Louisiana Attorney General Buddy Caldwell is using illegal, contingency-fee contracts to hire his top supporters to represent the state in its biggest tort cases, lawsuit watchdogs allege.
And even when Caldwell hires outside lawyers on an hourly basis, there are questions about whether the state is getting its money’s worth.
Louisiana Lawsuit Abuse Watch and the national American Tort Reform Association are calling out Caldwell for giving hourly contracts worth upwards of $27 million to some of his top campaign contributors.
“The attorney general is contracting out much of the state's legal business to a small group of politically connected trial lawyers,” said Melissa Landry, executive director of Lawsuit Abuse Watch.
“Many of those individuals are campaign contributors.”
Allen Usry, Caldwell’s campaign chief, has 11 contracts to represent the attorney general’s office. Usry, his family and other attorneys at Usry, Weeks & Matthews combined to give Caldwell’s campaign more than $100,000.
Another contract recipient is Wade Shows, who served as Caldwell’s campaign treasurer.
The conservative blog site TheHayride.com used a public records request to gather all of the attorney general’s outside legal contracts, and Landry found that 13 firms that received much of the lucrative contract work had given a combined $277,000 to Caldwell’s campaigns.
When we confronted Caldwell with the numbers, the attorney general said: “OK. But that's 13 out of 700 or 800 lawyers” that he’s hired as outside counsel.
And when we asked him why he doesn’t open the contracting process to a public review process, as is done with most professional services for government agencies, he said he needs to have a special level of trust with the lawyers he brings in.
“I just gotta do things my way,” he said. “I'm from a small town and you gotta know people, and you know if you've had contact with them if they've got a certain skill set.”
That’s precisely the problem, says Tiger Joyce, president of the American Tort Reform Association.
“To say there are only a handful of people I know and trust, that's an unacceptable answer,” Joyce said. “And any reform would begin with the notion of public bidding for those services.”
The watchdogs are also questioning the legality of contracts of open-ended value that pay outside lawyers based on a negotiated fee or a percentage of whatever the state collects once the case is adjudicated or a settlement is reached.
These critics and constitutional scholars point to a 1997 state Supreme Court decision that found contingency-fee contracts unconstitutional if they pay lawyers from a portion of the state’s award without legislative approval.
“Rather than paying them a reasonable hourly fee based on their work, he’s promising them a large percentage of the state’s award,” Landry said after finding payments to contract attorneys that amount to 20 percent of the total settlement.
Caldwell says the critics have it all wrong. The contracts that pay attorneys only if they win the case are not contingency-fee contracts, he said, because the outside law firms get paid above and beyond anything the state recovers. The outside attorneys are left to negotiate their own fees with the defendants or the judge after the state gets paid, Caldwell said.
And Caldwell says that kind of contract saves the state a considerable amount of money and also gives it more leverage in litigation. He said the outside law firms take on all of the risk, all of the costs of depositions and discovery, so Louisiana isn’t cowed anymore by concerns over whether it can afford those upfront litigation costs.
“That’s why they’ve been ripping us off,” Caldwell said of big drug companies that the state is now pursuing in court. “… because the state couldn’t afford the cost for the litigation. And that’s what I’ve given them. I brought this to the attention, I got the outside firms to spend the money, take all the hit for the costs. So if they lose, they gotta pay all the costs and the state is out nothing.”
He says he’s found a way to “work around” the 1997 Supreme Court decision. He said that on major Medicaid fraud cases, he can use a state law called the MAPIL Statute that explicitly directs violators to pay all court costs and attorneys’ fees.
But Dane Ciolino, a constitutional law professor at Loyola University, says regardless of the MAPIL Statute, it violates the state Ethics Code to have private defendants paying lawyers for their public work.
“They’re trying to make it work despite the significant limitations imposed by the Ethics Laws and by the Louisiana Constitution,” Ciolino said.
