Fee cap for state-hired outside lawyers vetoed

Gov. Ralph Northam has vetoed the General Assembly’s proposed limit on the amount the state can pay outside litigation attorneys.

Senate Bill 926, introduced by Sen. Mark Obenshain, R-Harrisonburg, was presented as a money-saving measure. Northam vetoed the legislation March 19, saying it would tie the hands of state lawyers trying to recover from wrongdoers.

Obenshain told Virginia Lawyers Weekly he introduced the bill in an effort to recoup money the state could use to pay firefighters, police and teachers. With a limit on the amount outside counsel can make, more of the money recovered in lawsuits could go to the state, Obenshain reasoned.

He said similar laws have passed in other states and, to his knowledge, the bill would not have harmed any Virginia businesses. It targeted out-of-state firms offering litigation programs to states, Obenshain said.

“If we have an Attorney General’s office that is activist and looking for companies to sue using outside counsel, we should have the ability to limit how much they pay them,” Obenshain said in an interview.

Northam said he felt the bill would “weaken the Commonwealth’s bargaining positions against those who harm Virginia residents” by limiting what the state could pay special counsel.

“An edict to limit the availability of this fee arrangement hinders the Commonwealth’s ability to successfully prosecute violations of state law,” Northam said in a news release.

Northam also argued allowing high contingency fees to go to special litigators doesn’t cost the state money and could improve the chances of litigation success.

“The use of a contingency fee arrangement to retain special counsel can be good for Virginia taxpayers,” Northam said. “Contingency fees are only awarded upon the successful outcome of litigation. Therefore, the use of contingency fees benefits the Commonwealth and taxpayers at no cost to either.”

Obenshain said he believes capping the fees of outside litigators would not have the negative impact Northam described.

“My view is that it’s a reasonable cap,” Obenshain said. “It’s hard to argue any lawyer will be undercompensated for $50 million.”

As a result, Obenshain said he is going to weigh interest in the General Assembly to see if he can get enough votes to override the veto. Otherwise, he said it is likely the bill would meet the same fate if he were to reintroduce it next year.

“I think if the administration is going to use one of its first two vetoes on this, it’s a good sign they’ll never agree to a limit on fees for outside counsel,” Obenshain said. “I’ll see if the GA has an appetite for overturning the veto, but it may be a fool’s errand otherwise.”