An investigation by The New York Times has ripped the lid off a multimillion-dollar collusion between state attorneys general, primarily Democrats, and private law firms that enriches the lawyers and state treasuries at the expense of private companies.
"The partnership is part of a flourishing industry that pairs plaintiffs’ lawyers with state attorneys general to sue companies, a collaboration that has set off a furious competition between trial lawyers and corporate lobbyists to influence these officials," the
Times writes.
Attorneys from law firms — which often donate generously to the campaign chests of attorneys general to buy influence — approach them after an election with a shopping list of proposed lawsuits to be filed against companies in their states.
The attorneys general then sue the companies, adding the legal weight of state government to the lawsuits, and hire the law firms as outside counsel which, when the suit is settled, typically take 20 percent of the award, with the remainder going to the state, the Times' report shows.
And it's all legal.
"This has gotten out of hand," Scott Harshbarger, former Democratic attorney general of Massachusetts, told the Times.
"It seriously threatens the perception of integrity and professionalism of the office, as it raises the question of whether attorneys are taking up these cases because they are important public matters, or they are being driven more by potential for private financial gain," Harshbarger said.
The gains can be huge. In just one state examined by the Times, Mississippi, Democratic Attorney General Jim Hood forked over $57.5 million to lawyers in two years, while receiving $395,000 in campaign contributions from law firms and providing $400 million to state coffers over the last decade.
For example, private law firms were hired in Mississippi to sue pharmaceutical firm Eli Lilly over the anti-psychotic drug Zyprexa. They won a settlement of $18.5 million and pocketed a $3.7 million fee, the
Northern Mississippi Daily Journal reported.
A senior partner at one of the law firms donated $125,000 to Hood's campaign funds, the Times reports.
In 13 states examined over a 10-year period by the Times,
law firms have donated $1.96 million to Democratic attorney general candidates and $240,000 to Republicans, $3.8 million to Democratic attorneys general associations and $1.57 million to Republican attorneys general associations, and $1.48 million to Democratic state party committees and $445,000 to Republican party committees.
It adds up to a minimum of $9.8 million over a decade with 76 percent of it going to Democrats, the Times said.
"Private lawyers whose traditional work has been filing class-action tort claims or securities fraud cases on behalf of individuals or groups are now often operating with the power of the state, substantially increasing their chance for success by bringing claims on behalf of 'the people,'" the Times states.
In another example, Nevada's attorney general hired Cohen Milstein in 2009 to sue the Bank of America, which netted a $38 million settlement for Nevada — and $5.6 million for Cohen Milstein, the Times reported.
Cohen Milstein attorney Linda Singer told the Times, "There is not a bit of shame about anything we do here."
However, Colorado's Republican Attorney General John Suthers told the Times, "Farming out the police powers of the state to a private firm with a profit incentive is a very, very bad thing."
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