August 11, 2006

Commentary:

SB 1489 Provides Blank Check to AG

By Andy Kotner

Frivolous lawsuits already cost Californians millions of dollars each year. You’d think that would compel our legislators to reform our legal system. Instead, some California legislators want to write a blank check to the Attorney General (AG) and open the door for even more lawsuit abuse.

Senate Bill 1489 (Ducheny) is just more special interest politics at play that ultimately benefits plaintiffs’ lawyers and leaves consumers and taxpayers to pay the price.

SB 1489 would require defendants to pay attorneys’ fees, investigation costs, witness costs and court costs any time the Attorney General’s office “prevails” in a lawsuit in a wide range of litigation areas. The bill, which applies retroactively to 2003, does not define “prevail,” however. SB 1489 also contains a dangerous provision that allows the Attorney General to partner with private attorneys who would get the same “prevail” privilege as the AG. It amounts to a one-way loser pays provision that’s simply half baked.

Unfortunately, California has a flawed system with little-to-no oversight when it comes to AG’s and the private plaintiffs’ firms they hire. AG’s are thus free to award lucrative contingency fee contracts to the firms that are their political donors and they often do just that. Now some legislators want to hand them a blank check that the people of California will have to pay, without providing any corresponding benefit.

SB 1489 also highlights a bigger issue that plagues our legal system – Attorneys General contracting with plaintiffs’ lawyers behind closed doors. When the government hires private attorneys to represent the people on a contingency basis it creates a dangerous incentive for them to distort legal principles in order to ensure greater profit from damages attained.

When our legislators evaluate policy decisions, they are required to consider the impact of the policy on the state’s economic health and are accountable to the people they represent. In contrast, when private lawyers join with activist AG’s to take on corporate policy reform, they are not accountable to anyone and the only factor taken into consideration is the size of the settlement. Why would legislators allow this conflict of interests to continue?

SB 1489 overlooks that problem and creates further incentive for these backroom deals to continue and for plaintiffs’ attorneys to shake down businesses to make themselves rich at the expense of hard-working Californians.

Other states have recognized this problem and passed reform legislation like the Private Attorney Retention Sunshine Act (PARSA). It addresses the problems caused by the closed-door negotiation of contingency fee contracts between plaintiffs’ lawyers and government officials. PARSA requires that there must be an open and competitive bidding process when state governments enter into contracts with private attorneys. It also calls for legislative oversight of contracts likely to result in more than $1 million in attorneys’ fees and expenditures.

Instead of opting for this type of common sense reform, many California legislators are in favor of SB 1489, thereby writing the AG a blank check to give to the plaintiffs’ lawyers of their choice. Our legislators need to remember whom they were elected to serve – the people of California, not plaintiffs’ lawyers.

“Andy” Kotner is President of San Diego County Citizens Against Lawsuit Abuse (CALA), a nonprofit, public education organization. Write to her at sdcala@sbcglobal.net.

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