Report: State Contracts Boost Dem-Linked Lawyers, Not Consumers

Susan Crabtree, RealClearPolitics

Last year, McKinsey & Company, the global management consulting firm, agreed to pay nearly $600 million to settle complaints brought by 49 state attorneys general for its alleged role in exacerbating the opioid crisis. McKinsey was accused of helping to “turbo-charge” opioid sales by advising drug manufacturers to focus marketing efforts on doctors already writing the most prescriptions of the addictive painkillers.

More than 500 thousand people have died of opioid overdoses between 1999 and 2019. Some consumer advocates expect that some money from the settlement will trickle to loved ones who were affected by this crisis.

The first to receive the cash was however a group of attorneys. With $15 million allocated to the non-profit National Association of Attorneys General, the remainder of the cash was primarily slated for state departments and general fund accounts.

This is what the lawsuits claimed would provide consumer protection. And it’s hardly an isolated case. Attorneys general – politicians who have to campaign for that role – and other state government entities often hire large private trial-lawyer firms to help prosecute their cases, entering into weak contracts that provide big fees for the firms but few guarantees that consumers will see any restitution from the legal action, according to a new report by the conservative Alliance for Consumers.

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The report also notes that, though Democrats tend to boast about standing up to big business and protecting consumers, it’s Democratic politicians who appear to benefit most from weak public contracts, as well as their natural political ties to trial lawyers.

The AFC study found that the top eight plaintiff-side trial firms — all of which boast numerous state and local government public contracts involving prominent litigation — generated $15 million in combined political donations from 2017 to 2020. These donations came from the companies directly or via their 1,300 lawyers or other staff members. 98% went to Democrats and groups that support their reelection. Those eight firms are Morgan & Morgan, Lieff Cabraser, Motley Rice, Baron & Budd, Grant & Eisenhofer, Berger Montague, Cohen Milstein, and Simmons Hanly Conroy.

The $15 million from these eight firms dwarfs federal donations generated by some of the biggest U.S.-based corporations, including BlackRock (the world’s largest asset manager), Nike and Twitter.

In one instance, Lieff cabraser was able to generate more than $30,000 per legal professional in federal donations from 2017 to 2020. More than $2.5million in total, with less than $30 going towards a Republican candidate.

“It’s a political money game where [these firms] are getting millions in state money through very problematic, under-protective contracts, then they’re turning around and being very aggressive with their political giving to Democrats,” said O.H. Skinner is the Executive Director of Alliance for Consumers. This organization works to ensure consumer protection efforts, class action lawsuits, and attorney general enforcement actions comply with the law. It benefits all consumers and not only politicians.

“Time and time again in these cases, it ends up with lawyers getting millions of dollars, part of which goes to help feed political donations to Democrats, and consumers get nothing. … Consumer protection is getting hijacked,” he said.

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Skinner worked previously on high-profile consumer cases under Arizona AttorneyGeneral Mark Brnovich. Skinner argues that taxpayer-funded agreements between the state government and these businesses often lack basic ethics protections that should have been part of all outside-counsel contract.

He said that too often the contracts only last a couple of pages and are glaringly ineffective. Sometimes, they appear to have been written by trial lawyers rather than officials. These contracts are often not subject to an expiration date. They also rarely guarantee that any contingency fees for lawyers won’t be paid out of funds set aside for victims’ restitution.

The contracts often do not require lawyers to offer the most favorable pricing terms to other government clients for the same matter. The contracts rarely contain language that provides adequate conflict protection, even though many trial lawyers represent different government entities in the same case.

“These types of weak, under-protective, giveaway contracts make some sense if the goal is to fund left-wing campaigns,” the report states. “… But they make no sense if your goal is to help consumers and protect taxpayers.”

Montana’s Attorney General Austin Knudsen was a Republican and fired Motley Rice (the law firm he had hired before him). The South Carolina-based firm bundled so much money for President Biden during the 2020 campaign that its founder, Joe Rice, is under consideration to be Biden’s pick for the plum post of ambassador to the Bahamas.

But it wasn’t just the firm’s political connections that Knudsen was concerned about. He argued that the terminated contract was so weak it had no scope limitations, no expiration date and covered all future suits over “manufacturing, distribution, marketing, and sale of opioids,” among other concerns. In contrast, Skinner points out, the conventional best practice is to tie a state’s outside-counsel contract to a particular defendant or ongoing case, and to have an expiration tied to a certain date (subject to renewal) or to the end of a particular piece of litigation.

These types of contingency contracts give outside counsel a claim to a percentage of the state’s winnings from litigation or settlement, and it’s crucial that the state protect itself by making clear what cases are covered, rather than handing out an “amorphous lottery ticket on the public’s bank account,” Skinner said.

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“The Motley Rice contract was basically the opposite of best practices in this respect,” he argued.

When it comes to political giving, the eight firms cited in the report directed more than $4 million (of the $15 million total they doled out) to the Biden presidential campaign and the Democratic National Committee, while $6 million  went to political party committees – accounts linked to House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer, as well as those with ties to the liberal American Bridge super PAC, which supports Democratic candidates.

Furthermore, Democratic candidates were able to receive more than $4,000,000 and support them with the Democratic Senatorial Campaign Committee. In addition, $2 million was given to Democratic candidates for House seats and to the Democratic Congressional Campaign Committee which aids in their election.

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