Caldwell’s position that these are not “contingency fee” contracts appears to be contradicted by the state’s own Office of Contractual Review, which specifically noted on the approval of one deal that it was a “conting fee."
Hourly rates questioned too
After the 2010 BP oil spill, Caldwell wasn’t shy about asking the Legislature to give him the power to hire outside attorneys on a contingency-fee basis. Only Louisiana and Wisconsin explicitly forbid the practice without legislative approval. But the Louisiana Legislature twice voted against allowing Caldwell to hire outside counsel on contingency.
So, in the case of the BP trial and others, Caldwell was forced to hire outside attorneys on an hourly basis. And here is where he’s come under fire again. He’s paid about $15 million so far to a team of lawyers to represent the state’s claims against BP, and the bulk of those claims haven’t even been heard yet.
Caldwell argues the state is lucky to have the lead attorney on the case, Allan Kanner of New Orleans, at a rate of $600 an hour, because he is a leading light in the field of environmental law and has the expertise to go up against BP defense lawyers making about $1,200 an hour.
“I am really lucky,” Caldwell said. “Allan Kanner is one of the best, if not the very best oil and gas, environmental attorney on the North American continent, and he is respected as such. And when you can get someone like that for $600 an hour, Jesus. We're doing really, really good to have him available.”
But Kanner has found himself crosswise with the federal judge presiding over the BP case.
U.S. District Judge Carl Barbier has battled with Caldwell’s office over how the Gulf states should be represented at trial. Louisiana wanted a separate trial for government claims, but Barbier combined government and private claims and directed the states to pay 4 percent of their awards to the team of private attorneys driving the litigation.
Caldwell fought to exempt Louisiana from the order and kept Kanner’s team in place. At one point, Barbier wrote that Louisiana “has obstructed and frustrated the legal process.” Caldwell said that was “legal speak” from Barbier and he doesn’t pay attention to it.
Instead, Caldwell says his decision to pay hourly rates to outside lawyers rather than paying the private plaintiffs steering committee 4 percent of Louisiana’s take will bring tens of millions more into state coffers. One analysis showed that rather than the $25 million Caldwell’s office has spent to date on litigation, the 4-percent bill would already exceed $100 million, even though the bulk of the state’s share of fines and penalties still hasn’t been determined.
Sleeping on the clock?
The contentiousness seemed to ramp up with the start of the trial this spring, when Caldwell made his only courtroom appearance and questioned why BP's financial partner in the blown out well, Anadarko, had not been mentioned. Barbier interrupted Caldwell mid-sentence to tell him that Anadarko had been dismissed from the case.
And the bitterness came to a head last month when Barbier interrupted testimony to accuse Kanner of falling asleep at the plaintiffs’ table.
“Wait one second. Would somebody tap Mr. Kanner and wake him up? Mr. Kanner, are you awake?” Barbier said.
“Yes, your honor,” Kanner responded.
“Did you get enough sleep last night?” Barbier continued. “If you need to get up and walk out and get some air, you can do it, but we need to keep you awake, OK?”
We asked Caldwell what he thought of Kanner allegedly sleeping on the job, and the attorney general said he “should be sleeping” because the state shouldn’t have had to participate in that part of the trial anyway.
Then, he took another swipe at the judge.
“I'm not concerned at all because (Kanner) couldn't have been sleeping more than 30 seconds and the judge is sleeping part of that time, too,” Caldwell said defiantly.
The plaintiffs steering committee came to Judge Barbier's defense Tuesday.
"It is evident to any objective observer that Judge Barbier has shepherded this litigation forward with the utmost integrity and competence," said co-lead plaintiffs' attorneys Steve Herman and Jim Roy. "Any statement to the contrary is simply not true.
"For nearly three years -– and throughout every minute of this spring’s trial -- we, along with dozens of other lawyers involved in this case, have observed first-hand Judge Barbier’s exemplary diligence, thoroughness and engagement."