The General Assembly passed legislation this year to increase transparency and accountability in government. Gov. Terry McAuliffe vetoed it. This is unfortunate, and shows that McAuliffe isn’t as serious about transparency and ethics reform as his rhetoric suggests.
Let’s start with some background.
The attorney general is the commonwealth’s top lawyer. He represents the governor, the General Assembly, state agencies and departments. He also is tasked with defending Virginia’s laws and constitution. The Attorney General’s office is a lot like a large law firm, with a staff of about 400 full-time attorneys.
There are occasions when the governor or attorney general hires outside counsel to help defend the law or take a case to court. This could happen when there is a conflict of interest or when the attorney general needs a lawyer with more expertise on a particular issue. Taxpayers pay the bill for these lawyers.
Senate Bill 1059 was introduced to make the process of hiring outside counsel more transparent.
This legislation, which passed both the House and Senate with bipartisan support, would do two things: First, it would cap what are called “contingency fees” that could be paid to third-party lawyers. Second, it would increase transparency by requiring the governor and attorney general to post contracts with these lawyers online.
These are common-sense steps that would protect taxpayers, increase transparency and make government more accountable. McAuliffe’s veto sends the wrong signal to Virginians at a time when all elected leaders should be taking steps to restore the public trust.
Sometimes lawyers use what is called a “contingency fee” structure when their clients can’t afford to pay retainers or hourly fees. It’s fairly simple. If the client wins, the lawyer gets paid. If the client doesn’t win, the lawyer doesn’t get paid.
This concept is perfectly acceptable for clients who can’t afford to pay a lawyer up front but still need access to justice. Virginia, however, isn’t one of those clients, and too often contingency fees paid by taxpayers are used to line the pockets of out-of-state trial lawyers.
Here’s how it works. The Attorney General’s Office will hire a law firm on a “contingency fee” basis and become part of a lawsuit. When the trial lawyers win, they take a large part of the settlement as payment. In some instances, these out-of-state lawyers are on corporate witch hunts, filing frivolous and unnecessary lawsuits against businesses just to force a costly settlement.
SB1059 simply says if contingency fees are needed, the Attorney General must explain why this fee structure is in the best interest of the commonwealth and its taxpayers. The bill also caps the amount of contingency fees that can be paid to outside counsel, ensuring that more of the funds recovered will go into the state treasury for teachers, state troopers and state retirees, not to the out-of-state lawyers.
In his veto explanation, the governor said the bill would limit the attorney general’s ability to hire outside counsel. But the contingency fee cap is set at $50 million, hardly pocket change. The governor’s argument simply doesn’t hold water.
This bill would also increase transparency in the process by requiring the attorney general and the governor to post any contingency-fee based contracts online, and require them to report to the General Assembly on the use of outside counsel every year.
These are simple, obvious and necessary steps to increase government transparency and protect taxpayers. In other states, attorneys general have awarded no-bid contracts to campaign contributors. Taxpayers have been forced to pay exorbitant fees without ever really knowing the details of the cases.
That’s not something we want happening in Virginia.
The bill included exceptions when posting the contract would jeopardize or compromise the case. So again, the governor’s argument that this bill somehow limits our ability to hire counsel just doesn’t add up.
The governor had the opportunity to amend the bill to address his alleged concerns. In fact, the Attorney General’s Office indicated to House and Senate leaders they would work to do that. But instead, the governor vetoed the bill.
By vetoing this bill and removing the contingency fee caps, McAuliffe is preserving the ability of an attorney general to secretly enrich out-of-state trial lawyers at the expense of Virginia taxpayers.
That’s unacceptable. The General Assembly must act to override the governor’s veto on April 15.
William J. Howell is speaker of the Virginia House of Delegates. Mark D. Obenshain is a member of the Senate, and was the GOP candidate for attorney general in 2013.