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CONTINGENT FEES AND CONFLICTS OF INTEREST 

IN STATE AG ENFORCEMENT OF FEDERAL LAW 

HEARING 

BEFORE THE

SUBCOMMITTEE ON THE CONSTITUTION 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

FEBRUARY 2, 2012 

Serial No. 112–82 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

LAMAR SMITH, Texas, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

DENNIS ROSS, Florida 

SANDY ADAMS, Florida 

BEN QUAYLE, Arizona 

MARK AMODEI, Nevada 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

JARED POLIS, Colorado 

SEAN MCLAUGHLIN, Majority Chief of Staff and General Counsel 

PERRY APELBAUM, Minority Staff Director and Chief Counsel 

SUBCOMMITTEE ON THE CONSTITUTION

TRENT FRANKS, Arizona, Chairman 

MIKE PENCE, Indiana, Vice-Chairman 

STEVE CHABOT, Ohio 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

JIM JORDAN, Ohio 

JERROLD NADLER, New York 

MIKE QUIGLEY, Illinois 

JOHN CONYERS, JR., Michigan 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

PAUL B. TAYLOR, Chief Counsel 

DAVID LACHMANN, Minority Staff Director 

(III) 

C O N T E N T S 

FEBRUARY 2, 2012 

Page 

OPENING STATEMENTS 

The Honorable Trent Franks, a Representative in Congress from the State 

of Arizona, and Chairman, Subcommittee on the Constitution ....................... 1 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, Ranking Member, Committee on the Judiciary, and 

Member, Subcommittee on the Constitution ..................................................... 2 

WITNESSES 

The Honorable William McCollum, Jr., former Florida Attorney General, 

Partner, SNR Denton 

Oral Testimony ..................................................................................................... 12 

Prepared Statement ............................................................................................. 19 

Amy Widman, Assistant Professor of Law, Northern Illinois University College of Law 

Oral Testimony ..................................................................................................... 28 

Prepared Statement ............................................................................................. 30 

James R. Copland, Director and Senior Fellow, Center for Legal Policy, Manhattan Institute for Policy Research 

Oral Testimony ..................................................................................................... 48 

Prepared Statement ............................................................................................. 50 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Material submitted by the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, Ranking Member, Committee 

on the Judiciary, and Member, Subcommittee on the Constitution ................ 4 

Material submitted by the Honorable William McCollum, Jr., former Florida 

Attorney General, Partner, SNR Denton ........................................................... 15 

Material submitted by the Honorable Mike Quigley, a Representative in 

Congress from the State of Illinois, and Member, Subcommittee on the 

Constitution .......................................................................................................... 112 

(1) 

CONTINGENT FEES AND CONFLICTS OF INTEREST IN STATE AG ENFORCEMENT OF 

FEDERAL LAW 

THURSDAY, FEBRUARY 2, 2012 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON THE CONSTITUTION, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 2:36 p.m., in room 

2141, Rayburn Office Building, the Honorable Trent Franks (Chairman of the Subcommittee) presiding. 

Present: Representatives Franks, Pence, Conyers, Scott, and 

Quigley. 

Staff present: (Majority) Holt Lackey, Counsel; Sarah Vance, 

Clerk; (Minority) Heather Sawyer, Counsel; and Veronica Eligan, 

Professional Staff Member. 

Mr. FRANKS. Well, good afternoon and welcome to this Constitution Subcommittee hearing on contingent fees and conflicts of interest in State attorney general enforcement of Federal law. 

Without objection, the Chair is authorized to declare a recess of 

the Committee at any time. 

Again, I just want to welcome you all here today and appreciate 

the Members at least on this side of the aisle for being here and 

hope you guys can carry the day when the time comes. 

The rule of law is not just a matter of what the law is. Who enforces the law and how they enforce it are also critically important. 

The rule of law does not require only fair laws; it also requires that 

those laws are applied with integrity, consistency, and accountability. 

Today’s hearing is about who should enforce Federal law and 

how. Specifically, we ask whether Federal law should ever be enforced by trial lawyers seeking a contingent-fee payday. 

Over the past 2 decades, there has been an increase in the phenomenon of State attorneys general outsourcing their law enforcement duties to contingency fee lawyers. These State AG’s will hire 

a plaintiffs’ lawyer to sue a business for an alleged wrong on behalf 

of all of the people of the State. 

The contracts that these State AG’s enter with plaintiffs’ lawyers 

are often secretive, lucrative, and ethically dubious. Often there is 

no competitive bidding by various law firms to ensure that the taxpayers received the best value possible for their legal representation. As a result, the contracts sometimes dramatically overcomVerDate Aug 31 2005 10:16 Apr 09, 2012 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6601 H:\WORK\CONST\020212\72692.000 HJUD1 PsN: DOUGA
2 

pensate the lawyers. Law firms representing the States have been 

awarded contingency fees that equal as much as $90,000 per hour 

of work performed on a case. 

Many of these cases are not brought based on the independent 

judges or judgment by analysis of the State attorney general as a 

law enforcement official, but instead, outside trial lawyers generate 

the cases and then pitch them to the State AG. In this way, the 

lawyer’s interest in profit supplants prosecutorial discretion in deciding when to enforce the law. 

This trend is especially troubling because the plaintiffs’ lawyers 

who bring these cases are often among the biggest donors to the 

State AG’s election campaigns. State AG’s should be focused on defending the public and enforcing the law, not on enriching their political benefactors in the trial bar. Giving unelected, unaccountable 

trial lawyers a profit interest in enforcing the law leads to inconsistent law enforcement and troubling conflicts of interest. Law enforcement should not be motivated by profit. 

