Contingency-fee contracts for opioid suits could be invalidated

By The Record | Aug 29, 2018

In response to revelations during our state’s tobacco litigation in the 1990s about the excessive contingency fees awarded and the political payoffs that accompanied them, and the subsequent conviction and imprisonment of former Texas Attorney General Dan Morales for illegally attempting to divert $500 million in fees to a friend, Texas legislators overhauled the rules applying to government agencies hiring outside lawyers.

The new rules require that contingency fee contracts be submitted to the Comptroller for “review and approval.” They also specify a maximum contingency fee of 35 percent, strict requirements for keeping billing records, and a prescribed method for calculating fees.

In a 2012 decision involving litigation by counties relating to the mortgage crisis, a federal court affirmed that requirements under Texas law “must be satisfied before a Texas county can retain outside counsel on a contingency fee basis.”

That same year, a state court judge voided a contract between Harris County and its contingency-fee lawyers that had not secured the required approval.

Six years later, some of our county officials – and the lawyers courting them for contracts – still haven’t learned that lesson.

Having succumbed to the blandishments of plaintiffs attorneys peddling opioid lawsuits, public officials in some Texas counties have signed eagerly, and perhaps too hastily, on the dotted line of contingency-fee contracts, in the process neglecting to get the Comptroller’s approval.

Contracts that the law firms of Haley & Olson and Harrison Davis Steakley Morrison Jones signed with Montgomery County and more than a dozen other Texas counties were never submitted to the Comptroller for review and could ultimately be invalidated.

Montgomery County Assistant District Attorney John J. McKinney’s reply to a recent request for required billing records was that “no documents exist that are responsive.”

Without “responsive” documents, neither county officials nor the taxpayers they work for can determine if time and expenses are being calculated properly. Nor can they ensure that counties sharing representation by the same counsel are not each being billed in full for work done for them collectively.

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