Now that round one of Rhode Island’s landmark lawsuit against the lead paint industry has been declared a mistrial, the future of the heavily politicized lawsuit is up in the air.
That could mean that two law firms handpicked by Rhode Island Attorney General Sheldon Whitehouse to represent the state in the case could be out millions of dollars. The firms, which agreed to work on a controversial contingent fee basis, would collect just under 17 percent of any winnings by the state.
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Superior Court Judge Michael A. Silverstein declared a mistrial 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 – splitting four to two in favor of the companies that once made the lead paint.
If the jury had found in favor of the state, future trials involving separate juries would have been held to determine liability and possible damages owed to Rhode Island by the paint makers.
Whitehouse promised that the state would continue its legal fight against the former lead paint manufacturers, although he will be leaving office after his term ends in December.
He also filed a motion asking the Judge Silverstein for summary judgment. Attorney General-elect Patrick C. Lynch has said he plans to pursue the lawsuit.
When he sued the lead paint companies on behalf of the residents of Rhode Island in 1999, Whitehouse handpicked two private law firms to wage the legal war – including the key law firm that wrested a multibillion-dollar settlement from the nation’s tobacco companies in 1998.
The two firms, Decof & Decof and Ness Motley, agreed to work for half the usual contingent fee. According to the contingent fee payment arrangement, the law firms will only collect payment if the state collects money from the lead paint companies through a trial victory or financial settlement.
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 attorneys general and private personal injury lawyers with little or no competitive bidding and no public scrutiny.
In May 2001, Forbes Magazine published a story on the nation’s richest tort law firm, Charleston, S.C.-based Ness Motley and its branch office in Providence, reporting that Ness Motley had become Rhode Island’s largest political contributor in 2000, at $540,950 for that year’s national elections.
Ness Motley’s lead attorney in Rhode Island, Jack McConnell, was one of the lawyers who negotiated the $240-billion tobacco settlement.
Rhode Island’s primary lawyer in the case is Leonard Decof, widely considered the state’s leading personal injury lawyer, who a decade ago helped Rhode Island recover millions of dollars in damages from accounting firms, insurance companies and credit union officials after the collapse of the state’s credit unions.
Linn F. Freedman, 41, deputy chief of the attorney general’s civil division, was the third trial lawyer representing the state.
The defendants in the case 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 September, the paint companies tried to block the start of the trial by charging that the state’s reliance on legal teams working for contingency fees was unethical.
Judge Silverstein rejected the paint company argument, saying that that there weren’t any prohibitions in Rhode Island against such a relationship, despite opposite rulings by judges in other states.
In November 1998, the state attorneys general of 46 states signed an agreement with the tobacco industry, in which the tobacco companies agreed to a $246 billion settlement over 25 years.
Michael Horowitz of the Hudson Institute estimates that the tobacco settlement will provide $500 million per year to 200 to 300 lawyers. Big business advocates and watchdog groups say they are wary of a new trend of “legislation via litigation.”
“We have a problem with what we view as the entrepreneurial aspect of attorneys general using the office to affect public policy rather than simply enforcing and defending the laws of the state is really of concern to us,” said Mike Hotra, a spokesman for the American Tort Reform Association.
The potential for favoritism and even worse in the selection of law firms used is enormous, say critics. Many are advocating reform of the system. Such reforms could include capping fees paid to attorneys; compelling restitution to the states of any contingency fee settlements that are grossly excessive; and requiring legal contracts to be made through an open bid process and be subject to oversight by state legislatures.
That having been said, the money that the attorneys in Rhode Island’s lawsuit against the lead paint industry is actually half the standard contingent fee. Both Ness Motley and Decof and Decof agreed to work for half of the standard contingency fee, or 16 2/3 percent.
Whitehouse said it was a question of balancing the need to bring in lawyers who stood the best chance of winning the case against the desire to win as much money as possible for those who have suffered lead paint poisoning.
He said he needed to hire lawyers with expertise in such cases, who were also capable of handling “the blizzard of paper litigation that inevitably ensues when you take on a major company with major representation.
“The purpose of the exercise here is to provide as much relief as possible for the poisoned children of Rhode Island,” said Whitehouse. “Ness Motley is a firm with the resources to take on that kind of litigation. I don’t think there’s an attorney in Rhode Island with a better reputation in the local court system than Len Decof.”
Bruce Cogan, interim dean and professor of law at Roger Williams Law School, said he thinks the lawyers and Whitehouse are getting a bad rap.
“It seems to me that lawyers are an easy target for public criticism,” said Cogan. “Contingent fee relationships allow people wronged by rich institutions or corporations, level playing field to give a remedy, and our tort system said ‘it’s OK, otherwise there will be an injustice done. Otherwise, citizens would be unable to successfully get a re-compensation from parties that have done some very bad things. You have to ask, what’s the net good that’s coming out of this. It seems to me that there are very substantial amounts of good.”
Fidelma Fitzpatrick, an attorney at Ness Motley who said she has worked specifically with McConnell on the lead paint issue, said the potential winnings for the law firm were tempered by the fact that the firm was taking all the risk.
“There’s been a tremendous output of human resources and payment of expenses that will only be recovered if we succeed. It’s a huge risk. That doesn’t often figure into analysis of whether or not firms got paid too much or too little,” she said. “This wasn’t a political decision that was made. It has been very vogue in the media and in certain circles to criticize the plaintiff’s bar for taking these fees, but what’s not noticed is that, in agreeing to take such cases, we’ve agreed to outlay a significant amount of funds.”
No lawyers at the Rhode Island Bar Association would comment. Decof did not answer phone calls. Through their public relations agency, the defense declined to comment.
Part one of a two-part series.