I will use an example, imagine if a city decided that instead of 

police officers, it would hire a private company to enforce its traffic 

and parking laws and give that company a percentage of every 

ticket that it wrote. Does anyone imagine that this would lead to 

more consistent or fair application of the law? 

To protect taxpayers from paying unduly high legal fees, to prevent conflicts of interest and cronyism in law enforcement, and to 

protect prosecutorial independence, the executive branch of the 

Federal Government has banned Government agencies from hiring 

outside counsel on a contingent-fee basis. 

Despite this ban on Federal agencies entering contingency fee 

contracts, certain statutes adopted by the late Democratic majority 

in Congress empower State AG’s to enforce Federal laws by 

outsourcing the work to trial lawyers on a contingency fee basis. 

These provisions of law contradict the general Federal policy 

against contingency fees by giving State AG’s power to enforce Federal laws without restricting them from outsourcing the work on a 

contingency basis. 

I expect today’s testimony will demonstrate contingency fee enforcement of State law by State attorneys general in the past has 

been bedeviled by conflicts of interest and, in at least one case, 

criminal convictions for corruption. Allowing State AG’s to enforce 

Federal law on a contingency basis raises the specter of bringing 

this corruption and conflict of interest to Federal law enforcement. 

And so I look forward to the witnesses’ testimony on the propriety of allowing State attorneys general to enforce Federal law on 

a contingency basis and to any suggestions for how Congress can 

protect prosecutorial independence and neutrality. 

And with that, again I thank you all for being here, and I would 

now yield to the Ranking Member of the Committee, in this case, 

Mr. Conyers, for his opening statement. 

Mr. CONYERS. Thank you, Mr. Chairman. I am happy to be with 

you again. 

And I am particularly pleased to see our former colleague, Bill 

McCollum of Florida, who spent many years on the Committee 

himself. I welcome his presence today. 

3 

There are a number of ways we can approach this subject, and 

of course, each Member has his own interpretation of it. But just 

starting on my statement, which I probably will not get to page 7 

of an 11-page statement in 5 minutes, I will point out that the 

Speaker of the House has authorized payment of up to $1.5 million 

to outside counsel, a very prominent, conservative lawyer, to defend 

the Defense of Marriage Act in court. And I am sure he will be interested in what all of us think and say in the course of this hearing. 

Now, the most prominent case for hiring outside counsel, the 

most famous to me, is the tobacco cases where R.J. Reynolds made 

it clear about what they were trying to do, which was quite inappropriate, and we now went on through outside counsel and State 

attorneys general to force the tobacco industry to compensate for 

funds used to pay for the public health disaster caused by smoking, 

a landmark case. 

They also uncovered the industry’s corrupt practices, including 

promotion of addiction through manipulation of nicotine levels and 

efforts to recruit teenage smokers. 46 States eventually joined in 

the litigation, resulting in a $200 billion payment by the tobacco 

industry and also a requirement to dismantle many of the industry 

groups that spearheaded the deliberate misinformation. 

I have a number of other cases, the most recent being the former 

Ohio Attorney General, Richard Cordray, who partnered with outside lawyers to reach a $475 million settlement on behalf of Ohio 

investors who were deliberately misled by Merrill Lynch. The attorney general Cordray also reached a $700 million agreement with 

AIG over investor losses, helping to recoup funds lost by the Ohio 

Public Employees Retirement System and the State Teachers Retirement System. 

Then we have the Zyprexa case in South Carolina, a $45 million 

settlement. 

And we had the Louisiana attorney general have outside counsel 

challenge the tobacco industry in his State. 

In addition, I would like to include in my statement a memo from 

the Center for Justice and Democracy, which outlines probably 

more than a dozen other important cases brought by State attorneys general with outside counsel. 

With that, Mr. Chairman, I will conclude my statement and 

thank you very much. 

[The information referred to follows:] 

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Mr. FRANKS. And I thank the distinguished former Chairman, 

and without objection, other Members’ opening statements will be 

made part of the record. 

Let me also add my welcome to Mr. McCollum. He is someone 

that was never a colleague while I was here but certainly someone 


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I hold to be a friend, and he is, as the former Chairman said, no 

stranger to this Committee. 

Bill McCollum, a partner at the law firm of SNR Denton, was a 

20-year Congressman from Florida and a Member of the Judiciary 

Committee. From 2007 to 2011, Mr. McCollum served as Attorney 

General of the State of Florida where he spearheaded passage of 

the Transparency in Private Attorney Contracts legislation which 

requires Florida’s attorney general to conduct open bidding for contingency fee contracts and provides for caps on potential attorney’s 

fees. 

Our second witness is Professor Amy Widman or Widman? 

Ms. WIDMAN. Widman. 

Mr. FRANKS. Widman. Forgive me. Professor Amy Widman of 

Northern Illinois University College of Law. Professor Widman 

teaches torts, administrative law, and legislation. Her academic interests include research and writings on State attorney general 

enforcemenr of Federal law. And we appreciate you being here, 

Professor. 

Our final witness is Mr. Jim Copland, Director of the Center for 

Legal Policy at the Manhattan Institute for Policy Research. Mr. 

Copland has researched and written on the problems associated 

with State attorneys general outsourcing law enforcement work on 

a contingency fee basis. 

Each of the witnesses’ written statements will be entered into 

the record in its entirety. And I would ask that each witness summarize his or her testimony in 5 minutes or less, and to help you 

stay within that timeframe, there is a timing light on your table. 

When the light switches from green to yellow, you will have 1 

minute to conclude your testimony. When the light turns red, it 

signals that the witness’ 5 minutes have expired. 

