Even though the state has staff attorneys capable of handling complicated lawsuits, Alabama's recent use of private trial lawyers to pursue its claims against Exxon Mobil was far from unusual, state officials said.
The only difference was the payment-in this case the private lawyers stand to make hundreds of millions of dollars by representing the public's interest.
"I authorized the appointment of lawyers for a simple reason. The governor asked for their appointment," said state Attorney General Bill Pryor.
"We would've been happy to handle this litigation on our own," Pryor said, but since Gov. Don Siegelman asked for outside lawyers, it wouldn't have been appropriate for the attorney general to push another option.
Pryor also said that he supported the lawsuit against Exxon Mobil and didn't really quarrel with using private lawyers.
But the attorney general- an outspoken critic of "contingency fee" agreements that pay trial lawyers with a portion of the jury award- said he disagrees with how the lawyers in the case will be paid. The arrangement was completely at Siegelman's discretion.
The Mobile law firm of Cunningham, Bounds, Yance, Crowder & Brown tried the case for Alabama, and on Dec. 19 won a nationally publicized verdict of $3.5 billion against Exxon. The jury in Montgomery County Circuit Court decided that the company deliberately underpaid royalties due the state for natural gas obtained off Alabama's coast. Jurors set the level of compensatory damages at $87 million and then added about $3.4 billion in punitive damages.
As a part of its contract with the state, the law firm gets 14 percent of any money won. If the $3.5 billion award holds on appeal, the firm's fee will amount to $490 million.
"These are very good lawyers," Pryor said. "I have high regard for their ability. Where I have the biggest policy disagreement is on how you pay them".
"I totally disagree with contingency fee payments. The governor and I have a respectful disagreement on that."
In fact, the disagreement goes beyond Pryor, a Republican, and Siegelman, a Democrat. In general, the GOP has pushed to restrict lawsuits and damage awards, supported by business groups with similar goals. Democrats have usually preferred leaving the court system more open, a position favored by the state's plaintiff lawyers.
The 14 percent fee in the Exxon case was well below the Mobil law firm's usual rate of 30-40 percent, according to state documents and Robert Crowder, a partner in the firm. Furthermore, the firm would have received nothing had it lost the case, despite its investment in research and preparation, Siegelman's office has said.
"They had the expertise and the resources to handle this case. They were able to take a risk that the state couldn't have done," said Carrie Kurlander, a spokeswoman for the governor. "Based upon the verdict, I don't think there's any question that the right attorneys were hired."
The state is pursuing similar litigation against Amoco Production Co., Hunt Petroleum Corp. and Shell Oil. Lawyers for Exxon Mobil said they will appeal the verdict. They argued throughout the trial that the underpayment stemmed from different interpretations of what they labeled as vague lease agreements.
Kurlander said the contingency fee agreement was the best deal for the state. Paying an hourly rate or agreeing to reimburse expenses could have proved very costly had the state not won, Kurlander said. "If you do this on an hourly rate, the firm may not put up the resources for free" as it did in this case, she said.
In early 1999, Siegelman's office came to the attorney general's office does have lawyers capable of litigating a case like the Exxon Mobil dispute, Pryor said. One division specializes in complicated subjects but usually is occupied with federal cases.
The departments of Revenue and Conservation & Natural Resources- both of which were affected by the case- also have state attorneys to represent them, but "I don't think they would be up to the task of committing the resources for this kind of litigation," Pryor said.
"When you go up against very capable corporate lawyers on the other side, ordinarily we would hire outside counsel," he said.
"That would be the practice of Alabama for the last few decades," Pryor added. He said however, "we're trying to handle more of these cases in-house."
Although the jury found that Exxon withheld payments on purpose, it appears unlikely - based on Kurlander's observations- that state officials will pursue criminal charges in the case.
"We haven't reviewed the case for that," Kurlander said. "It appeared to us to be a civil matter so we pursued it as a civil action."
Said Pryor: "We have not received any request form the governor's office that any kind of charge like that, or investigation like that, be pursued."
Pamela Bucy, a law professor at the University of Alabama who specializes in white-collar crime issues, said the state probably would have pressed a criminal case first if it was ever part of the plan. "That's not required, but it's the easier way to do it," she said. "You'll almost certainly win the civil case if you've won the criminal case."
Criminal convictions must meet a higher standard of proof than in a civil trial, Bucy noted, perhaps making them less attractive as a tool of redress.