Some county governments have found that when it comes to suing corporations over polluted property, hiring a private law firm on a contingency fee basis is the way to go.
But against the backdrop of a multi-billion dollar dioxin case in Harris County, there’s an effort to outlaw those arrangements in pollution lawsuits.
(UPDATE: A Texas Appeals Court on July 25 ruled in favor of Harris County, denying a temporary injunction sought by the companies Harris County was suing using contingency lawyers) The House Committee on Environmental Regulation has scheduled a hearing today on a bill that would ban counties from using private firms, HB 3119. (UPDATE: On April 16, the committee delayed consideration of the bill by “leaving it pending”)
The bill has the support of the Texas Conservative Coalition Research Institute that compiled a report on what it calls the “dubious practice of employing private lawyers on a contingency basis.”
“The arrangement creates a variety of perverse incentives. A county faces no risk in bringing a suit and the outside, contingency-based counsel has no incentive to settle the suit,” said Brent Connett, communications director for the group.
The group argues that instead, contingency fee deals encourage private firms to enrich themselves at the expense of adequately funding the cleanup of toxic sites.
Harris County, which was the focus of the conservative group’s report, says contingency fee arranagements are vital to its efforts to litigate pollution cases.
“We don’t have money to go out and hire lawyers. You’re talking about, at a minimum, hundreds of thousands of dollars that we would have to spend up front just to go to court. With the contingency fee, we don’t have to do that. We only pay if we win,” said Terrence O’Rourke, special assistant to the Office of the Harris County Attorney.
The issue is nothing new to the county. In a case before the Texas First Court of Appeals, attorneys for two corporations challenged Harris County’s right to hire contingency fee lawyers in a case involving a dioxin-contaminated site along the San Jacinto River. In the 1960s, waste from a paper mill was dumped into ponds. It’s now an EPA Superfund site. Signs in the area warn that fish are contaminated and should not be eaten.
Lawyers for the companies argued in court that the case could result in $2 billion to $3 billion in civil penalties with 25 percent going to the private lawyers, according to coverage of the hearing by Law360. The companies’ lawyers reportedly said that the contingency fee arrangement created a profit incentive that would be unfair to their side, denying them a neutral prosecution of the case.
The ‘Rogue Prosecutors’ of Harris County
The Office of the Harris County Attorney portrays the fee arrangements differently. The county argues that contingent fee contracts are reviewed and approved by the Texas Comptroller and are governed by state law that caps payments according to the amount of work performed.
And the county points out that the big corporations fighting the suits often use very experienced, highly-paid attorneys.
“They’re spending millions on their lawyers and Harris County can’t afford that. We’ve got contingent fee lawyers,” says O’Rourke, the county’s special assistant.
HB 3119 isn’t the first time lawmakers have tried to rein in Harris County. In 2003, a new law took effect (SB 1265) that now requires local environmental enforcers to first submit a potential criminal case to the Texas Commission on Environmental Quality (TCEQ). The commission is then supposed to review the case and determine if criminal prosecution is warranted.
The Harris County District Attorney’s office has characterized the law as a response to complaints by companies that the county was a “rogue prosecutor” of environmental crimes. Harris County officials have said they’ve had to make environmental enforcement a priority since the the county is home to an enormous petrochemical complex and, according to those local officials, the state’s regulators are far too hesitant to take aggressive action against polluters for fear of hurting the “business friendly” reputation of Texas.
The author of the latest bill to curb county enforcement, Rep. Cindy Burkett, a Republican from Garland, did not respond to requests for comment.