Before I recognize the witnesses, it is the tradition of this Subcommittee that they be sworn. So if you would please stand. 

[Witnesses sworn.] 

Mr. FRANKS. Thank you and be seated. 

Now, I would recognize our first witness, Mr. McCollum, for 5 

minutes. 

TESTIMONY OF THE HONORABLE WILLIAM McCOLLUM, JR., 

FORMER FLORIDA ATTORNEY GENERAL, PARTNER, SNR 

DENTON 

Mr. MCCOLLUM. I had a great pleasure of being on this Committee, as you noted, for a number of years. While you and I didn’t 

serve, I have a great respect for you. Former Chairman Conyers, 

I guess Ranking Member, you were my very first Chairman, Subcommittee Chairman. You may remember, 1981-1982. And I have 

a lot of fond memories of those days. Congressman Scott and I did 

a lot of business together. It may sound strange. Democrats and 

Republicans actually worked together. At least when I was here on 

this Committee, we did. I hope you still do. 

I am here today, Mr. Chairman, to represent the U.S. Chamber 

of Commerce and the U.S. Chamber of Commerce’s Institute for 

Legal Reform in discussing the issue you have asked us to talk 

about, and that is the role of the State attorneys general in Federal 

13 

law enforcement today and the contingency fee contracting issue 

that goes with that. 

I have had, as you might imagine, quite an experience with that, 

as recently as these 4 years you described. I was Florida’s Attorney 

General, and I think I have a pretty good perspective on it. 

And what I am concerned about and what concerns me the most 

is that over the last few years, there has been a considerable expansion of Federal law that provides State attorneys general with 

new powers, some of it unexercised, maybe not very publicly 

viewable or visible because of that. But the burdens potentially for 

business and the public with this duplication of Federal and State 

enforcement can be significant, and the potential for abuse is also 

significant, especially if there are contingency fee contracts with 

private plaintiff’s attorneys associated with it. 

I worry about pay for play—the possibility of it. The appearance 

of it is even worse. And that is what I have seen in activities of 

some of my former colleagues as State attorneys general. The concern that the public perception, when you make these deals out of 

the public scrutiny, that something hanky-panky is going on is 

really great. 

And so I have had to attempt to address that. In a couple minutes, I am going to come back to the specifics of what I did in Florida and what I am promoting as a model program for contingency 

fee contracts, which you might wish to examine. 

But first, I want to comment broadly on the fact that there are 

three things that I think the Subcommittee particularly should 

look at in examining this question. I think you should consider how 

to create a balanced legal system, one that protects the public without creating incentives for unnecessary litigation that impose enormous burdens on private businesses and consumers, the risk and 

burdens for business and the public of the continuing expansion of 

legislative authority, and the need for transparency, fee caps, and 

other safeguards on the occasions when contingency fee contracts 

are used. 

Let me say at the outset that there are several new laws, the 

Consumer Product Safety Improvement Act of 2008, a provision 

that expanded the opportunity for State AG’s in HIPPA, truth in 

lending, and most recently the Dodd-Frank bill, which disturbs 

most people—the potential of that—the most. 

And just briefly on Dodd-Frank for a moment, it expands, as you 

know, the law in the area they call the Consumer Financial Protection Bureau. Mr. Cordray is now in charge of that, a former colleague of mine, attorney general. And the powers given to the 

States to enforce are explicit, and they are expected to be utilized. 

And there are questions about the definition of what is in fact a 

consumer violation under that law. It could be deceptive. It could 

be unfair, which are two terms that we have a lot of use in all of 

the State laws. But there is a new term called ‘‘abusive.’’ An abusive act is not defined. I am sure that the bureau will eventually 

promulgate a regulation or rule trying to define it. 

I worry—and you should too, I think—that there could be a proliferation of interpretations even of that rule in the State attorney 

general’s efforts to gain traction in enforcing this. 

14 

But in the limited time I have, let me summarize what I think. 

I think that this Subcommittee should consider whether or not this 

continued expansion is a good idea of giving more power to State 

attorneys general in other areas of law, whether or not the Federal 

rule, which is an executive order that exists today that prohibits 

Federal agencies from contracting on a contingency fee basis should 

be the rule, maybe implemented as a contingent rule with all of the 

powers that are given to the State attorneys general so they don’t 

have the power to go out and hire plaintiff’s attorneys just as the 

Federal agencies cannot. 

Or if you consider the way we are doing business now, I would 

suggest that the model Transparency in Private Attorney Contracting Act, which is modeled after a law that I wrote first as a 

regulation in my office and then got passed in 2010 in the State 

of Florida—that particular law is one which provides for some limits. It provides, first of all, that the State attorney general has to 

find that they don’t have the ability, they don’t have the resources, 

they don’t have the capability in-house of doing the litigation. 

Secondly, they have to do competitive bidding under their own 

rules. 

Third, there has to be a determination that is posted that people 

can see when they do this competitive bidding. 

Third—fourth, I guess it is. We have caps in any contract with 

a private attorney of fees, a total cap of $50 million per matter, but 

underneath that, it is a scale of 25 percent of the first $10 million, 

and then for each $5 million, it scales down 20 percent, 15 percent, 

down to 5 percent of the balance. We figured that on $1 billion recovery, which is very large for a State attorney general to have, 

you would wind up with the potential of having attorney fees of 

$50 million. Roughly that is what it equates to, $1 billion recovery. 

