Tuesday, May 22, 2007

Bush Bars Federal Government from Using Lawyers on Contingency-Fee Basis

Article on May 17 in the Wall Street Journal -- U.S. Policy on Attorneys Fees Sparks Debate at State Level, by Amir Efrati.  Here's an excerpt:

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."

President Bush has long had an informal policy against contingency-fee arrangements with outside lawyers, said Jeff Rosen, general counsel of the White House's Office of Management and Budget. Now, that policy is "being institutionalized," he said.

The practice is part of a wider issue about civil litigation in the U.S. So-called tort reformers say the system is getting overwhelmed and imposes too many costs on society. Plaintiffs' lawyers argue that lawsuits are often the only way to give ordinary citizens a chance to protect their rights.

The Wall Street Journal Law Blog had a related post, Bush Bars Gov’t From Using Contingency-Fee Lawyers, by Peter Lattman.  Thanks to Richard Nagareda for pointing us to the WSJ Law Blog post.

Howard Erichson previously posted on this blog about the issues surrounding the government's use of outside counsel reimbursed by contingency fees.  And the Drug and Device Law Blog has a helpful post with many links to various other comments on Bush's executive order barring government use of contingency-fee lawyers.

If a particular law is written giving the government discretion in the prosecution of an action, then handing over control to outside counsel compensated by contingency fee is problematic.  Yet interestingly, we tolerate those problems in the regular tort suit where the plaintiff has discretion over settlement of the suit, and one would think that sophisticated government lawyers as "clients" would be better able to restrain outside counsel than unsophisticated tort claimants.  Indeed, corporate counsel sometimes retain outside law firms to represent the corporation on a contingency fee basis -- if we trust corporate counsel to supervise, can't we trust government lawyers to do the same?

My broader concern is that the government is being deprived of an efficient method of bringing talented lawyers to bear to further government representation.  The irony here is strong -- the Bush administration and Republicans generally are big fans of privatization of services because it brings best quality for lowest cost; but when the service at issue is lawsuit representation against corporate defendants, then it's a different matter.  I would keep to a more consistent line, and embrace the benefit of private markets across the board -- with all the disclosures and ethical rules necessary to prevent corruption in the award of government contracts.



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