Part two in a two-part series regarding Rhode Island’s groundbreaking lead paint case.
The contingent fee arrangement that outgoing Rhode Island Attorney General Sheldon Whitehouse struck with two private law firms in its landmark lawsuit against former lead paint manufacturers has an “unseemly” history in England, according to Bruce Cogan, interim dean and professor of law at Roger Williams Law School.
But the ethically murky contingent fee arrangement has nevertheless been used to do a lot of good for poor and dis-empowered people in America, said Cogan.
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Two weeks ago Superior Court Judge Michael A. Silverstein declared a mistrial in the lead paint lawsuit, after the jury could not reach a unanimous decision on whether lead paint constitutes a public nuisance in Rhode Island. Jurors listened to seven weeks of testimony before deadlocking during deliberations.
Two law firms, Providence-based Decof & Decof and Ness Motley, based in South Carolina, are representing Rhode Island on a contingent fee basis – meaning they will only collect payment if the state collects money from the lead paint companies through a trial victory of financial settlement.
The firms, which agreed to work for half of the standard contingent fee, would collect just under 17 percent of any settlement received by the state.
“Historically, in England – and our American system grows out of the English legal system – the idea of participating in your client’s monetary receivings was frowned upon. This was the concept of barristery, where the lawyer was trying to drum up litigation and financing it for their clients. It was regarded as unseemly,” said Cogan.
The contingent fee arrangement evolved in the United States in the mid-20th century, largely to level the playing field for individual citizens with limited resources fighting large institutions or corporate defendants, said Cogan. Prior to World War II, most individuals who were harmed by large institutions or businesses didn’t get anything, said Cogan.
Since then, professional rules of conduct in America’s legal system have come to see contingent fees as legitimate, he said.
“There has always been something called ‘qui tem claims,’ where private citizens can bring claims on behalf of government, when it’s in the government’s interest to deputize individuals to pursue cases where they don’t pursue – procurement fraud in government defense contracts – things like that,” said Cogan. “We have been willing to accept in this country for a long time in our tort system. And it has achieved a just set of outcomes.”
Contingent fee payment arrangements between states and the private law firms have caused investigations in other states and national outcry from critics. Critics decry contracts for billions of dollars entered into between attorney generals and private personal injury lawyers with little or no competitive bidding and no public scrutiny.
The precedent for the agreement was the agreement negotiated by Whitehouse with Decof & Decof, then known as Decof & Grimm, to represent Rhode Island against the state’s banking institutions in 1996 and 1997.
“We brought litigation on behalf of the state against a variety of malefactors, and they agreed to take that case for sixteen and two thirds percent. When we decided to go forward with the case against lead paint manufacturers, I let the law firms know that I wanted that to be the precedent,” said Whitehouse.
Whitehouse put Rhode Island out front nationally when he filed the first state lawsuit against lead-paint manufacturers. The lawsuit in Rhode Island Superior Court alleged that the defendants marketed and sold lead-based paint with the full knowledge that it was toxic.
The 10-count lawsuit seeks damages to “get the lead out of Rhode Island’s children, homes and buildings, by paying to treat children with lead poisoning, meet the education needs of affected children, and abate lead paint from buildings and homes.” Lead paint stopped being used in homes in the mid-1950s and was banned by the federal government in 1978.
The defendants are American Cyanimid Co., Atlantic Richfield Co., E.I. duPont deNemours & Co., NL Industries, The O’Brien Corp., Millennium Inorganic Chemicals Inc., ConAgra Grocery Products Co. and The Sherwin Williams Co.
In some Providence neighborhoods, 40 percent of the toddlers last year were poisoned, according to an analysis of state data by the Providence Plan, a nonprofit group working to revitalize the city.
“This case involves a public health crisis of inordinate magnitude in Rhode Island. In order to ensure that the state adequately recovered funds and that those funds didn’t get diverted to legal fees, we agreed to take one-half the standard contingency. Six or seven lawyers representing the state, versus more than 50 attorneys who showed up in court to represent the lead paint manufacturers, each being paid hourly,” said Fidelma Fitzpatrick, an attorney at Ness Motley who worked specifically on the lead paint issue, said that the potential winnings for the law firm was tempered by the fact that the firm was taking all the risk.
An interesting comparison can be found in Linn F. Freedman, deputy chief of the attorney general’s civil division, who argued most of the pretrial motions for the state.
Compared to the money that her colleagues at the private law firms could collect, Freedman, is doing essentially the same work for pennies.
“One of the absolute key lawyers in this case in Linn Freedman, deputy chief of civil division, and she has been involved from day one and getting paid nothing but state employee’s salary. She’s been absolutely vital,” said Whitehouse.