Now, I got involved and interested in this in Florida because of 

the tobacco case that Mr. Conyers pointed out. Back in 1994, Florida was one of the early States to bring tobacco. It did use plaintiff’s attorneys. It used 11 different law firms. It settled earlier 

than anyone else. And in the settlement process, the attorneys got 

$3.4 billion. 

And what is it that is wrong about that? 

Well, the taxpayers didn’t get their—you know, they should have 

gotten a bigger take of that. We shouldn’t be paying $3.4 billion in 

a settlement like that. That is way too much in attorney’s fees. 

And secondly, it had a terribly bad appearance. The public distaste for that was extreme. Former Governor, Lawton Chiles, a 

Democrat, was outraged when he realized what had happened. But 

in reality, that is what happened. 

And so I promulgated this idea and the model has been expanded 

a bit. And today I would like to suggest that those caps and that 

provision, along with some control provisions, are in this model. 

And I don’t believe it is in the record. I am not sure that it came 

up with my testimony. I would like to submit a copy of the model 

act for the record, if I could, Mr. Chairman. 

Mr. FRANKS. Thank you, Mr. McCollum. Without objection, it will 

be entered into the record. 

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Mr. MCCOLLUM. Thank you. 

[The prepared statement of Mr. McCollum follows:] 


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Mr. FRANKS. Thank you for your testimony. 

Professor Widman, you are recognized for 5 minutes. Thank you. 


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TESTIMONY OF AMY WIDMAN, ASSISTANT PROFESSOR OF 

LAW, NORTHERN ILLINOIS UNIVERSITY COLLEGE OF LAW 

Ms. WIDMAN. Mr. Chairman and Members of the Subcommittee, 

thank you for inviting me to speak today on enforcement of Federal 

law by State AG’s. I am honored to be here today to share findings 

of my research in this area. My background, as you said, is Assistant Professor of Law at Northern Illinois University. 

The role of State AG’s in the context of their enforcement of 

State laws is hardly a Federal matter. As such, I would like to 

focus my testimony on Congress’ role in State enforcement of Federal law. 

I, along with Professor Cox at the University of Minnesota Law 

School, recently published the first study examining in detail the 

use by State attorneys general of concurrent enforcement authority 

in Federal consumer protection laws. Our research, which is published in the Cardozo Law Review, confirms that State AG’s use 

their power to enforce the Federal law responsibly, Federal agencies work cooperatively with the States in this role, States have not 

contracted with private lawyers to enforce any Federal laws 

throughout the decades of such enforcement, and the presence of 

enforcement authority is a benefit to both citizens and the Federal 

agencies. 

I would like to highlight for the Committee our findings which 

I think are important points on which to begin today’s discussion. 

At the outset, these enforcement grants are not new. Such enforcement grants began decades ago, have been passed by both 

Republican- and Democrat-controlled Congresses, and signed into 

law by every Administration since the mid-1970’s. 

We focused our research on the 16 consumer protection laws 

granting State AG’s concurrent enforcement. Of those 16 laws we 

studied, three of them have now been incorporated into DoddFrank. So even though our study was conducted as Dodd-Frank 

was being signed into law, the results do directly speak to how 

State AG’s have in the past and might continue to respond to at 

least part of the authority granted under Dodd-Frank. 

Our findings were surprising in that they did not correlate with 

the statements put forth by critics of Federal grants of concurrent 

enforcement power. 

First, such enforcement grants are used sparingly. In other 

words, fears of over-enforcement have not, in fact, played out during the decades of such concurrent enforcement. 

Also, despite alleged predictions to the contrary, the number of 

claims has not risen in recent years, nor was there any indication 

of any trend toward more aggressive use. 

More important for today’s hearing, the court documents show 

that not one of these cases appeared to be brought in conjunction 

with private counsel. 

We also found that Congress consistently inserted some limits to 

this authority. Dodd-Frank has similar limits, notably a notice provision allowing a Federal agency to intervene in any case filed by 

a State AG, remove such case to Federal court, and appeal any outcome. These types of restrictions, coupled with our data showing 

cooperation between State and Federal regulators, effectively preclude any risk that a State AG will enforce a law contrary to the 

29 

Federal agency interpretation. In fact, in passing Dodd-Frank, Congress had considered and rejected proposals to restrict such arrangements with outside counsel. 

Another somewhat surprising finding from our study was that 

Federal agencies were actively and cooperatively involved in cases 

brought by State AG’s. Our data showed clear communication and 

cooperation between the Federal and State enforcers, and the information and documents gathered as to cooperation tended to show 

no Federal-State conflict in interpretation of the laws. 

Congressional grants of concurrent State enforcement powers 

have proven to be a benefit to both citizens and Federal agencies. 

It appears from the data that States approach their enforcement 

role as primarily a means to supplement and support Federal enforcement. It is also clear that Congress chose to grant State AG’s 

these enforcement powers under these particular laws in order to 

increase enforcement. If Congress were to grant authority with one 

hand and limit it with the other through regulation of contingency 

fee agreements, which in turn could hypothetically mean that a 

State AG could not bring a viable enforcement action due to lack 

of resources, it would amount to an enforcement authority on paper 

but without any practical significance. 

Given the clear benefits that such concurrent enforcement can 

provide for Congress, Federal agencies, and ultimately citizens, 

coupled with the lack of any instance of abuse, there is no reason 

for Congress to address such grants of enforcement authority now 

any differently than they have in the past. 

I would like to point out here actually that from 1990 to 1999, 

11 such statutes were passed with these Federal grants of authority to States to bring enforcement action, and from 2000 until the 

present, there have only been seven. So, in fact, the use of these 

grants has not increased in recent years. 

