Bill looking to limit contingency fee contracts awarded by attorney general to $10M clears House committee

02/15/2017 05:11 PM

FRANKFORT — A bill that would cap at $10 million the amount of money that can be paid to lawyers awarded contingency fee contracts by the attorney general’s office cleared the House Judiciary Committee on a party-line vote Wednesday.

The panel advanced House Bill 281, sponsored by Rep. Jason Nemes, on an 11-6 vote, with Democrats on the panel voting “no.”

The legislation would only limit contingency fees, which are awarded when cases are won, and not court expenses, fines and penalties. It would also prohibit law firms already involved in litigation against defendants from taking contingency fee contracts.

Attorneys would be entitled to 20 percent of the first $10 million recovered in civil cases. That share would drop to 15 percent from between $10 million and $15 million, then 10 percent from between $15 million and $20 million, then 5 percent once the recovery amount hits $20 million.

For Nemes, HB 281 is about increasing the amount of litigation dollars that flow back to the state.

“I think it enables Attorney General (Andy) Beshear to attract appropriate attorneys to handle the case while also ensuring that in these cases that the lion’s share of the money, the appropriate amount of money comes back to the commonwealth or to citizens of the commonwealth who’ve been harmed and need to be made whole,” said Nemes, R-Louisville.

But Beshear, who testified against the bill, said his office would have a limited pool of attorneys to choose from when taking up lengthy, large-scale civil cases if HB 281 became law.

The state could also be on the hook for higher court costs that would typically be handled by outside counsel, he said, citing $448,054 in costs for the Purdue Pharma case as one example. That litigation resulted in a $24 million settlement.

“The costs not only includes experts, but they include documents,” Beshear said.

“We have a case right now where the other side just handed over 38 million documents. Folks, we don’t have a budget in the AG’s office for the IT necessary to handle that, much less to scan, code, review it and prepare, and those lawyers on the other side that’ve dealt with these cases for a dozen years, they know every one. They know where those needles are hidden.”

Former Florida Attorney General Bill McCollum, speaking for the U.S. Chamber of Commerce, said Beshear’s concerns are unfounded and that the attorney general will have little trouble finding attorneys who will work for up to $10 million dollars.

McCollum helped craft a similar measure implemented in Florida during his time at attorney general there.

“Ten million’s a lot of money, and they get their costs back on top of that, if that’s the case,” he said. “… Based on seeing it around the country in the states that have enacted this exact same type of provision, these that are in here on the fees and the fee tiers and the fee caps, very, very fine attorneys and law firms, the big ones that he’s talking about, still want to do the business.”

The bill passed down party lines, but some Republicans expressed some misgivings about the measure and said they hope to see some changes before a floor vote.

Nemes said he is open to that, such as removing a provision that would make attorneys’ expenses and other information open for public scrutiny during litigation. Lawmakers said that could give the opposing side an insight into the state’s legal strategy.

HB 281 would also require that all contingency-fee contracts be posted online by the Finance and Administration Cabinet, something Beshear said his office already does through the state’s Open Door portal.

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