The Southeast Louisiana Flood Protection Authority East asked the state legislative auditor to review its contract with a team of outside attorneys.
The attorneys represent the board in a lawsuit, accusing 97 oil and gas companies of contributing to coastal erosion. Auditor Daryl Purpera concluded, there are "significant legal questions" about the board's power to hire attorneys to work on a contingent basis.
Loyola University Law Professor Dane Ciolino says courts will have to rule on whether the authority is a state or local board. "If it is a local board, it's going to be much more able to retain its own counsel on its own terms, than if it's a state board," said Ciolino. "If it's a state board, then are constitutional problems with retaining counsel on a contingent fee basis."
The fact that the Louisiana Attorney General plays a role in representing the SLFPA-E complicates matters. Purpera writes, "The Louisiana Supreme Court held that the AG could not utilize contingency fee contracts unless the AG was specifically authorized to do so by the Louisiana Legislature."
Outside attorney Gladstone Jones says AG Buddy Caldwell approved his hiring. In a letter dated July 16, 2013, Caldwell wrote, "...having reviewed the resolution you provided, we find that the employment of counsel and fee arrangements set forth therein conform to Louisiana law and are hereby approved."
"We feel very comfortable, given the attorney general's opinions and his statements that we have been properly hired," said Jones.
The auditor also had questions about a so called "poison pill" provision in the contract. It requires the authority to pay expenses and attorneys' fees if the suit is terminated by the board or state legislature. Jones says his legal team is entitled to be compensated. "We are taking on an enormous risk with very well funded oil companies opposing us and apparently a very angry governor," said Jones. "We have three law firms and nearly 20 lawyers working full time on this critically important case. We're approaching one million dollars that we've spent on this case so far, the three law firms and we fully expect that one million dollars will be five in pretty short order."
But, Ciolino says that's not the way discharged attorneys are supposed to be paid. "In Louisiana as in every other jurisdiction, clients should be free to discharge their lawyers at will, without any impairment what-so-ever," said Ciolino.
"This "poison pill" provision would cause any client to pause in making a discharge decision, based on the financial consequences of doing just that. In a typical case, a discharged lawyer would intervene in the matter and assert a lien on the recovery. The court would give the lawyer an award, based on the value of the services the lawyer provided through discharge, not a fixed percentage and certainly, not an hourly fee."
SLFPA-E Commissioner Joe Hassinger, a recent Governor Jindal appointee, sponsored the resolution seeking the legislative auditor's report. He released a statement saying, "It seems to me that there significant issues with the entire contracting process. On its face, the poison pill provision is deadly to Louisiana taxpayers.
Adding insult to injury, the Board was told at our last regular meeting that the poison pill provision was intended to be poison to the Legislature. Then, at our most recent special meeting - a meeting called for no substantive purpose, which in itself cost Louisiana taxpayers thousands of dollars - it was revealed that the Board's competitive selection policy was apparently not followed.
Well, we are a public body, spending taxpayer money. We don't do secret. A week ago or so, the Association of Levee Boards expressed its disagreement with the process employed by SLFPAE.
And now, the independent Legislative Auditor has concluded that there are "significant legal questions" about the contract that must be addressed. Bring in the cotton candy and the dancing tigers - this is a circus. I know that the Authority's Commissioners acted with good intention.
But sometimes even the most well-intentioned must take a breath, step back, and objectively re-evaluate whether the process utilized was a flawed one." "We're perfectly happy to go the distance as we are, unless we hear from the attorney general, we're all set," said Jones.
The legislative auditor now recommends that the board seek a judge's ruling on the questions surrounding the lawsuit.