The Supreme Court of California Rules on Santa Clara Contingency Fee Issue - Backpedals on Clancy

IMAGINE that a City Attorney comes before the court and makes the following argument: Your Honor, we face a crisis. We believe certain substances present in the homes and public buildings of our fair City must be removed. Not only can we not afford to pay for that removal, we cannot afford to litigate the public nuisance action that we think must be brought to protect our city. Were we to undertake such litigation on our own, the limited resources of our office would quickly be overwhelmed by the law firm firepower that the defendants would bring to bear. The only way we can address this problem in a fiscally responsible way is if we get help by hiring outside counsel who will level the playing field and enable us to serve the people by pursuing a public nuisance action. And the only way we can afford the skilled outside counsel that this lawsuit demands is to hire counsel on a contingent fee basis, so that our cash-strapped City does not have to incur the enormous out-of-pocket expense of hourly attorney fees, and our contingent fee counsel can instead be compensated out of the monetary recovery in the public nuisance action. Now, I understand your concerns about hiring contingent fee counsel and I want to assure you that I will be in control of the entire litigation, fully supervising every aspect of contingent fee counsel' s involvement. Contingent fee counsel are hired only to assist me. I'm in charge here. We need to solve a problem that urgently impacts the welfare of our citizens. But in these tough economic times, we just need a little help. Thank you. Superficially, this may sound like a reasonable approach to solving a major problem. But on closer examination, the proposed cure--outsourcing the prosecution of public law enforcement claims to private counsel under a contingent fee agreement--is worse than the disease. The practice of government entities hiring private contingent fee counsel to prosecute sovereign, public law enforcement actions undermines impartial law enforcement by entrusting these actions to lawyers with a financial interest in the Nonetheless, in County of Santa Clara v. Superior Court, (1) the Supreme Court of California issued a ruling that will skew the filing and handling of civil lawsuits by contingent fee counsel acting on behalf of government entity plaintiffs seeking redress for everything from obesity to climate change. As a result, instead of determining whether and how to pursue litigation based on the overall public interest, government plaintiffs will be guided by the advice of private outside counsel who have a personal stake in obtaining the largest amount of money. Contingent fee arrangements, when used appropriately, are recognized as an important tool of American justice, facilitat[ing] access to the judicial system for individuals who lack the means to pre-pay legal expenses. (2) Nonetheless, contingent fee agreements continue to generate skepticism. As one commentator noted: One of the most serious dangers is that contingent fees tend to erode an attorney's judgment.... When the lawyer in effect invests in a cause of action by taking his fee as a percentage of the recovery, it is easy for him to lose his detachment from the client's interests. He often becomes more of a businessman concerned with his own financial well-being than a proper advisor to the client.... [T]he contingent fee is now viewed as giving a lawyer an interest in the actual accident, disaster, or transaction that precipitated the lawsuit and a stake in its outcome. This ... undermines public faith in the judicial system by seeming to encourage the filing of lawsuits that lack merit. (3) Recently, however, states and other governmental entities have either sought or been persuaded to retain private contingency counsel to pursue public nuisance claims. …