State Supreme Court Rules Against Attorneys in $18M Fee Case

State Supreme Court Rules Against Attorneys in $18M Fee Case
Joe Denton and Justin Zachary, lawyers at Denton & Zachary of Little Rock (Karen E. Segrave)

The Arkansas Supreme Court ruled Thursday that two Little Rock attorneys aren’t entitled to an award of $18.16 million in attorneys’ fees in a case that challenged the illegal use of taxpayer money by the state Department of Transportation.

Attorneys Joe Denton and Justin Zachary of Denton & Zachary of Little Rock will receive no money for their fees or costs of about $6,900 for their work related to the successful challenge of state’s Department of Transportation's use of $121 million of Amendment 91 tax dollars for unqualifying projects in Little Rock, including the Interstate 30 Crossing.

Pulaski County Circuit Court Judge Chip Welch ruled in June 2021 that Denton and Zachary were entitled to a 15% contingency fee of the reimbursed amount.

The state of Arkansas and the Arkansas Department of Transportation appealed the ruling for attorneys’ fees.

The state Supreme Court found that circuit court abused its discretion in awarding attorneys’ fees and costs, Chief Justice Dan Kemp wrote.

Arkansas Attorney General Leslie Rutledge said in an email statement that, "The victory in the Arkansas Supreme Court protects $18.1 million of state funds from private attorneys seeking a financial windfall from the State."

Lorie Tudor, the director of the Arkansas Department of Transportation said in a statement to Arkansas Business that the agency and the Arkansas Highway Commission were grateful for the ruling, which she said was a victory for Arkansas taxpayers. 

"Our focus throughout has been to articulate the complexities of highway funding and to protect the taxpayers," she said. "The efforts of many have resulted in $18 million in highway funding remaining for its intended use in improving Arkansas’ roads and bridges." 

In a concurring opinion, Justice Shawn Womack wrote that illegal-exaction lawsuits are the cornerstone of accountability between the government and taxpayers.

“By representing taxpayers and ensuring that governmental entities act appropriately when spending taxpayer funds, the attorneys in these cases do a great service to our state and it seems only right that they be compensated for that service,” Womack wrote. “However, nothing in our state law currently authorizes attorney fees to be paid in an action such as the one before us.”

Womack asked the members of the General Assembly to look at the matter and determine if they believe attorneys should be authorized to be paid in these types of cases.

Attorneys Denton and Zachary said in a statement that they were disappointed in the high court’s ruling and fear it will “formally discourage other Arkansans from challenging the state where wrongdoing and other illegal actions are apparent.”

They said in their statement that the right of Arkansas taxpayers to challenge improper use of state tax dollars is in the state constitution.

“But the high court here has affirmed the government’s arguments practically eliminating a citizen’s constitutional right to challenge the state in cases such as this,” they wrote. “The implications of this decision are already having far-reaching implications for other challenges.”

Associate Justices Karen Baker, Courtney Hudson and Robin Wynne dissented.

Arkansas Assistant Attorney General Vincent France represented the state of Arkansas at the state Supreme Court, and the Little Rock law firm of Friday Eldredge & Clark LLP represented the Arkansas Department of Transportation.

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