If there was any question Harris County needs contingent-fee attorney help in litigating a complex environmental case, it was answered by looking across the counsel table at the corporate defendants and their lawyers who opposed the government's fee contract, Vince Ryan says.
The Harris County Attorney says he sat with two of his assistants while a private lawyer the county had retained argued why the county's contingent-fee contract met statutory and constitutional muster during oral argument before Houston's 1st Court of Appeals in November. Meanwhile, the defendants in the case appeared with a dozen big-firm lawyers in the courtroom to oppose them, Ryan says.
"There's no question that the defendants in this case, compared to our office, have virtually unlimited resources," Ryan says, noting that while his office is full of capable attorneys, but environmental enforcement actions are a specialty area that demand outside help.
"Just to contrast who was on our side and who was on the other side; it shows the private industry can afford a lot of" lawyers, Ryan says.
The mass of attorneys had converged on the appeals court to do battle in International Paper Co. et. al v. Harris County, et al. In that case International Paper Co. and Waste Management Inc. allege that Harris County's use of contingent fee attorneys to sue them in an environmental clean-up case violates the U.S. Constitution.
Specifically, the defendants argued that the county's "delegation of enforcement power to private, contingent-fee attorneys violates Defendants' right to a fair and neutral prosecution under the Due Process Clause of the Fourteenth Amendment of the U.S. Constitution" in their briefs.
But on July 25 in one of the most comprehensive Texas decisions on the issue in years, the 1st Court rejected the defendants' argument, blessed the contingent-fee contract and dismissed the appeal.
The background to International Paper, according to the decision,is as follows.
The Harris County Commissioner's Court authorized Ryan to file an environmental action against Waste Management and International Paper to clean up paper mill waste along the San Jacinto River east of Houston. In authorizing the lawsuit to seek civil penalties against the companies, the commissioner's court authorized Ryan to retain Houston's Connelly • Baker • Wotring [referred to in the opinion as CMB] as "special counsel" for the suit on a contingent-fee basis.
The fee contract, among other things, provided that:
• The county had a substantial need for legal services which cannot be adequately performed by government attorneys, nor could those services be reasonably obtained by paying hourly fees.
• In the event of a judgment against the defendants, CBW would be paid "a fee consisting exclusively of all that attorney's fees awarded and 25% of each additional dollar in excess of the award of the attorney's fees awarded to the county and collected by [CBW]."
• In the event of a settlement with the defendants, the county would pay "35% of any settlement to [CBW] if [the settlement] does not contain a separate allocation of the award of attorney's fees; or in the event the settlement provides for a separate allocation for the recovery or attorney's fees, [CBW] shall recover attorney's fees plus 25% of each additional dollar awarded to the county."
The defendants moved to temporarily and permanently enjoin the lawsuit's prosecution by contingent-fee lawyers. The trial court denied the defendant's injunction, finding that the county attorney had the authority to proceed with the lawsuit, but that the fee contract was void because it did not comply with the Texas Water Code and the Texas Government Code, which requires authorization from the Texas comptroller.
While the defendants appealed the ruling to the 1st Court, the county amended the contract after obtaining comptroller approval, among other things, while the appeal was pending.
After finding the complaint about the original fee contract moot, the 1st Court focused on the county's need for contingent fee lawyers versus the defendants' due process arguments to reach their conclusion.
"The use of contingent-fee lawyers may allow a governmental entity to pursue complex, non-frivolous litigation that it could not otherwise afford. Indeed, the Commissioners Court explicitly stated the 'substantial need for services which cannot be adequately performed by the attorneys of a governmental entity, nor can be reasonably obtained under a contract providing only for the payment of hourly fees,' " wrote Justice Harvey Brown in a decision joined by Justices Evelyn Keyes and Michael Massengale.
"While the Defendants complain that 'profit-motivated' attorneys have 'all the wrong incentives,' a profit-motivation should encourage attorneys to pursue the litigation efficiently and to conclude a case quickly if it is not meritorious — at least to the same extent as attorneys paid on an hourly basis," Brown wrote.
"Defendants are correct that the lawyers will be incentivized 'to pursue maximum penalties,' but that is true for many advocates who take a case to the jury. At best, the balance of equities does not weigh in favor of finding that the trial court erred in denying temporary injunctive relief."
"Moreover, Defendants' only complaint regarding CBW is that the firm will be paid on a contingent-fee basis," Brown wrote. "We reject the contention that simply because a lawyer will be paid a contingent fee in a civil case means that lawyer will disregard any heightened standards to which a lawyer performing government functions is subject."
S. Shawn Stephens, a partner in Baker & Hostetler in Houston who represents International Paper in the 1st Court appeal, did not return a telephone message seeking comment. Glenn Ballard Jr., a partner in Bracewell & Giuliani in Houston who represents Waste Management, also did not return a call for comment.
Ryan says he's pleased with the decision. So are Debra Baker and Ernest Wotring, the CBW partners the county retained to represent them in the case.
"It's a pretty clear opinion from the 1st Court of Appeals that these types of contracts don't violate the constitution," says Wotring, who argued the case before the 1st Circuit. He adds that while he made the argument, his colleagues at the plaintiff's counsel table are really in charge of the case, including Ryan and his assistants Rock Owens and Terry O'Rourke.
"Look at the fact that the investigation is being run by the Harris County Attorney's Office. The Harris County Attorney's Office is the key signatory on the very first pleading. Under the Texas rules, they are the responsible attorney,'' Wotring says.
Wotring plans to try the case along with Baker.
The decision comes months after the end of the Texas Legislature's regular session, in which lawmakers proposed bills outlawing the government's use of contingent-fee lawyers in pursuing environmental enforcement actions. Those proposals did not pass. [See " Water Warriors: Contingent-Fee Contracts Challenged for Environmental-Enforcement Actions" Texas Lawyer, May 20, 2013, page 1.]
There's no good reason to limit the government's use of contingent fee lawyers, Baker says.
"Defendants use contingent fee contracts when it benefits them," Baker says. "I think the perception of the people should be that local government should be able to hire private counsel just like everyone else to make sure justice is done.''
Terry O'Rourke, an assistant Harris County Attorney who will also try the International Paper case says the decision is an important ruling for Texas jurisprudence when it comes to protecting the public from contamination.
"We could not bring a case of this magnitude without contingent-fee counsel," O'Rourke says. "And I believe contingent-fee counsel is the David the public can present to fight the mercenary Goliath."