval of contingency fee agreements come before them. And come before them they will - in droves, once the contingency fee bar seizes the financial opportunities that lay in a new block of government clients.

Santa Clara focuses on nuisance actions. These will be a springboard. The lead paint cases originally included causes of action for fraud, strict liability, negligence and unfair business practices. If Santa Clara stands, we will soon hear why there's no reason to distinguish between nuisance actions and the others in contingency fee deals.

How these "public-private" cases are managed matters less than who chooses the case in the first place.

In Santa Clara we are not told how the governments and private firms hooked up. Were bids solicited? Or did the firms solicit the cities and counties?

For a dire example of where the latter can lead, look at Mississippi. There, plaintiff lawyer icon Dickie Scruggs brought his Katrina litigation plan to state Attorney General Jim Hood. Their joint contingency fee effort won $80 million in private lawyer profits from State Farm. Scruggs and his firm contributed more than $50,000 to Hood in the 2007 election cycle, according to Wall Street Journal research. The Journal found that over the past five years, Hood and 27 law firms jointly pursued state lawsuits against companies. Those firms gave Hood $543,000 in campaign contributions. Now Mississippi is looking at requiring competitive bidding for private lawyer hiring and limiting contingency fee deals to $1 million.

What might securities lawyers Bill Lerach, Melvin Weiss, et al., have tried, given their willingness to illegally pay clients, if California had not been protected by the Clancy decision?

South Carolina-based Motley Rice, a private firm in the Santa Clara case, boasts that its attorneys have "gained global recognition for their work on behalf of the State Attorneys General."

Our association's amicus brief in Santa Clara noted, without any inference of wrongdoing, that two other law firms hired by the cities and counties in the lead paint litigation made campaign contributions to San Francisco's city attorney, one of the Santa Clara parties. San Francisco's unique city/county status makes its city attorney an elected official, as are all district attorneys in the state. Everywhere else, city attorneys and county counsels are hired by city councils or boards of supervisors. The Civil Justice Association of California's review of contribution records turned up no Santa Clara case private attorney contributions to local elected officials in the jurisdictions involved.

Some county counsels and city attorneys argue they can't afford expensive litigation, that small counties are especially handicapped. But a major product or financial transgression is not going to occur just in Mariposa County. It will be discovered statewide. City and county counsel can combine and coordinate their efforts across jurisdiction lines - just as district attorneys do. Maybe district attorneys and the attorney general should handle these matters.

Our amicus brief recalls how California's attorney general joined with 49 other states in a tobacco public nuisance lawsuit but rejected offers from outside contingency fee lawyers seeking a piece of the action.

Following the 2004 passage of CJAC-sponsored Proposition 64 barring Unfair Competition Law claims by private lawyers without injured clients, the Daily Journal reported that "the plaintiffs' bar has been looking to team up with public prosecutors since the [initiative] limited private attorney general suits." It didn't happen. A Lockyer spokesman told the paper that "it's not a good idea having private lawyers running around with a badge."

This philosophy, flowing directly from Clancy and Mosk, runs strong in district attorneys' offices around the state. Note that neither the attorney general's office nor a single district attorney filed an appellate court amicus brief in the Santa Clara case.

During the plague of private lawyer shakedown lawsuits leading up to Proposition 64, district attorneys called attention to the important distinction between public and private enforcement of civil laws. This distinction, the Los Angeles district attorney's office pointed out in a brief in one of the auto repair shop B&P Code Section 17200 extortion cases, "is especially important in that the systemic checks and balances - including special ethical norms and the democratic electoral process - applicable to public enforcement officials do not apply to 'private attorneys general' litigating representative causes of action."

Mosk died in 2001 at the age of 88, on the very day he was planning to submit his retirement resignation to the governor. In a tribute to him before Congress, it was observed that "while his life has ended, his legacy shines brightly for all Californians and for our great Nation." The Santa Clara ruling has dimmed his legacy. The Supreme Court should restore it.

John H. Sullivan is president of the Civil Justice Association of California in Sacramento, a nonprofit association representing businesses, professionals, and local governments. Information on the association and civil justice issues is at www.cjac.org.

 

 


Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.