Tiger Joyce, President, American Tort Reform Association*
Arizona last month became the latest state to embrace transparency and reasonable limits on contingency fees for private sector lawyers when they are hired to litigate on the state’s behalf.
State Rep. Kimberly Yee deserves a great deal of credit for championing this commonsense, good-government measure. Her statehouse colleagues and Gov. Jan Brewer also are to be praised for acting in the public interest and on behalf of all Arizona taxpayers in enacting H.B. 2423. The new law bars the state from entering into a contingency-fee contract with a private sector lawyer or law firm unless the attorney general first makes a written determination that the contingency-fee representation is both cost-effective and in the public interest. The contract must be posted on the attorney general’s website for at least 365 days.
The new law also limits the amount of aggregate contingency fees that private lawyers may receive. They may not receive more than: 25% of any recovery less than $10 million, 20% of any recovery between $10 million and $15 million, 15% of any recovery between $15 million and $20 million, 10% of any recovery between $20 million and $25 million, and 5% of any recovery more than $25 million.
H.B. 2423 reflects many of the principles ATRA laid out a few years ago in its “transparency code for state attorneys general,” designed to check a troubling and potentially corrupting trend wherein politically ambitious attorneys general court campaign support from private lawyers by offering those lawyers no-bid contingency contracts that can sometimes prove to be worth hundreds of millions of dollars. And too often in many states, such lucrative contracts receive little or no oversight from state legislatures or the public.
In addition to shining some refreshing Arizona sunshine on state contracts with private sector contingency-fee lawyers, Grand Canyon State lawmakers, led by Sen. Albert Melvin, also are to be commended for another welcomed tort reform. Passage and enactment of S.B. 1212 now appropriately limits the amount of an appeal bond to the lesser of: the total amount of damages awarded, excluding punitive damages; 50% of the appellant’s net worth; or $25 million. Prior to enactment, Arizona did not effectively ensure that defendants could afford to persist in the appeal process and appropriately resist pressure from plaintiffs to settle.
*The American Tort Reform Association is the only national organization dedicated exclusively to tort and liability reform through public education and the enactment of legislation.