The intersection of trial lawyer opportunism, climate orthodoxy, and political expediency has become a busy and increasingly perilous place.
Over the summer, Richmond, Marin County, Oakland, San Francisco, San Mateo County, Imperial Beach, Santa Cruz, and Santa Cruz County in California filed suit against ExxonMobil and other energy companies for damages to coastal property and infrastructure caused from climate change-related increases in sea levels.
The legal foundation for holding individual companies responsible for a planetary climate phenomenon is far from solidified so the companies are sure to fight long and hard to avoid losing a war of financial attrition.
Even in progressive California, taxpayers generally don’t let elected officials take in a penny more than needed.
These suits are feasible financially for these California cities and counties only because the plaintiffs’ firms representing them are working on contingency. They don’t get paid unless they win, but if they do win, they hit the mother lode.
On its face that might sound like a reasonable arrangement, but it is actually part of a troubling trend.
First, the contingency fees are exorbitant. For example, the contracts between San Francisco, Oakland, and Hagens Berman, a law firm leading several of the lawsuits against the energy industry, would give the firm nearly a quarter of the hoped-for payout from Exxon and the others.
Second, these suits are expanding a perilous new frontier in the world of ambulance-chasing by elected officials that began with the multi-state litigation against the tobacco industry in the 1990s.
Nearly five years ago, the U.S. Chamber of Commerce’s Institute for Legal Reform published a report detailing a growing alliance between state attorneys general and private plaintiffs’ lawyers to seek hefty monetary damages from unpopular industries with deep pockets.
The Washington law firm of Cohen Milstein has been at the forefront of this trend. It brought a controversial racketeering case targeting ExxonMobil on behalf of the U.S. Virgin Islands.
Linda Singer, a former District of Columbia attorney general who now runs the Cohen Milstein Public Client Practice, is quite open in explaining why this arrangement makes sense: “AGs offices, like other state agencies, have been hit with budget cuts, and they have been very interested in using outside counsel to leverage their resources and do the work.”
In essence, plaintiff firms are devising new theories, such as “climate crime,” and using government-backed cases to test these theories in court, in the hopes of raking in billions.
Instead of making policy in city hall or the state legislature, officials are farming out the resolution of complex public policy questions to trial lawyers. This smacks of legal opportunism, not pro bono work to advance the public good.
Third, giving trial lawyers free rein encourages frivolous lawsuits and protracted litigation.
A telling example came in 2014 when a Nevada judge ordered the state’s attorney general to pay legal and discovery costs to a mortgage lender that Cohen Millstein had sued on behalf of the state, alleging that the company violated state consumer protection laws by engaging in “robo-signing.”
In that case, the mortgage lender, Lender Processing Services, had settled similar claims in 49 states.
But it was unable to reach a settlement with Nevada — a situation that the company said reflected Cohen Milstein’s incentive to hold out for more money under its contract with the state, which awarded the firm 15 percent of any settlement.
Finally, these lawsuits are corrupting the concept of attorneys general discharging their law enforcement duties without regard to politics.
Last March, a superior court judge in New Hampshire appropriately ruled that the state attorney general did not have the legislative authority to “deputize” Cohen Milstein to pursue a pharmaceutical company in a case stemming from the marketing of a prescription opioid.
Many environmental activists will cheer on law firms such as Cohen Milstein and Hagens Berman as contemporary Don Quixotes, working for free on behalf of cash-strapped towns and cities to wring money from fossil fuel companies.
The difference is that Don Quixote’s delusions were righteous and harmless. The novel was satire and farce.
Today’s trial lawyers are embarking on a perilous real-world quest to use municipalities and attorneys general to substitute litigation for policymaking and gin up environmental extremism, with the end goal of a multibillion-dollar payout.
John Burnett is the founder and CEO of the consulting firm 1 Empire Group. He is also a financial services industry professional and former candidate for New York City comptroller.
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