State AG Litigation Contract

You are a lawyer in the consumer protection division of the state attorney general’s office. Preliminary investigations as well as some undercover stories in the press reveal the possibility of a major billing scandal involving the health care industry. Following the growing number of states who have recently pursued such claims and the recent huge success in tobacco litigation, it is proposed to bring suit against a number of firms. The total damages claim is for hundreds of millions of dollars, possibly more than a billion.

Your office, however, has only four attorneys, many of whom are quite busy on other matters. Therefore, it is agreed to hire an outside firm that specializes in large-scale litigation, probably one of those super-successful plaintiffs’ boutique firms. Many of them have already expressed interest and some have been interviewed.

Two further notes. First, although this novel litigation strategy has the potential to be extremely lucrative, it will also be expensive, requiring that millions of dollars worth of lawyers’ and experts’ time be invested up front. Second, the office is worried about the possible political fallout of making fee payments to outside lawyers that prove embarrassingly large.

Advise your department head on the compensation scheme that should be used in the contract with the outside firm. Focus on the form of the compensation scheme and any closely related matters. In preparing your advice, be sure that you do each of the following:

Describe different ways that the firm could be compensated.

Identify the major pros and cons of each approach.

Discuss how, if at all, any negatives of a given approach may be mitigated.