Whether and how particular States respond to critics of contingency fee arrangements between State AG’s and private counsel is 

a subject best handled within the realm of State governments. 

Thank you for your time this afternoon, and I would be happy 

to answer any of your questions. 

[The prepared statement of Ms. Widman follows:] 

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Mr. FRANKS. Thank you, Professor. 

And now, Mr. Copland, we will recognize you for 5 minutes, sir. 

TESTIMONY OF JAMES R. COPLAND, DIRECTOR AND SENIOR 

FELLOW, CENTER FOR LEGAL POLICY, MANHATTAN INSTITUTE FOR POLICY RESEARCH 

Mr. COPLAND. Thank you, Mr. Chairman, Representative Conyers, and other Members of the Subcommittee, for your invitation 

to testify today. 

In my research, I have found that contingent-fee litigation entered into between States and private counsel can raise significant 

conflicts of interest and other ethical concerns. And I fear that the 

Federal delegation of enforcement authority to State attorneys general might magnify these concerns and expand their scope. 

Whenever there is concurrent enforcement authority held by 

State attorneys general over Federal law, there is a risk of enforcement overreach. Even if the Federal authorities and 49 out of the 

50 State attorneys general agree that conduct did not run afoul of 

a Federal law, a single State AG could, in effect, dictate national 

regulation for the rest of the country. 

These risks are substantially heightened when States are permitted to contract out enforcement to private lawyers on a contingent-fee basis. As the Chairman stated at the outset, in practice, 

these State lawsuits are contracted out, often conceived by private 

lawyers themselves who approach the State attorneys general with 

ideas, rather than having ideas that are generated and originated 

out of the State attorneys general’s offices. 

Moreover, whereas State officials, acting in the public interest, 

would often prefer to balance a variety of concerns, private attorneys who operate on contingent-fee agreements have a financial incentive to maximize money recoveries, an incentive that would be 

congruent with a client’s interests in private actions but is frequently in tension with a State’s public interest role. 

And indeed, when you look at the awards and settlements in 

State-sponsored contingent-fee lawsuits, they often total in the millions and sometimes billions of dollars, as Representative Conyers 

was alluding to in his opening remarks. Essentially this amounts 

to a huge diversion of funds from State governments to private 

counsel. 

Moreover, because these sums often go to the current and future 

campaign donors of the State attorneys general—and 43 of the 

State attorneys general are elected officials—these arrangements 

can create at least the appearance of a ‘‘pay to play’’ arrangement, 

an appearance of impropriety. That a number of States have no formal process whatsoever for overseeing private attorney contracts— 

and many State attorneys general have doled out work on a no-bid 

basis—heightens these concerns. 

I note in my written comments in more detail the recent history 

of States contracting out with private counsel on a contingent-fee 

basis and how it has been rife with abuse, including in the examples of tobacco litigation, the Zyprexa litigation that the Representative referred to, and other litigation including the former Attorney 

General Richard Cordray’s securities class action litigation in Ohio. 

49 

I would also like to point out that under Executive Order 13433, 

Federal agencies are prohibited from entering into contingent-fee 

arrangements with outside counsel, and that is the case even 

though the potential for abuse is significantly greater for State 

than for Federal prosecutors, given that most State AGs are elected 

officials subject to fund-raising pressures. 

Among recent Federal legislation that creates this concurrent 

State enforcement authority, Dodd-Frank, in my opinion, is particularly prone to potential abuse, both due to the statute’s scope, 

which basically includes the entire U.S. financial industry, and to 

the relatively untrammeled lack of supervision existing for the new 

Consumer Financial Protection Bureau. And this bureau can promulgate regulations that State AGs might, in turn, enforce. It is 

rather uniquely insulated from congressional oversight. 

Now, my fellow witness, Amy Widman, as she noted, along with 

Prentiss Cox, has done a survey of 16 Federal consumer protection 

statutes and concluded that, ‘‘neither over-enforcement nor inconsistency with Federal regulators is apparent.’’ And she has extended that argument in her written comments and again in testimony today, going further than she did in her academic work, saying that this ‘‘effectively precludes any risk.’’ 

I simply disagree that the conclusions drawn by Widman and 

Cox follow from their data. Many of the most significant laws they 

examined are extremely new, including Dodd-Frank, which has just 

been passed and was just being passed when they wrote their 

paper. 

Moreover, they exclude from their data set the potential largescale claims invoking Federal law in the antitrust and environmental arena, not to mention State-led actions invoking Federal securities law where these abuses have been rife. The laws they 

study instead generally involve uncontroversial provisions applying 

to a narrow set of businesses, namely telemarketers, abortion clinics, boxing promoters, pornographers, sports agents, and moving 

companies. So I don’t think it is a clear analogy with what we are 

talking about, with something with the breadth of Dodd-Frank. 

In conclusion, I just want to say that I think Congress should 

consider what I would deem a modest step, and that is the step of 

codifying Executive Order 13433 and making that Federal rule 

apply equally to any State concurrent enforcement authority of 

Federal law. 

I welcome any questions. 

[The prepared statement of Mr. Copland follows:] 

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Mr. FRANKS. Well, thank you all very much. 

I am going to go ahead and begin the questioning time by recognizing myself for 5 minutes. 

Mr. McCollum, when you were Attorney General in Florida, did 

members of the plaintiffs bar reach out to you to, as it were, pitch 

new lawsuits for you to file? 

Mr. MCCOLLUM. Chairman Franks, they did, not frequently, but 

there were a half a dozen times, especially with regard to a rather 

unique problem with Florida and several other States dealing with 

sales tax issues and whether or not Expedia, Travelocity, those online travel agencies, were paying their appropriate share of the 

State sales tax laws. We ultimately decided that we weren’t going 

to go that route. We decided to try to go through and get a determination by the court separately on our own. 

