WASHINGTON (Map, News) - In their quest to open new income streams, liability lawyers have in recent years increasingly turned to state attorneys general to sanction lucrative suits, as well as for tax-funded but often unaccountable contracts for a variety of legal services.

Such arrangements sometimes involve the private attorneys being retained by the state official to bring enforcement suits on their behalf, with a contingency fee arrangement.

Critics point to several potential problems with these deals, most notably the potential for political influence peddling and corruption. Having a private attorney handle a suit on behalf of a state replaces the attorney general’s oath to defend the public interest with the contingency fee deal providing incentive for the largest possible settlement or verdict, regardless of the public interest.

Critics also point to the lack of transparency and accountability of such arrangements that results because contingency fee payments do not come from the state treasury but from the defendant. This fact usually places the fees and indeed all of the documentation regarding the suit beyond reach of laws that protect the public’s right to know.

The Associated Press uncovered a classic illustration of the flaws when it sought copies of the more than 1,700 noncompetitive contracts worth more than $100 million issued by then-California Attorney General Bill Lockyer to private law firms and lobbyists.

Bill Lockyer, former California attorney general

The news service found the contracts had been classified in 2003 by Lockyer as “confidential,” which kept them from public view.

Lockyer claimed the classification was an innocent mistake.

Ultimately, AP got 113 contracts, only 12 of which were later found by Lockyer’s successor to have been properly classified.

Eliot Spitzer, former New York attorney general

The Wall Street Journal’s John Fund points out that Lockyer had received nearly $2 million in contributions from liabilities lawyers during his two previous re-election efforts.

Among the “confidential” contracts exposed by AP were agreements with 11 law firms that received $60 million in attorneys fees from a $1.6 billion settlement with a utility company.

Four of the firms had collectively contributed more than $400,000 to Lockyer’s campaign.

Fund also points to other examples of attorneys general providing contracts to liability lawyers and firms that were also campaign donors:

» Then-New York Attorney General Eliot Spitzer claimed in 2004 he would not accept donations from companies with legal issues before his office. Law firms were exempted, though, because, according to an aide, “every law firm does work for the attorney general’s office.” Prominent among Spitzer’s 2004 donors were William Lerach and David Bershad, who recently pleaded guilty in federal court to participating in a long-running $11.8 million kickback scheme.

Patricia Madrid, New Mexico attorney general

» New Mexico Attorney General Patricia Madrid received more than a quarter of all her 2002 campaign donations from liabilities lawyers, some of whom received significant state contracts.

» Similar controversies have surrounded Oklahoma Attorney General Drew Edmundson and Missouri Attorney General Jay Nixon.

Surprisingly, only three states cap hourly fees for private attorneys doing contingency fee-based contract work, and only one has competitive bidding for them, according to a study by attorneys John Beisner, Jessica Davidson Miller and Terrell McSweeney cited by Institute for Legal Reform head Lisa Rickard.

Unfortunately, Beisner, Miller and McSweeney also quote a 1999 warning by former Alabama Attorney General Bill Pryor, who opposes such contracts that they “create the potential for outrageous windfalls or even outright corruption for political supporters of the officials negotiating the contracts.”

"Lawyers Gone Wild" is a series of special reports by The Examiner looking at the cost and consequences of class action lawsuit abuse in the United States. Read the latest articles in the series.