Shine Light on Private Attorney Contracting (Tiger Joyce Commentary)

In a perfect world, politicians’ devotion to the public interest would always trump their self-interest. But we don’t live in a perfect world. Take, for example, the recent actions of two Arkansas state officials, Secretary of State Mark Martin and state Treasurer Martha Shoffner. Both Shoffner and Martin leveraged their positions as public officials for the benefit of others. Shoffner made a personal financial gain from her indiscretions, while Martin attempted to funnel taxpayer funds to an influential partisan appointee with a clear conflict of interest. Clearly, the citizens of Arkansas deserve better.

Just last month Gov. Mike Beebe condemned Martin’s behavior, and a circuit court judge ruled that Martin acted outside the law in retaining lawyers, ignoring an Arkansas statute that requires approval from the attorney general. One of those retained is an appointed member of the State Board of Election Commissioners, the body that works closely with Martin’s office to ensure fair elections in Arkansas. Gov. Beebe and the Arkansas Legislature would do well to enact legislation to put an end to this unseemly behavior that smacks of quid pro quo.

Since the statute was enacted, Secretary Martin is the only Arkansas Secretary of State to employ outside counsel, despite employing more-than-capable in-house staff lawyers. His willingness to forsake a fair and open bidding process when hiring outside counsel to prosecute lawsuits on behalf of the state is plainly inappropriate.

Similar “pay to play” arrangements have increasingly made news — bad news — in many states in recent years. While state governments hiring legal counsel from the private sector can serve a valid purpose in specific instances, uniform policies to govern such arrangements must be in place to ensure openness and transparency. Various governors, attorneys general and other ranking officials have offered lucrative contingency contracts with handshakes behind closed doors to their patrons from the plaintiffs’ bar. These lawyers, whose goal is to maximize the fees they receive, then turn around and offer generous campaign contributions to the officials who hired them.

Since the multibillion-dollar 1998 Tobacco Master Settlement Agreement was brokered largely by private-sector personal injury lawyers on behalf of 46 states, there has been a significant increase in the number of contingency-based lawsuits, with a good number of them being pushed by lawyers with close ties to state officials. These lawyers offer their services and are paid only if a case is won or settled. At first blush, this sounds like a good deal that increases revenue for state budgets without having to raise taxes or cut services.

Contingency cases and contracts can serve the public interest when used appropriately. However, today there are no safeguards in place to ensure such appropriateness, and personal injury lawyers are exploiting them to make millions. In essence, there is an incentive to sue, sue and sue again, betting that at least one case will eventually yield a jackpot. When one factors in the lack of oversight and vetting of the lawyers hired, along with the questionable merits of many of these cases, the result can be a flood of unnecessary litigation that can actually work against the public interest.

When a state develops a reputation for suing first and asking questions later, large and small businesses that might consider expanding or relocating their operations and jobs to that state are driven away and invest in other less litigious states. While the state may occasionally gain financially from contingency cases, its citizens can lose employment opportunities and suffer lower rates of economic growth.

Recognizing that too-cozy relationships with personal injury lawyers and their litigation-promoting shenanigans are bad for a state’s ability to stimulate growth and job creation, lawmakers in more than a dozen states have now enacted laws based on the basic principles of model legislation known as the Transparency in Private Attorney Contracting bill.

The model legislation acknowledges the occasional need for states to hire outside counsel when, for example, government staff attorneys may lack the specific expertise required by certain types of complex litigation. But it balances such needs with requirements for transparency and accountability. Contingency fees paid to outside counsel are reasonably limited and made public. Legislators are given oversight authority and state attorneys must maintain control over the litigation. These provisions are meant to ensure that lawsuits brought on behalf of the state are truly in the public interest and not simply in the private interests of certain politicians and powerful private-sector attorneys.

Without a healthy system of checks and balances, Arkansas residents and taxpayers cannot be sure they’re getting the best, most ethical bargain for their buck.

So rather than let the public’s trust in Arkansas officials erode further, state leaders should embrace the common-sense, good-government principles of transparency and accountability. Enacting appropriate reform legislation that governs the hiring of outside counsel will make clear to everyone that Arkansas promotes the public interest, and not the private interests of powerful officials and their friends.

Tiger Joyce is president of the American Tort Reform Association, based in Washington, D.C.