But I will say to you that there are cases that are big enough, 

and there conceivably can be for State attorneys general where you 

do have to go outside, and there are conceivably cases where it is 

appropriate to use a plaintiff’s contingency fee law firm. But if you 

do, I think they ought to have the restraints that I mentioned to 

you in this model, Transparency in Private Attorney Contracting. 

I am not so sure that is the same when you are giving this authority to the States, though, from a Federal law, which of course is 

a different horse. 

Mr. FRANKS. Well, when you give model legislation and the 

guidelines that you have put in the record here, that is especially 

helpful because it is experienced and kind of tried by the fires of 

reality. 

So I want to ask a question that would be to all of you. In your 

experience and your concern here, you understand that the primary 

concern that we have here is to try to reach justice ultimately and 

to prevent overcharging the taxpayer for certain legal services and 

to try to make sure that we maintain prosecutorial independence 

so that fairness and absence of corruption in general is obtained. 

So I would start with you, Mr. McCollum. If you could put just 

one provision that you think would improve the existing legislation, 

where we are now, what is one thing that you would do. I suppose 

it would have to reflect one of your primary concerns with our 

present circumstance, and if you could point that out and say here 

is my main concern and here is how to fix it, what would be just 

one thing that you would say would be your—— 

Mr. MCCOLLUM. Well, the one thing I would do would be to adopt 

this model system, which, by the way, is being promoted in the 

States. 10 States, including yours, have adopted a version of this, 

and the Chamber of Commerce is promoting it now around the 

country with State AG’s to have them sponsor it in their legislatures. I think if you could adopt that onto the Federal laws saying 

in every case where there is a Federal right being given to enforce 

a Federal law to a State attorney general, that they have to abide 

by this. Of course, they can do as they wish on State laws, but this 

is the Federal laws. 

And I would add one other thing while you have given me the 

forum here. One of the great problems that State attorneys general 

have, especially in smaller States, is they don’t have the resources 

to be able to go after the bad guys. Any number of these Federal 

108 

laws are not being used now primarily not because people are going 

out and looking for contingency fee attorneys, but because they 

don’t have the capability of getting damages with them, they aren’t 

able to recover costs. And the appropriations in the States often 

don’t appropriate the monies, and the way that consumer protection works is that you have got to be able to recover costs of your 

lawyers and the time and all and the Federal laws that give these 

enforcement powers don’t have those provisions. 

Mr. FRANKS. Thank you. 

I suppose if it is being adopted in Arizona, that should end the 

debate, but maybe it doesn’t. [Laughter.] 

Mr. MCCOLLUM. If Arizona and Florida agree to this, it ought to 

be done. 

Mr. FRANKS. I don’t know how you could do better than that. 

But, Professor Widman, what would be your main concern with 

the present circumstance, and what would be your answer to respond? 

Ms. WIDMAN. Yes. To the extent that this is entirely hypothetical, as we have never had a contingency arrangement under 

the State enforcement of Federal law, I think transparency is important. But I would define transparency as open bidding, and I 

would think that it would need to be applied to both contingency 

and hourly. If transparency is the goal, it makes no sense to focus 

purely on contingency fees. And so that would be my answer there. 

I would also like to say there are damages and costs in the statutes that we studied. So I would just like to clarify that, that some 

of the State enforcement grants that exist on the books right now 

do allow for damages and costs. 

Mr. FRANKS. Thank you. 

Mr. Copland, main concern and best response. 

Mr. COPLAND. Well, my main concern is the potential for overenforcement and the appearance of impropriety, the quality of Federal justice. Your interest here is really the Federal law. I agree 

with Professor Widman that it is not appropriate for Congress to 

come in and try to dictate to States how to contract when you are 

enforcing State law, but when it comes to Federal law, we have an 

executive order, 13433, which says you can’t use contingent-fee contracts with outside counsel to enforce Federal law. I think the same 

rule ought to apply to the States. And that is probably where I depart from General McCollum. Rather than trying to implement 

what I think is a very good reform at the State level, I would just 

extend that executive order, make it a Federal statute, and apply 

it equally for all enforcement of Federal law. Obviously, if State 

AGs want to bring enforcement actions under State law using contingent-fee agreements, that is a different matter. 

Mr. MCCOLLUM. If I might, Mr. Chairman. The Chamber of Commerce would concur with Mr. Copland on that point. I simply suggested an alternative that I think is viable and I know a lot about 

it because I wrote it. 

Mr. FRANKS. Yes, sir. 

Well, thank you all very much. Very compelling. 

I would now recognize Mr. Quigley for 5 minutes. 

Mr. QUIGLEY. Thank you, Mr. Chairman. 

109 

Mr. McCollum, I appreciate your candor in your testimony referring to the letter sent to Senators Dodd and Shelby, Frank and 

Bachus, November 4, 2009. But quite honestly, I think the letter 

is a little stronger than you sort of refer to now. It says, permitting 

States who enforce their own consumer protection laws while setting minimal Federal standards for all will encourage interested 

States to, quote, test drive innovative, new ideas and concepts, just 

as many State attorneys general did with the Bank of America in 

crafting the Countrywide settlement so as to focus on loan modifications and again a concern that State innovation may lead to a 

multitude of conflicting State requirements is misplaced. History 

has shown only a small number of States typically take advantage 

of the opportunity to move beyond Federal protections. Finally, if 

uniformity is to be achieved by sacrificing consumer protection, the 

very real cost to consumers must be weighed in the balance. Weakened consumer protections and limited enforcement authority already have damaged many consumers. It is a lot stronger than, I 

would suggest with respect, the reference you make here. 

