Guest Commentary

Frank Cruz-Alvarez & Talia Zucker, Shook, Hardy & Bacon L.L.P.*

A federal court in Kentucky recently entertained the issue of a state’s ability to contract with private attorneys on a contingency-fee basis.  See Memorandum Opinion and Order, Merck Sharp & Dohme Corp. v. Conway, No. 3:11-51-DCR, dated Mar. 21, 2012 and Mar. 23, 2012 (E.D. Kentucky).  The court’s two rulings are of particular interest to businesses facing prosecution, now or possibly in the future, under state consumer protection laws.

Here, the attorney general of Kentucky filed suit against Merck Corporation (“Merck”) in Kentucky state court for violating the Kentucky Consumer Protection Act, alleging that Merck willfully engaged in unfair and misleading practices regarding the medication Vioxx.  One year into the litigation, the attorney general retained outside counsel pursuant to a contingency-fee agreement.  The contract provided that outside counsel would assist the attorney general’s office, but that the attorney general would retain direct authority over the litigation.