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Rokita’s TikTok legal battle part of array of contingency fee contracts

By:

Indiana Capital Chronicle

August 1, 2022

When Indiana Attorney General Todd Rokita’s office jumped onto a multi-state, bipartisan investigation of social media giant TikTok, it wasn’t initially clear his office would outsource the work to a Washington, D.C.-based boutique legal firm for free — almost.

“We’re going to find out whether or not the Chinese, and by definition, if you’re a Chinese company, then the [Chinese Communist Party] is a part of it, is intentionally grooming our children,” Rokita said in a March Fox Business appearance. “… If they’re grooming our kids to get hooked on porn, drugs, alcohol — because the burner phones that we set up certainly indicate that they’re trying to do that.”

But on May 19, Rokita’s office finalized an agreement with Cooper & Kirk to evaluate and pursue a potential cause of action. Under that contingency fee contract, the law firm won’t get paid a cent unless it secures a recovery, and even then it’ll get only a certain percentage of the funds won.

Rokita’s office has five more of the contingency fee contracts in effect now, according to the website, four of which precede his time in office. Among them are cases against opioid manufacturers and marketers, pharmacy benefit managers, and antitrust cases against Google and the Michigan-based automobile parts industry. The Indiana Department of Revenue also has one.

The contingency fee contracts are a way for governments to bulk up their legal teams and bring on people with hyper-specialized experience to take on particular cases, especially against corporations or industries with deep pockets. But they also have reputations as handshake or sweetheart deals.

Indiana Code requires that the contracts be “cost-effective and in the public interest.”

Agencies must justify themselves in writing before entering into contingency fee contracts with outside counsel, answering questions on whether an agency has the legal and financial resources to take the case itself, whether it can spare the time and labor, how complex a case will be, the legal expertise required and the geographic area in which the agency needs the services.

The contracts are also subject to the state’s usual ethics guidelines governing state employees and their financial interests or relationships.

Indiana’s Office of the Inspector General reviews the justifications and OK’s them in reports. Agencies and outside firms can execute their contracts and jump into the work after.

Rokita’s office, for example, is finalizing plans for a contingency fee contract with Louisiana-based Meade Young to evaluate and pursue legal action against British pharmaceutical company GSK plc. The Inspector General’s Office notes Rokita’s claim that GSK delayed generic entry for Flonase, and that Indiana then overpaid for the branded allergy relief product from 2004 to 2006.

Indiana law sets the maximum percentages agencies can give counsel in contingency fee contracts: from 25% of a $2 million–$10 million recovery, down in increments to 5% of a $25 million or more recovery.

It also caps a firm’s maximum payday to $50 million.

But, that’s only if the firm wins money for Indiana.

“It’s really time consuming to bring these cases in, and it’s risky for the lawyers because they don’t collect anything, typically, unless they win,” said Jennifer A. Drobac, a professor at Indiana University’s McKinney School of Law. “… Charging on an hourly basis, they’re guaranteed to get paid because they get a retainer in advance, and they bill off of the retainer.”

Drobac said in private practice, contingency fees are usually at least 30%, and could stretch to 50% for particularly “high-risk” cases.

Some of the legal firms that currently hold contingency fee contracts with Rokita’s office only work with governments, and only on contingency fee contracts. Others offer more diverse services.

The firms the Capital Chronicle reached either declined to speak on the record, referred requests for comment to Rokita’s office or didn’t respond.

Three of the current firms have earned something off three cases:

  • Cohen Milstein Sellers & Toll: $536,200 received out of $2.5 million for a $12.6 million recovery.
  • Foote, Mielke, Chavez & O’Neil and Rynbrandt & Associates: $35,162 million for a $126,250 recovery. (In this case, the firms earned 33.3% of any settlement up to $2 million.)

Correction: This story has been corrected to remove a contract belonging to the Indiana Department of Revenue.

Indiana Capital Chronicle is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Indiana Capital Chronicle maintains editorial independence. Contact Editor Niki Kelly for questions: info@indianacapitalchronicle.com.