I mean, I understand that it is not a perfect comparison. This is 

a pretty good signal that the States are doing okay with this. 

Mr. MCCOLLUM. Well, Mr. Quigley, if I might respond. I would 

say to you that the primary concern of my fellow attorneys general 

and I at the time that letter was written was that the Dodd-Frank 

law was going through. It was going to happen. And we always are 

very protective of our powers, our rights, and we didn’t want to be 

preempted. We didn’t want things to be taken away from us. 

Mr. QUIGLEY. What was the first word? You didn’t want to be 

what? 

Mr. MCCOLLUM. And we preferred concurrence which would be 

giving us the equal power at least to share in this because we saw 

that with the new agency being created, there was going to be this 

huge Federal role. And we currently, at that time, were doing 

much of the same things that this new law is doing. It simply federalized it. So it was a better choice to not take those powers away. 

Mr. QUIGLEY. Was it the problem of outsourcing at all? I mean, 

you have outsourced. You outsource services on a non-bid basis. 

Mr. MCCOLLUM. Well, let me say to you that every State attorney general is different, and their rules are different. In Florida, 

we were a fairly large State, 400 lawyers. We did almost everything in-house. I think I only hired—and frankly, I only continued 

the contract of one outside counsel, and that was for a fee basis 

rather than the contingency fee. But there are smaller States that 

have to join other States. There are multi-State actions. There is 

a cooperative effort with the Justice Department. I wouldn’t wish 

to segregate those out and tell you otherwise. 

Mr. QUIGLEY. Well, but respectfully isn’t that what you are asking us to do, sir? Isn’t it asking us to sort of uniformly say to the 

States this is the way we are going—a one size fits all, given that 

their financial capabilities, their levels of expertise, their abilities 

frankly are quite disparate? 

Mr. MCCOLLUM. Well, if I might say so, you certainly can argue 

that point with regard to whether or not you impose the Federal 

rule that Mr. Copland talked about, which does prohibit private attorney contracting for contingency fee. I am suggesting to you that 

110 

assuming you don’t want to go that far and don’t want to do that 

to the States—you have every right to do that because that is what 

the Federal rule is for Federal law with Federal agencies, and you 

are talking about enforcing Federal law here. 

But if you don’t want to go that route, then at the very least, the 

movement in the United States among the States—and there is becoming an increasing concurrence among AG’s, Democrat and Republican—is that there needs to be a Transparency in Private Attorney Contracting, which includes some fee caps, includes putting 

stuff up on the Web, includes competitive bid, and includes a clear 

provision that some State supreme courts have ruled on that said 

the attorney general has an obligation to maintain control over litigation because he or she represents the State and the people. And 

those are things that are all written into this model that I propose 

to you that you might adopt in this case only—not to impose it on 

the States for State matters, but only for Federal law where the 

Federal Government is giving the enforcement powers to the States 

just for those. Then the States can decide on their own whether to 

adopt this for other matters. 

Mr. QUIGLEY. Yes, but even there, you are limiting some of these 

States with a uniform provision. If what you say is true, then I 

would argue Congress doesn’t have to do anything. But there is a 

difference between transparency and there is a difference between 

oversight and dictating one of the points that you made which is 

fee caps. All of a sudden, you are probably going to be limiting who 

is going to do this work for you. And these folks aren’t competing 

against a very small entity. With Dodd-Frank, with the tobacco 

companies, they were competing against some extraordinarily influential, powerful people who had extraordinary resources too. I 

mean, isn’t this a little bit about leveling the playing field? 

Mr. MCCOLLUM. Let me respond by telling you this little story. 

This was a rule in the office before it was a statute. I asked it to 

be codified. I had lots of the most famous plaintiff’s lawyers in the 

country come knock on my door perfectly willing to operate under 

these fee caps. And I proved my point. We marketed it out there 

calling up privately saying would you really do this. Now, the official story, of course, of the trial lawyers bar is we don’t want any 

restraints at all. But the reality is this wasn’t a big thing on their 

plate because the $50 million is a huge amount, and when you 

start seeing these even larger fees that are recovered, it is actually 

bad for the profession. It is certainly bad for the AG’s. And I think 

the taxpayers are owed the obligation from the government, where 

you do have the opportunity to restrain it, to make sure that they 

get the benefit of these recoveries, that you are not paying out so 

much in attorney’s fees, as long as you can get the attorneys to do 

the work. And this is not too low to do that. 

Mr. QUIGLEY. But as a State official, did you want Congress telling you that, or did you want the ability—because you yourself 

began this conversation by saying there is such disparate differences between what a small State can dictate and what a larger 

State with greater resources and sophistication can. Don’t you want 

to give them the opportunity to say, well, all right, we think fee 

caps make sense? And if that is what they want to do, that is their 

decision. It is a whole different story when we are dictating. 

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Mr. MCCOLLUM. I think you are not dictating it to them. You are 

just telling it to them with regard to their using Federal law in the 

cases where they are actually doing Federal work for you, for Congress. You have the right to do that. I would never want you to tell 

me as a State attorney general what to do with my State law, and 

that is why I wrote the letter, the one you were quoting. 

Mr. QUIGLEY. And I will finish by saying this story as well. I just 

don’t think there is as much difference between what you argued 

then and how—I would argue contradictory now. Abraham Lincoln 

argued before the Illinois Supreme Court in the morning, came 

back in the afternoon on a different case and argued the exact opposite. One of the justices noticed that and he said, well, I have 

had time to think about it since then. So I think we have a little 

bit of that in the consideration. 

