By Susan Crabtree for 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.
From 1999 to 2019, more than 500,000 people died from opioid overdoses. Consumer advocates might expect at least some of that settlement money to trickle down to families who suffered and lost loved ones in the still-ongoing crisis.
But the first recipient of the windfall was a group of lawyers. The settlement deal allocated $15 million to the nonprofit National Association of Attorneys General with the remaining cash mainly slated for state government departments and state general fund accounts.
So much for the consumer protection the lawsuits promised. 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. The donations were doled out by the firms either directly, or through their roughly 1,300 lawyers and other employees and staff, with 98% of those funds going to Democrats or groups supporting 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.
Lieff Cabraser, for instance, generated more than $30,000 per lawyer in federal giving from 2017 through 2020, more than $2.5 million in total with only $30 of that political largesse going to a Republican candidate or committee, the AFC found.
“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, the executive director of Alliance for Consumers, which works to ensure that consumer-protection efforts, class-action lawsuits and attorney general enforcement actions are consistent with the rule of law and benefit everyday consumers, not just class-action lawyers and 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, who previously worked on top consumer-oriented cases under Arizona Attorney General Mark Brnovich, argues the taxpayer-funded contracts between state governments and these firms often lack basic ethics protections that should be part of all outside-counsel contracts.
Too often, he said, the contracts are only a few pages long and glaringly weak, sometimes appearing to be written by the trial lawyers themselves rather than government officials. The contracts, which often have no expiration date, also almost never ensure that contingency fees for the lawyers will not be taken out of money set aside for restitution to victims, for instance.
They also usually fail to require that the lawyers provide the best pricing terms that the same firms offer to other governmental clients on the same matters. And the contracts almost never include language providing appropriate conflicts protection, even though trial lawyers often represent multiple government entities that may have very different interests 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.”
Last year, Montana Attorney General Austin Knudsen, a Republican, fired Motley Rice, the law firm hired by his Democratic predecessor. 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.
Additionally, more than $4 million flowed to Democratic candidates and the Democratic Senatorial Campaign Committee that supports them, while more than $2 million went to Democratic candidates for the House and the Democratic Congressional Campaign Committee that helps elect them.
Syndicated with permission from Real Clear Wire.
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