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Chart: City Contingency Deals – Working for a Cut After Wasserman, Comden, Casselman & Pearson won a $29 million jury verdict against a Southern California contractor in 2001, San Francisco came knocking. The Northern California city was thinking about filing its own suit against Tutor-Saliba Corp. and wanted to tap into the Los Angeles firm’s experience, said partner David Casselman. Four months after the jury’s decision, his firm signed a contract with then-City Attorney Louise Renne for up to $100,000 to consult for the city. But when it came time for current City Attorney Dennis Herrera to hire co-counsel for the city’s fraud suit — easily one of his office’s most high-profile plaintiff cases — he turned to San Francisco’s Farella Braun & Martel, agreeing to a contingency deal that would give the firm 20-30 percent of any settlement or judgment. Unlike the city’s other contingency agreements signed in the last four fiscal years, Farella Braun’s deal also calls for hourly fees, capped at $2.6 million. Herrera’s office talked to Wasserman, Comden and “a number of others” before choosing Farella Braun as co-counsel for the federal suit San Francisco filed in 2002, he said. “Farella offered us the best combination,” he added, pointing to factors such as cost, expertise and location. “Structuring it the way we did,” he added, “allowed us to attract a top-notch firm to prosecute the case.” Though Farella Braun hadn’t gone after Tutor-Saliba before, it did have expertise in construction litigation as well as the federal Racketeer Influenced and Corrupt Organizations Act and the state False Claims Act, which both come into play in the city’s allegations, said Farella partner Steven Lowenthal, the firm’s point person during contract negotiations. “It was that combination that I think put us on the radar screen for this case.” Plaintiff lawyers who sign on to represent the city have to consider more than the potential recovery for one case. To avoid conflicts, the lawyers representing San Francisco are precluded from taking on clients who are suing the city. That includes agencies like the Municipal Railway, which attracts a lot of personal injury suits, said Stephen Tigerman, whose former firm was among those helping the city sue the makers of lead paint. “When a firm makes a decision to become involved in a case like that, they have to weigh that,” said Tigerman, a liquidating partner for Wartnick, Chaber, Harowitz & Tigerman, which pulled out of the lead paint case after the firm decided to shut its doors in 2001. “For a period of time, we did have to turn away potential clients who had claims against the city.” Several firms apparently decided the trade-off was worth it, signing eight contingency agreements from July 1, 2000, through June 30, 2004. Phillips & Cohen and Irell & Manella agreed to the lowest percentage, 5 percent, for a false claims case in which the city was an intervenor. The firms already represented the whistle-blower in the qui tam action. The highest percentage, 33-40 percent, came in Moscone, Emblidge & Quadra’s contract for a false claims case against one of the city’s expert witnesses. San Francisco didn’t end up pursuing the case very far, never filing suit, partner James Quadra said. But his firm is still working on price-fixing litigation under another contract. Lowenthal, who says Farella is discounting its fees by about half for the hourly portion of the Tutor-Saliba contract, calls the hybrid approach “a way of sharing the risk.” With combined hourly-contingency deals, both parties to the contract are acknowledging they’ve got a long, expensive road ahead of them, said Geoffrey Wells, a partner at Greene, Broillet, Panish & Wheeler in Santa Monica, which has no city of San Francisco contracts. If a case is expected to wend through the courts for eight or 10 years, “that’s a difficult amount of money for a lot of firms to finance nowadays.”

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