But I would seek, Mr. Chairman, if I could, without objection, a 

copy of the letter that I have referenced from the National Association of Attorneys General dated November 4, 2009, please. 

Mr. FRANKS. Without objection. 

[The information referred to follows:] 

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Mr. QUIGLEY. Thank you. 

Thank you, sir. 

Mr. FRANKS. Thank you, Mr. Quigley. 

And I now recognize Mr. Scott for 5 minutes. 

Mr. SCOTT. Thank you, Mr. Chairman. Mr. McCollum, it is good 

to see you again. 

Mr. MCCOLLUM. It is good to see you. 

Mr. SCOTT. In your legislation or guidelines, you mentioned the 

requirement to find that you do not have the resources to fight the 

battle. How often does that happen? 

Mr. MCCOLLUM. It happens. It depends on the size of the State 

again and the resources. Each State differs a lot, Congressman. In 


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Florida, we generally didn’t have a problem with getting the job 

done. I had a great consumer protection division and did the unfair 

and deceptive trade practice, the little FTC laws, all the time, and 

we did great things. Like with the State of Illinois, we did Countrywide and got huge settlements. We did AT&T and Verizon and 

went up against the big boys. But in your smaller States and even 

medium-sized States, Kansas, Missouri—and I know that because 

I have worked with General Koster. By the way, he as a Democrat 

has accepted this model, and he feels it helps protect the image of 

the office and the feelings that might be there because he does do 

contingency fee contracting. 

But I didn’t have a problem in my office of needing to go outside. 

I can see where I would occasionally. It might happen. In securities 

litigation, you do have to. There is not that expertise in the office. 

Mr. SCOTT. Your guidelines require a written representation, a 

competitive bid, detailed records, a cap, and posting on the website. 

Is that limited just to contingent-fee outsourcing? 

Mr. MCCOLLUM. In our rule, it was because that was the area 

where the most apparent problem with appearances was. In other 

words, the worry that everybody has is that you are doing something on the side with somebody. We certainly were posting things, 

as far as our office was concerned, with regard to non-contingency 

cases too. Posting on the Web became the thing while I was attorney general. 

By the way, Florida is a little different than some States. We 

have a sunshine law that we started down there. Everything is 

public. I can’t sneeze without it being public. 

Mr. SCOTT. As you indicated, the same problems would occur 

whether there is a contingent fee or an hourly rate or a flat fee. 

Mr. MCCOLLUM. It could but frankly the fee arrangements are 

not nearly as explosive because the amount of money going to the 

attorneys is not as often huge quantities. You know, you take a 

percentage of a recovery in these big cases, securities cases or 

pharmaceutical cases or others. That is the issue. And there are 

going to be cases where that contingency fee is perfectly appropriate. I want to reiterate that with you. 

Mr. SCOTT. When do you calculate the appropriateness of the fee? 

Waiting until the case has already been won seems like an inappropriate time to ascertain whether or not it is a reasonable fee. 

It is when the contract is made. It would be like waiting until 

someone has won a golf tournament and then ascertaining whether 

$1 million is a reasonable fee for 4 days’ work. Well, you know, you 

should have said that before you won the tournament. When you 

write the contract, if it is reasonable then, it ought to be reasonable 

whatever the result is. 

Mr. MCCOLLUM. Well, I agree with you on that, and that is why 

what this does—and I did not maybe go over it in great enough detail, but on the fee part, it says up front—so you know that from 

the very beginning—it is going to be 25 percent of the first $10 million that is recovered, 20 percent of the next 5, so on down the line, 

and you know what your limits are. 

Mr. SCOTT. The reasonableness of that you ought to calculate at 

the beginning because that may be unreasonable. It may be a very 

easy case, which means those amounts may be unreasonable. It 

118 

may be very complex and very unlikely to recover anything at all, 

in which case those fees may be inadequate to attract reasonable—— 

Mr. MCCOLLUM. Remember, Congressman Scott, you are on the 

right end of it, the last statement you made. These are caps. The 

attorney general is perfectly in his bounds to have a more restrictive contact. It is still negotiable. But $50 million is a $1 billion recovery in our experiences for a single State. But if you have multiple States together, by the way, it would be $1 billion a State. 

Mr. SCOTT. It also depends on how much work is done. 

Professor Widman, can you describe why a contingent-fee arrangement may be a good thing? 

Ms. WIDMAN. Well, contingency-fee arrangements allow—they 

are no-risk. So these sorts of cases are high-risk cases. So instead 

of using taxpayer money to fund what may be a very viable claim 

but risky precisely for the reasons that we have discussed, that a 

small State may be going up against a very well-funded defense 

team, therein lies the risk. The risk is not the novelty of the claim 

or anything like that, but it is the reality of the balance of power. 

And so contingency fees allow, at no risk to taxpayer money, the 

ability for a State to rectify those abuses. 

Mr. FRANKS. Well, I thank all of you and I thank certainly the 

Members here. I come away more informed than I was, and I am, 

again, very grateful to all of you for your testimony. 

Without objection, all Members will have 5 legislative days to 

submit to the Chair additional written questions for the witnesses 

which we will forward to the witnesses and ask them to respond 

as promptly as possible so that their answers may be made part 

of the record. 

And without objection, all Members will have 5 legislative days 

with which to submit any additional materials for inclusion in the 

record. 

And with that, again, I thank all of you and the Members and 

the observers. 

And this hearing is adjourned. 

[Whereupon, at 3:24 p.m., the Subcommittee was adjourned.] 

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